While the demise of ad agencies due to digital disruption has long been prophesied, the evidence just doesn't point to such an outcome. The actual outcome, to date, has been the proliferation of agencies. As digital democratized publishing has opened unlimited new channels, the marketing environment has, in turn, become much more complex, with CMOs hiring a broad phalanx of best of breed channel-specialist agencies. Indeed, “integrated marketing” — or the orchestration of this “stable of agencies” — has become the issue of greatest importance for CMOs, (according to a Forbes study), sadly surpassing even “effective advertising.”
In other words, help in managing the marketing cacophony has become even more desirable than selling more product. Forbes' survey also reported that a third of all clients report that they manage over 50 agencies and 22% have a roster of over 100 agencies! Clearly, Forbes was surveying the biggest brands, but having five or six agencies involved in a brand that spends under $10 million annually in measured media is commonplace these days. Sounds like a tipping point, doesn't it?
So, let's assume clients finally decide enough is enough with the current “stable of agencies” model. What do they do? Two likely replacements for ad agencies consistently arise in this dialogue. The first speculative replacement is that clients will move services currently provided by agencies in-house. Commonly supporting this argument is the rationale that the “real time” nature of digital marketing requires in-house management rather than the hand-off to an agency. Plausible argument. But can anyone cite another example where the outsourcing and specialization trend has been reversed and clients have actually increased headcount to take back services formerly outsourced? It's like reversing the laws of nature.
The other suggested competitor to ad agencies is the consumer. Crowd-sourcing new product ideas, and even creative concepts, have certainly shown promise. But listening, engaging and sharing the content consumers are adding to your brand's story seems to me the not-yet-fully-realized opportunity for CMOs, brand marketers and agencies but not a replacement for ad agencies. Indeed, if CMOs are struggling today to integrate the work and ideas of multiple specialized agencies, what struggles will they experience orchestrating infinite consumer voices on their brand? Or should we be giving up on the idea of having any control or influence on our own brand's narrative? If you believe the next great play, song, novel, movie or TV show is likely to be crowd-sourced, then this model is for you.
There will always be a place in society for creators. They will always be few in number and hard to find. But they are the brave souls who make that first keystroke or paint stroke upon a blank page or canvas, and take our minds to a place we hadn't yet imagined. Agencies aren't the only place for creators, but they are a place where writing and artistic talents are valued and where paychecks can be earned plying those skills. And agencies will continue to be a desirable destination for creators because they have the opportunity to hone that craft across such a plethora of brands and channels.
Are great brand storytellers really likely to choose to settle on the client side? A CPG client of mine once told me he moved from the agency side to the client side early in his career because, "I wanted to pull the other 90% of the marketing levers." I get that. But the great brand idea creators stay on the agency side because they are happy to only pull 10% of the levers that matter to them.
I don't see digital destructing agencies. Clients will continue to “filter” through agencies looking for the few great creators whose ideas will move their brand and business. And those few great creators — at just a few agencies for that brand or client — will be the right model for the rightful return of “effective advertising” as the most important issue for CMOs.