Is there a future for the advertising agency as we have known it to date?

In recent months, there has been a slew of articles about advertising agencies and their future/fate in a world that is so dramatically changing when it comes to the marketing of brands. Without question, brands have been amping up their internal resources and bringing many of the resources that have typically fallen within the domain of the agency back inside the organization. It is not uncommon for internal marketing teams to have senior chops in the areas of creative development and analytics down to community management, loyalty program management and even the day-to-day handling of certain media activities (like search engine marketing, affiliate marketing and more).

What’s an agency to do?

It’s a murky, unclear future for the marketing agency, but one thing is for certain: things are changing at an exponential pace. An agency used to act as the executional arm of the marketing department. An outsourced idea and creative team that could get the production done at a cost that was less than what it would cost the brand to have a permanent staff in place. Over time, this role has changed. The digital channels have definitely amplified the need for agencies to evolve and adapt. How people connect to traditional channels like TV, print, radio and out-of-home has changed from their intended purpose of interrupting consumers with a message during content consumption. Social media pushed this even further by forcing brands to engage with consumers – one-on-one – for the public to see, in a very human voice. Mobile continues to offer many ways to connect with consumers who now wield tremendous power in the palm of their hands. With that everyone is curious about how big data is going to play out, what’s in store for wearable technology and just what, exactly, the screen of the future will look like and how consumers will interact with it? Still, the role of the agency is fairly simplistic (in philosophical terms): help a brand increase their sales and loyalty. Nothing more. Nothing less. And that value-add has not changed since agencies were first invented. So, now what? How do agencies ensure their future by being able to help brands sell more and build stronger loyalty in such a disrupted and disintermediated world where every individual is consuming so much media in so many different channels and, in the same breath, are their own media channels (look no further than Facebook, YouTube, tumblr, Twitter and more)? How does an agency stay ahead of the curve?

Here are five new attributes for marketing agencies to develop:

1. Models of leanness. Eric Ries brought the concept of the Lean Startup into our zeitgeist. Marketing agencies of the future will need to focus on many of the strategies that the lean movement engenders. From how we initiate a project by establishing metrics and outcomes from the beginning, to being more agile in building programs that can bend, move and iterate as we learn from what the market is telling us (marketing optimization anyone?). Most marketing is still driven by quarterly planning or seasonal initiatives (aka marketers know best). While it may be hard to transition to a truly real-time way of operating (aka consumers know best), starting with models of leanness will force agencies to be more nimble, more sensitive to how the brand’s budget is allocated and force a spirit of partnership with the brands they represent. That partnership was somewhat lost in the past and agencies became more like vendors than trusted advisors. Models of leanness will bring partnership back to the table.
2. Utility over content. If the past ten years were about developing content in the social channels (in order to provide value, humanize the brand, be present in search engines and more), the next five years will be about the brands that can actually create a level of utility for the consumer (more on that here: Great Marketing Is Utilitarian). Too many brands are confusing a utility with more robust marketing messaging. The two are not the same. Utility is something that consumers would use on their own accord because it adds value to their daily lives (something they might even pay for). Regardless of attribution to a brand. The bonus (and benefit) comes to the brand by creating something that consumers can’t live without and the appreciation and attachment that comes from it.
3. Content as media. Content was used as chum for brands. Brands blog, podcast, tweet, post and more in hopes of drawing consumers over to their home base (which was – and still is – littered with marketing calls to action). As native advertising models continue to be introduced (more on that here: We Need a Better Definition of "Native Advertising") and the ability for brands to do something that will resonate with consumers gets more difficult due to the crowded social platforms, content becomes another form of media. Some agencies are helping brands to create their own, authentic newsrooms within an organization while other agencies are building their own newsrooms to help brands create more relevant and original pieces of content that don’t look, smell or act like a press release or advertorial. Content as media become a natural extension of an agencies’ ability to help tell a better and more connected brand narrative.
4. R&D. Marketing agencies sell professional services. Not products. In the past, many marketing agencies have done their best to create, market and sell an actual product (be it digital or physical). Most have had limited success. Service-based companies selling products has not been a wildly successful endeavor for the majority of marketing agencies. Going forward, this will have to change. The ability for a marketing agency to provide a higher level of research and development in terms of product development and technological implementation will be core to success. Agencies must get much better at providing a deeper context of opportunity for brands to explore. While everyone is excited about the potential of "big data," the idea of agencies bringing more R&D to brands could best be defined as "big research." Pushing beyond the research, analytics and insights to deliver solutions that can’t just be relegated to a purchased media space. Helping brands create what they’re going to be selling next.
5. Many big ideas. When people think of marketing agencies and the advertising output, they generally think about the big idea… and how it plays out across media. As we move towards the era of personalization, agencies must become the purveyors of personalization. This does not mean the death of the big idea, but rather a new dawn when agencies are bringing brands many big ideas that are either directly or loosely connected in a way that enables them to connect the brand through channels that transcend advertising (think content, wearable technology, screens that allow consumers to skip traditional messaging and more). Pushing that further, consumers are not the same when they’re watching television as they are when they’re on a smartphone. They’re not the same consumers when they’re reading consumer reviews as they are when they are in a physical retail location. Each scenario, each consumer, each moment of engagement continues to look very different than the output of marketing messages that agencies have been responsible for to date. The brands that can create these many big ideas and be accountable for these many new forms of creative are destined for success.

Is the agency of the future just a back to the future moment?

Sadly, most people think of "advertising" when they think of "marketing." Marketing – as traditionally defined – is about the Four Ps (Product, Price, Place and Promotion). Marketing agencies have spent the bulk of their time focused on just the promotion part of those Four Ps. The world – because of technology and connectedness – is forcing marketing agencies back to the entire sphere that encompasses marketing. Now, more than ever, marketing agencies will be challenged to prove their results and mettle. It’s going to be interesting to see which agencies can transcend and thrive in these times.

What do you think are some of the attributes marketing agencies need to remain valuable to brands?

The above posting is my twice-monthly column for the Harvard Business Review. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original version online here:

• Harvard Business Review – What the Marketing Agency of the Future Will Do Differently.