To survive in today’s marketplace, agencies’ operations must change as quickly as their clients’ needs.
The market has changed for agencies. Just a few years ago, it was comparably easier to grow or simply sustain a profitable business. I’ve helped many agencies overcome a variety of challenges in my 18 years of working in this industry. The challenges most struggle with today are due to significant increases in these areas:
- Demand for digital deliverables and data-informed brand experiences across the entire customer journey
- Project-based work replacing Agency of Record relationships
- Competition from small, specialized, digitally-savvy shops
- Competition from the big consulting firms
- The number of C-suite players influencing the agency selection process based on their respective interests
Brand marketers are seeking agencies that can integrate emerging trends, technology and data into their marketing strategies. That are willing to begin a client relationship with project-based work. That can deliver an increase in volume of work without compromising its quality. That can create a more transparent and collaborative workflow between the agency and their own in-house marketing team. That prioritize finding new ways to increase their value to their clients.
Industry research reports, such as the 2017 RSW/US New Year Outlook Survey Report, the RSW/US 2016 Agency New Business Report, and the SoDA and Forrester Research’s May 2017 Global Digital Outlook Report confirm what I’ve shared here. If any of it sounds familiar, you can at least take comfort in the fact that you’re not alone.
Where agencies need to start
The majority of agencies must determine whether their service delivery operations still align with or optimally support the services they’re now providing or would like to provide. What they’ve developed to support traditional advertising campaigns and AOR relationships won’t be effective enough for project work and digital-first thinking. Agencies need to reassess the following:
- Their business model, service offering and pricing strategies
- Their organizational and team structures
- Their management practices and workflow processes
- Their client retention and account growth strategies
- Their measurement and innovation programs
And that’s just the start. Agencies that rise to the top will reorganize not just for today’s environment, but for adaptability around whatever the future holds. We know it holds this: A need to change at the rate technology evolves with a keen understanding of how that technology impacts consumer behaviors and the surrounding world of marketing and communications.
What agencies need to change
They need to emphasize long-term organizational planning less and emphasize agility, continuous incremental improvements and experimentation more. Agency principals who adopt the latter will be better equipped to lead their organization through any changes that future markets demand. They’ll be able to do it faster and with minimal costs compared to the competition.
Their best practices.
As the industry has evolved, so too must the ways agencies service their clients, scale their business and compete in the market. Unfortunately, agency principals who don’t make these changes or who are still new to this way of thinking may not see the path to improvement until they’ve already endured avoidable costs for their business.
They need help uncovering their operational blind spots and identifying the best opportunities for the quickest benefit to the agency. To create internal consensus around what’s been working, what’s not working and a vision for change. To create continuous improvement and goal-setting programs that ensure the agency maintains its momentum and reaps the benefits.
The future for agencies with an appetite for change is an exciting and profitable one.
If this post resonated with you, or if you’d like to learn more about how Lodestar helps agencies, drop us a line.