The broken brand/agency model can be fixed
by Brigitte Majewski (@ForrBmaj) In a rapidly transformational digital age, the disconnect between marketers and agencies is growing. As part of our April 2017 report, The New Agency Operating Model for Brands, we developed a four-step process that B2C marketers may follow to adapt their agency investments in the age of the customer.
The marketer and agency relationship is broken. Before selecting yet another agency that will ultimately disappoint, marketers need to take an outside-in approach that prioritises customer strategy, experience delivery, and marketing performance over rote agency assignments. According to this recent research, marketers doubt their agencies’ ability to guide them through today’s new complexities. This includes the traditional agencies, which develop the overarching creative idea, and extends to media buyers. No agency type is immune from this marketplace distress.
Adapting marketing ecosystem
The entire marketing ecosystem is adapting to the empowered consumer and her radically different expectations and behaviours. The consequences of this acclimatisation are vast, from a recalibration of media value from quantity to quality to a reckoning with evermore helpful intelligent agents. Amid this drama, marketers will recognise a distressing subplot: the unsustainability of the current brand/agency relationship, which is a partnership to the tune of US$48.6bn.
Surveys have shown that marketers are increasingly dissatisfied with the agency’s ability to deliver long-term strategic thinking and stay ahead of cutting=edge new technology. In addition, the big consulting companies like Accenture, Deloitte and IBM are encroaching into the agency space. According to the Forrester/SoDA Q1 2016 Global Digital Outlook Online survey, more than 60% of marketers are open to working with consultants for agency work.
Economic forces, advances in technology, and changing customer behaviour and expectations have necessitated firms organising their entire business strategy around winning, serving and retaining customers. Traditionally, agencies would guide clients through this change but, ironically, many have failed to undergo the necessary transformation themselves. Frustrated marketers are unwilling to pay their agency’s hourly rate while they figure this out.
Agencies are facing some key challenges
- Fragmented expertise. Today campaigns travel through multiple agencies, where silos of expertise mean that no single entity has the full set of capabilities to deliver the personalised, relevant and seamless brand experiences customers expect.
- Data doesn’t connect across agencies. Data expertise stops with performance measurement and never moves forward to enhance the customer experience through better insights or optimisation.
- Technology use is not always strategic. Technology is being used on a one-off basis without integrating it across the broader strategy to better inform decision-making.
- Trust is secondary. Rebates and rigged production bids, as well as media markups and ad fraud reported in the news, are not helping build trust between marketers and agencies.
It takes two to tango
The disconnect does not lie squarely at the agencies’ feet — marketers don’t provide an environment where their agency can easily or advantageously organise around and deliver customer-centric strategies. Rigid budgets assigned to separate buyers and channels force agencies into ‘myopic strategies’, reinforcing the agency silos they so dearly want to break down. Moreover, marketers are still rewarding short-term thinking, encouraging agencies to staff to the desired fee instead of what it will actually take to get the work done.
Finally, despite the dramatic increase in channels, marketers are constantly squeezing their agencies on price, cutting margins and making it difficult for agencies to cover their own expenses and required skills sets.
A new blueprint for agency services
Here’s our four-step approach for marketers to adapt their brand and agency operating model.
- Change what you need. Marketers must do an internal reset to align with new strategic initiatives where creative strategy gives way to customer strategy. Media planning must take into account all experiential channels and measurement must transform into real-time performance management.
- Change how it’s done. Creative requests should merge with CRM data for informed customer strategies. Media and digital experiences should be mapped to a consolidated customer journey. More than this, marketers should take control over performance measurement and management.
- Change where you get it. The ideal services solution would be one agency that can deliver all components of the new value chain. However, this is not possible. Marketers will need to bring their data strategy in-house, expand the remit of their lead agency to think more broadly about their business, and share data across agencies through dashboards.
- Change how you pay for it. When everything must be measured in hours, agency innovation is compromised. This impacts the most-important and -distinct value of agencies: creative problem-solving. Marketers need to abandon traditional compensation tactics and should pay for results, not time. Incentives should also be seen holistically to encourage collaboration across agencies and channel delivery. Marketers should also consider paying for new skill sets they will require from the agencies, including data science, cognitive development, and product management.
Brigitte Majewski (@ForrBmaj) is vice-president and research director at American market research company, Forrester, and co-author, along with Sarak Sikowitz, of The New Agency Operating Model For Brands. Brigitte leads a team of analysts who help clients develop strategies to master and coordinate digital and traditional marketing channels using new media and technology to win, serve, and retain customers. She has more than 10 years of agency experience crafting integrated marketing strategies, with an emphasis on digital innovation.
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