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Jan 10th, 2011

Why now is the time for Agency 3.0

The global marketing services industry is constantly evolving and has now reached a crucial crossroads. The advent of the digital age brought about new challenges in the way advertisers reach their audience, which ultimately means a change in the way agencies do business with their clients.

Marketers used to appoint creative agencies to produce glossy television ads along with a supporting print campaign. However, agencies are no longer limited to this as the rise of new channels has opened up new ways to speak to consumers.

The business model that today’s agencies operate is simple – get the big brands, sell them big ideas and generate lots of cash. But with such fierce competition generated by the abundance of choice and marketing channels, the model is being tested to its limit. Marketers increasingly need to justify the return on investment that a campaign delivers.

There is no doubt that the agency model needs to change to acknowledge these new paths to market; but what should that agency look like? gyro interviewed key marketers from brands such as Google, Kelloggs, Bacardi, Barclaycard Freedom, Virgin Atlantic, Boots UK Audi, and More Than to build a picture of what marketers need going forward.

The digital age has transformed the world we live in and brands can no longer shut off when the working day or week is over; they are always on. But which type of agency do marketers believe is best equipped to deal with a 24/7 offering – boutique or network?

According to research undertaken by the b2b agency, more than half of respondents think boutique agencies are responding best to client and market change. A network agency does, however, have the resources to respond almost instantly to a consumer online, half way round the world.

Creativity is the most highly prized service that agencies offer brand marketers, with 77 per cent citing it as the single most function within an agency. Planning and strategy came a close second on 74 per cent. This latter statistic highlights just how crucial planning has became as the number of channels has fragmented.

Marketers remain unsure as to what Agency 3.0 looks like and there are several options fighting it out at the moment. While both network and boutique agencies have their pros and cons; they is also a third way: collaborative agencies. This offers the client the benefit of a boutique agency with the perceived scale of a network agency. However, network agencies could offer the perceived independent and flexibility offered by a boutique agency, but with the scale and resources to deliver a coherent and fully integrated global campaign.

We don’t know yet how the battle between boutique and network agencies is going to end but one thing is certain, clients are no longer looking to spend a small fortune on one TV ad. They want multiple creative executions that can be pushed out through multiple channels and if you cannot offer a fully integrated solution you are out of the running.

The research also found that clients are also looking for a fresh approach to remuneration. It showed that 90 per cent of marketers feel that agencies should be more accountable for the commercial success of their work, while 55 per cent thought that agency fees should be based on more than purely on time and output. Either way, it shows the needs for a new model of results-based payment.

The advertising industry does not have a blueprint for the agency of the future, and there so many different options at the moment it is difficult to see what will win out in the end. Christian Woolfenden, Bacardi’s global brand director, feels that the ideal resolution would be ‘a group of agencies, led by one, that can genuinely work together’. Meanwhile, Barclaycard Freedom marketing director Sarah Alspach wants ‘creative ideas from [her] agencies that can be executed cheaply’ but she also believes there will be more opportunities for bespoke work if an idea can connect with consumers quickly.

As an industry, we are only just beginning to understand what the real issues are. How the agency model adapts to tackle the new digital world and the challenge it presents remains to be seen.

By Richard Perry Chief Operations Officer at London marketing agency, gyro

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