The ad agency of the future: 4 reasons why clients should care

2 Aug

As we move towards a convergence of consumer-centricity, new media, engagement strategies and pull advertising, agencies are undergoing a transformation.

Content as king, speed to market, social media spaces, crowd-sourcing, buzz measurers…should your clients give a damn? Does how the agency model reconstructs itself matter to anyone outside of your walls?

I will argue that the answer is yes. And here are some reasons why:

1.  We’ll do more of what they want us to do. It’s our business to know the consumer and be versed in what motivates them. That’s not supposed to be our clients’ job. If it is, we can expect them to continue using us as suppliers. If an ad agency is not able to take the barometer of the market, strategize accordingly and sell the products and services, it’s hardly surprising that the clients take over. By changing with the consumer, it sends a clear message to clients that work with us, or those who might, that we offer not service, but expertise. Client servicing? Time to change that.

2. We will strategize for success in new ways. Media ain’t what it was. We still sell plans by impressions, eyeballs and click-throughs. These metrics are about volume. Sales volumes speak; click-throughs speak with forked tongue. Driving for sales success means attention to engagement over impressions. We can get 10,000 people to watch a video on YouTube, but if they are indifferent to it the numbers mean nothing. How an agency goes about the mix of traditional and new media changes all the old rules about how clients and agencies plan their media and evaluate success, therefore how they work together.

3. New compensation models. When Tim Williams spoke to T-CAAN members in June he made an eloquent case against agencies charging their cost back to the client, and instead charging their value. Nothing I can see will change the traditional agency/client relationship faster than figuring this one out. It will attract certain types of clients and repel others. It will be the agency’s own catalytic mechanism. And it will produce better results.

4. Real partnership. We love the word partnership, but we’re increasingly labeled and treated like suppliers. We have ourselves to blame. If an agency’s compensation is tied to success, things get real. What business doesn’t want to work with an agency that puts its compensation where its yap is?

Next week, Copeland will host a select group of Western Canada’s premier independent agencies, from BC, Alberta, Saskatchewan, North West Territories and Yukon, to explore these and other critical adjustments with Tim Williams of The Ignition Group.

2 Responses to “The ad agency of the future: 4 reasons why clients should care”

  1. Mario Parise August 3, 2010 at 9:25 am #

    Yes! Totally agree! But…

    If I understand your proposal, we’re talking about an approach that is more akin to a Commission-based compensation model. In other words, agencies (and their work) as sales people. This makes perfect sense since advertising is sales on a larger scale. A great ad campaign can bring in more sales at a lower cost then even the greatest sales people.

    Direct Response marketers have been doing this for a long time. Businesses actually approach DR companies and pitch to them for the honour of being taken on as clients. If the marketer thinks the product has potential, they’ll hammer out a deal that outlines the offer and the costs etc. and what % of each sale they get to keep.

    A lot of copywriters worked this way too (or some variation of it). Joe Sugarman made a fortune this way. Pretty sure Bob Bly still does. Claude Hopkins and Albert Lasker made their fortunes this way too (if I’m not mistaken). In a lot of ways, mail-order catalogues were a simple version of this business model.

    But the model never translated well to the rest of advertising. Mainly because only direct response allows you to track a results well enough to directly say “this sale is thanks to my work”.

    So the big question is how do we make this work across the board?

    If we run a campaign and sales go up 20%, can we take full credit for that 20% increase? Do we have proof? Unless we can prove beyond a reasonable doubt that those sales wouldn’t have occurred were it not for our work, then what right do we have to ask for a commission?

    Tracking impressions and click-throughs and engagement and whatever other form of metric is in vogue is not enough. Like you said, it’s about sales. But how do we reliably correlate the work undertaken to the value being created?

  2. dougbrowncreative August 5, 2010 at 2:32 pm #

    It’s interesting that you refer to it as commission-based compensation. That got me thinking about the negative stereotypes we often associate with commission salespeople and the perception they will say just about anything to make the sale. It creates a certain do or die urgency to the process though doesn’t it.

    Imagine how such an arrangement between an agency and a client would affect the level of trust. It won’t work for every client for sure. So I don’t think there are any across-the-board solutions. Just ones to be evaluated as they come along.

    Thanks for your thoughts Mario!

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