Commentary

Agency Model: Push Innovation, Cover All Media

by Jack Loechner , Staff Writer, September 14, 2011

According to a new study by the Horn Group and Kelton Research, marketing executives want to be challenged by the agencies they hire. Yet, only 3% say agencies are most often leading the charge for their company's innovation. Instead, it's marketing directors and execs, and customers, pushing for innovation. At smaller companies, with less than 200 employees, almost half of marketing execs say they're the ones driving innovation.

Leading Push for Innovaton by Company Size (% of Respondents)
*Company Size*	*Customers*	*Marketing Execs*	*Non-Marketing Execs*	*Partner Agencies*	*Other*
Total	26%	44%	22%	3%	5%
Revenue $10 million	31	41	21	3	4
Revenue < $10 million	20	46	24	3	7
200 or more employees	29	41	23	4	3
Less than 200 employees	23	48	21	-	9
Source: CMO Challenge Survey, August 2011

The report says that 68% of marketing execs say their companies are behind the curve in digital media integration and 71% say they haven't caught up with social media integration. However, 55% of marketing execs attribute internal, not external, factors as a bigger roadblock to using an integrated approach.

Not only do agency partners need to push for innovation, they have to see that change through and deliver results. When hiring outside agencies, marketing execs feel the ability to execute is far more important than cost or the agency's reputation, Over two in five marketing execs with 10 or more years in their position think the most important quality in an agency is execution, vs. 28% of those in the role for 5-9 years.

Results trump cost and reputation when hiring outside agencies: Marketing execs say the ability to execute (34%) is far more important than cost (15%) or the agency's reputation (5%).

Results More Important Than Cost (% of Respondents)
*Most Important Measurement*	*% Of Respondents*
Able to execute	34%
Industry expertise	27
Value	15
Responsiveness	8
Culture	5
Reputation	5
Source: CMO Challenge Survey, August 2011

77% of marketing executives want to work with agencies they would consider to be partners, not vendors, and roughly 70% now have engagements that resemble partnerships with agencies they use. Marketing execs also prefer smaller and more specialized forms over larger, all-in-one agencies:

· 86% prefer to work with smaller firms with fewer than 50 staff members.

· 63% prefer to work with a highly specialized firm

Having a smaller roster of more capable firms is appreciated by marketers mostly because this approach provides a consistent vision (61%) and stronger relationships (45%). 67% of those working in companies with $10 million-plus in revenue rely on a smaller roster of partners so that they can provide a streamlined vision, compared to 52% of those working in smaller revenue companies who feel this way.

Many would like to see more marketing efforts handled by one house, perhaps due to time and money savings. 58% say it's important for their company to integrate agencies, and 51% feel there is a general need for more integration. 58% who work in enterprises with 200 or more employees think there is a need for more integration, vs. 39 percent of those at smaller companies.

88% of marketing execs who work with more than one agency at a time report that these firms collaborate more on specific projects than on a regular basis. 34% of marketing execs have found that agencies who focus on collaboration are most likely to ensure a seamless multi-agency approach.

The report concludes that agencies must do more to challenge their clients and lead innovation. At the same time, delivering results trumps everything else, even cost and reputation, two factors on which agencies have long thought they compete. And the majority of marketing executives prefer to work with smaller specialist agencies who operate like collaborative partners.

The agency model for today's CMO, says the report in conclusion, is a unique breed of specialty agency that is an expert in 2-3 things, like PR, social media and interactive design, and adds other services into the mix through close partners. For this breed of agency, it's less about specialties and service offerings and more about creating cohesive brand experiences across every medium that matters... from physical to digital, social and mobile.

For The Horn Group graphic, please visit here, or for the PDF file sign up access, please visit Horn here.

agency, research

2 comments about "Agency Model: Push Innovation, Cover All Media".

Check to receive email when comments are posted.

Doug Garnett from Protonik, LLC, September 15, 2011 at 1:23 a.m.
Fascinating study. If this study surveyed the agency side my guess is it would find something entirely different.
It's my experience that agencies very regularly offer clients new things and push them in those directions. But, clients have to follow their own internal politics and what the agency identifies often doesn't fit with the political realities faced by the client. As a result, a great many agencies hold back rather than face continued turn-down by clients.
Besides, successful agencies know that the real key is for clients to be able to do the right things for their business. So even when an idea comes from the agency, it's critical that the agency not care if the client really clearly remembers it. This survey shows what appears to be considerable filtering from the CMO - given the remarkably low numbers (<5% mostly) giving agencies any credit for ideas.
It also sounds like clients are continuing to expect that digital media are a magic wand. This study interpretation suggests clients want far more from digital than it can actually deliver today.
In other words, a very revealing study - but not in the way interpreted by the study authors.
Reply

Chris Walker from Mobiah, September 21, 2011 at 12:05 a.m.

This is an interesting article and it offers many useful data points and motivators. There does seem to be a pretty big delta between the presented data on agency usage and how that data may be used in assertion that agencies need to push innovation more.

(I am a former large agency guy, now at a small, boutique agency, and loving it)

While I certainly agree that agencies should present ideas and press innovation to their clients, the reason they typically do not lead innovation are three-fold.

1. It is primarily the company (advertiser / CEO)'s job to develop their own company's innovation. Then the agency communicates their client's innovation to the masses. Or, if "innovation" is being used in the context of the company's marketing strategy, many many companies set up the agency/company relationship for ultimate failure by either not having, or not communicating a clear and shared vision of where they want to go. Often they do not even have visibility into the metrics that would illustrate success to their organization. (Established campaign goals, baselines, tests, new KPIs, etc).

What I continually preach is that the only way an agency's performance will be truly graded is when there is an established and agreed-upon criteria for success. That "success" criteria should be a negotiated blend of top-line business goals and the agency's ability to confidently deliver them.

2. Agency resources. Most of the clients I've worked with in the past left their former agency because the person they were put in touch with for day to day operations was a junior in the agency. While this is not an inherent problem at face value, when the agency does not carry the resource to regularly strategize (whether it's time or talent), the company is left with a sense of the agency not "owning" the campaign, hence, not leading innovation. This erodes respect over time and is difficult to reestablish once the relationship has gone stale. Establishing quarterly strategic meetings have been very effective in overcoming this.

3. I mentioned strategy in my last point but I wanted to mention one other point about it. Most agencies are famously efficient in tactical measures, but are not always well versed in strategic planning and decision making. Many large agencies are fantastic at strategy and the reason they are so good at it is because, simply put, they've done it before! But most small to medium sized businesses cannot afford their representation. So the lion's share of support data points to a company "getting what they pay for" when it comes to their agency. They get another employee or two to carry out marketing tasks and who just happen to work for their agency.

All of that said, most marketers will tell you that they'd LOVE to do more for their clients.

Unless there is someone at the table that understands the relationship between companies and their agency's role in their success; unless there is someone in the organization who has a clear understanding of the company's financial forecasts and expectations, and unless there is a counterpoint at the agency who can strategize based on those business objectives, relationships will continue to lack innovative synergy.

-C