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APG West | Agency value and the search for innovation

We started APG West to help embed strategic thinking as a more prominent part of agencies’ (and clients’) business here. That’s our local, micro challenge. But as an industry we also face many macro challenges. Technology is changing the marketing mix. Many services are being taken in-house. Agencies are caught in a pincer movement between consultancies and commoditisation.

Taken together, the micro and macro make a discussion about the changing nature of agency value very timely indeed, and made a fitting subject for our first Planning Labs event. The format brings together two speakers to share different perspectives and experiences on a shared topic – an experiment in colliding together two views to see what discoveries we can make.

Our first speaker was Fern Miller, CSO – and for a brief time last year also CMO – of DigitasLBI. The agency sits at the forefront of marketing and technology, and is also part of the Publicis Groupe. Fern’s talk focused on the dynamics between clients and network agencies.

Fragmentation is the first challenge. The networks haven’t helped clients consolidate their rosters fully yet – despite brands cutting back on agency partners, 12% still use four or more agencies for digital alone. As Fern said, individual agencies should be able to convince clients that they can do more for them than that suggests. Agencies are under scrutiny, and the perception of what they can provide is less healthy than ever. Keith Weed of Unilever says he wants the “110% solution” for his brands; the claim “fragmentation is tearing us apart” is pretty damning of agencies’ ability to see the problems they make for themselves. Fern also quoted HBR research that suggested agencies, still focused on advertising and campaigns when clients want rounded solutions and continuity, are also feeling the pinch because clients no longer want to outsource customer relationships, and want to own for themselves the data and skills that make marketing effective.

Agencies aren’t helping themselves. They’re staffed by people who lead different lives to the audiences they purport to reach and influence. As Fern said, “we don’t walk the same streets or drink in the same pubs” anymore. It’s still too rare to find non-white, non-male practitioners shaping brand strategies. And rare indeed is the interagency group who can put aside their differences in service of a shared idea executed across the marketing mix. This should be natural territory for planners, but the business model and legacy mindset of the agency (and the occasional interjection of the ad agency creative director) can all too easily get in the way.

Yet it’s clear agencies can still add value. The recent Pepsi disaster reminds us of what Fern called the “time, review gates and discipline” that agencies can bring to the strategic and creative process, and that can all too easily fall by the wayside in the rush to own the work.

So what should we do?

Fern’s recommendations resonated with the more independent agencies in the room. First, think about what you can do that a big agency or group can’t. This re-frame of a supposed constraint (size, budget, influence) as a potential competitive advantage is a positive idea – free of the legacy structures and protectionist mindset of a network, what is it a smaller agency could offer? Agility and lateral thinking are each beyond the consultancy for the time being. Second, do what too few marketers are doing right now and think about what people actually want from brands. While everyone else is inhibiting themselves with politics, steal a march with insight that transforms a client’s understanding of their problem. And third, just be better - work harder to prove the value in what you do rather than over-value the way you do things.

This was a theme that our second speaker, Steve Edwards, would embellish. Steve spent many years at Mediacom and, latterly, MGOMD. Here he ran Beyond, the internal agency that worked with start-ups to tackle the challenges of innovation and growth. He now runs Hare & Tortoise, a hybrid of the agency and consultancy model, based in Bath. Working with start-ups has helped Steve think less about individual disciplines, and more about the business problem and the ways to fix it. But, as Fern highlighted, Steve made it clear the attitude on its own isn’t enough. Planners need to move beyond the realm of the theoretical and demonstrate the value of a new approach – “put a figure on the idea,” as he put it.

This isn’t always natural territory to us, and the reason is that most planning is about optimisation of a solution we’re already familiar with – thinking strategically about messaging, for example, or the best use of media. Steve argued that rather than crafters of the familiar, we should think of ourselves as a service that won’t be needed for too much longer. Advertising is an intermediary ripe for disintermediation: ads will all be served programmatically soon, AI will strike out half of any team dealing with social.

This does focus the mind somewhat. But it should also galvanise us. After all, few problems are advertising problems, we only use advertising as the easiest and most familiar way of fixing them. Gaining traction for alternative models takes time and effort, however. And the start-up model (define the problem, develop and prototype the idea, assess potential, present the plan) is an actionable, entrepreneurial way of thinking about our jobs. It may also be what we need to do to keep them.

The problem is that few agencies or businesses will get there naturally. Most of us work in silos, being presented with a snapshot of the problem, from one corner of the organisation. (This, Steve argues, is one reason consultancies do better than agencies, in that they get to see the full challenge.) We’re suffering from what he called “institutionalised and incentivised inertia” – few practitioners are encouraged to look beyond their silo to solve the problem they know needs fixing, whether client or agency.

This is where being braver and more proactive comes in, challenging clients to help them get to the right briefs. Advertising and media briefs often focus on acquisition; but retention can have a greater impact, so hustle for the opportunity to address that challenge as well. Clients that acknowledge category disruption can take braver, bigger decisions; help them be aware of the threats they face and scope potential solutions.

Steve was clear on the importance of nurturing those solutions carefully, and over time. It can take years for a new idea to prove itself. “Innovation needs isolation in order to flourish” he said. Inside a business, or as an agency, it’s essential to let the new model emerge before judging its ability to overtake the old one.

In this light agencies should focus less on what their solution is, and more on how it should be done. Fern revealed that Karmarama’s policy on clients had been those whose ambition exceeded their budget – Steve built on this, pointing out that the shortfall between the two was creativity, and that this creativity is the value agencies offer. But if we are to avoid being disintermediated then that value must be made more tangible: an idea with a financial figure attached to it, a plan for how it will work and when it will deliver.

Our creativity alone will not be enough. We will need to present a rationale for why our ideas are better than just doing more of the same. Just like our speakers did for us.

APG West Planning Labs


You can read more from APG West events here

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