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Adapt or Die: The Future of the Ad Agency

Madeleine Coe | On 03, Jun 2016

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The ad agency is facing a radical shift. Clients’ needs have changed, and the size, shape, and appearance of the ad agency is going to have to go through a metamorphosis before it can meet those needs.

The birth of the Ad Agency in the early 20th century changed the way that products were introduced to market. The earliest agencies met needs for broadcast channels and print media with Media and Creative teams housed separately. All agencies came from the same mold and met similar needs for their client market. It wasn’t until the age of the Internet that agencies were forced into their first metamorphosis.

The digital agency was created to meet the Internet boom. Specialized agencies formed for Media, Creative, Social, Experiential, Print/Publishing etc. and were housed separately, then these firms were brought together under holding groups who could structure all those aspects into one package for the client. Package pricing is based on the hiring of FTE (full time equivalents). These holding groups are huge and the different disciplines are like silos, with almost no communication between them.

But with the emergence of Big Data, a new age has dawned.

Today’s marketing is omni-channel and omni-present, with a huge reliance on consumer information, and that means that it needs to be personal. It is client-focused and data-driven, not driven by agency objectives. New players and new approaches will make the agency of today.

In the New Agency, disciplines of Creative, Media, Digital, Production, Publishing, and Data will all live under one roof, with a fluid structure, enabling the agency to shift to meet the constant evolution of the consumer. Brand messages must be specific and expedient; an arrow straight to the heart rather than a barrage of bullets. Clients seeking to stay on the top of their game will need a partner in their ad agency—not just a vendor— in order to use this fusion of business operations and marketing. An equal alliance must be formed between client and agency, both with a stake in the outcome.

Ad Age interviewed leading industry professionals on the paradigm shift they can already see occurring, including Marc Pritchard, CMO of Procter & Gamble, who said that whatever form agencies take in the next five to 10 years, they must be client-centric.

“Agencies will be built around clients and consumers, not brands or channels like TV or digital,” said Mark Read, CEO of WPP’s Wunderman and of WPP Digital, in the article by Alexandra Bruell of Ad Age. “There won’t be a lead agency but disciplines sitting as equal partners in a much more fluid structure. In many ways, we’re all aiming for the same place from different starting points.”

However, the holding companies of old may not be able to adapt on their own. Will the smaller specialized firms they acquire be enough to fulfill the need to manage marketing across all mediums and serve up custom ads based on real-time search data? Or can this be achieved only through cross-disciplinary efforts?

Data is king in this emerging world order and only a full-service ad agency will be able to carry out its orders and serve up the brand experience that consumers are looking for. The agency of the future will also need to be smaller and tighter, eliminating redundancy in favor of cross-disciplinary talent that can adapt to the rapid progress of technology.

Scott Fletcher, co-founder and vice president of Tier10, sat down to discuss his vision of the future of marketing.

“You’re going to see a lot less silos even with the inside agency…and a lot more leads that work with all [disciplines] to make sure that everything stays consistent to the client’s needs. As opposed to bringing a digital analyst to the client to talk just about what we can do for you digitally, one lead will work with all of the disciplines to make it all happen behind the scenes before it ever gets to a client,” said Fletcher, describing the future of the ad agency.

He believes that Tier10 and smaller, more recent start-ups have a distinct advantage over the larger companies and the specialized firms that they collect. In order to adapt, Fletcher believes holding companies would need to consolidate, but start-ups have the ability to be “nimble,” allowing them to adapt and shift directions rapidly in order to accommodate clients. He believes that Tier10 has already placed itself in a unique niche that seems to align with the vision of the agency of the future. Rather than outsourcing, all disciplines started in-house, but where Tier10 specialized was in serving the automotive industry on the association level.

“When we started Tier10, we didn’t go to the FTE model. We put a premium on digital, data, and results. From day one, we presented ourselves not as a vendor or an agency, but a partner. Seven years ago we built our company and those were our tracks. We have always put a massive premium on doing everything ourselves, and not outsourcing, so that we can control the outcome and have a consistent look, feel, and message,” said Fletcher.

Has the best approach as a partner in the new age of marketing been found? Or will the evolution of the ad agency need to progress a little further before content, creative, data, and distribution can be executed profitably from one place? If Tier10 has already taken the next step towards the evolution of the ad agency, what comes next?

Fletcher says, “We’ve started entrenching employees in local markets and with our clients. Whether it’s having them split time between our office and the client’s locations, or handpicking employees who live in the market and can work shoulder-to-shoulder, elbow-to-elbow, with our clients, this is something we are focused on. While everybody else is just trying to align to be more client-friendly, we are entrenched and going deeper with our clients.”

So where does the ad agency of the future belong? Right in the trenches.

Sources: AdAge

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