You can’t even give it away – how agencies’ options are diminishing fast

I read this great summary of the habitual problem that many agencies face – giving away ideas for free and having to make their money on the production/implementation. But for how long will agencies enjoy this luxury of choice?

The practice has been going on for so long now, and the agency marketplace is so competitive, that it often feels like the only real-world option for most agencies.

Obviously the thrust of the article is quite rightly about the value of ideas and the effect of being recognisably differentiated on an agency’s ability (and confidence) to charge a fair rate for smart thinking. But the complementary – and arguably more pressing – issue is agencies’ ability to hold onto the production work itself.

This story from Adweek about Accenture illustrates things nicely – a great global win for TBWA but, realistically, where’s most of the client’s budget going to be spent? Exactly – with the good people at TAG.

But it doesn’t have to be this way.

Clearly the decoupling of implementation / production is nothing new in the UK, and we’re seeing it gain momentum in the US and other regions, but many agencies seem oblivious. Before long, it simply won’t be possible for agencies to ‘choose’ to make their money on production, as it simply won’t be part of the brief.

And that’s a pretty major spanner in the works for most agencies’ business models.

So we encourage the agencies we meet to take a different view. If losing that revenue isn’t an option and the prospect of competing on price with lower-cost production specialists doesn’t hold water, then consider moving the goalposts by using technology – specifically, by automating the adaptation and delivery of the work.

As we’ve said before, the decoupling sector is based on the same traditional manual production line that exists in most agency studios. Hygiene tools like workflow management and asset management help, but they’re really only marginal reductions in time and money wasted.

So the answer is to think more flexibly, intelligently and collaboratively about the marketing supply chain, for example:

  • how much should the ad agency do after the idea’s been created?
  • when should a talented Studio pick up the baton?
  • how can the adaptation and delivery of marcoms be automated?

Clearly this model will flex from client to client, but it’s a great example of how the creative application of technology can change the game for those willing to think differently.

It’s undoubtedly the way the production industry (and with it, the ad agency business model) is headed.

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