RIP: 20th Century agencies

April 22nd, 2010     by ddeal    

mad-men-2

This blog post comes to you from the Forrester Marketing Forum 2010, where the theme is adaptive marketing.  During a break-out, Analyst Sean Corcoran discusses the changing agency-client relationship.

Sean asserts that the 20th-century agency model is dying.  Agencies focused on one-way advertising are passing away in an era when marketing has become tantamount to a two-way customer experience.  That said, history has shown agencies have always adapted, such as the transition from print-based to TV-driven advertising.

And agencies are now entering an era of adaptive marketing — a time in which consumers are empowered, social media is mainstream, and marketing has evolved from push- to pull-focused.  During the adaptive marketing era, marketers are taking advantage of media addressability and more effective data-driven decision making.  According to Larry Flanagan, CMO of MasterCard, “We are moving from decades of push strategy to a more holistic 360 consumer strategy.”

Agencies are struggling to adapt to this new era for many reasons. Among them:

1. Agencies are focused on campaigns rather than experiences.
2. They can talk but are not very good at listening.
3. Agencies are build for waterfall approaches to idea development instead of a more iterative approach.
4. Agencies treat customers as audiences rather than participants.
5. They are mostly “unbundled” — creating disparate skill sets.
6. Agencies have trouble mastering many new specialties at once.
7. Co-creation has torn down the creative wall.
8. Agencies have moved down the value chain and rarely distinguish themselves from each other.
9. Agencies can only move as fast as their clients will allow.

Meantime, marketers do not trust traditional agencies with digital, and interactive agencies often struggle to differentiate.

Which is all to say that no type of agency is perfect for the new era.  As a marketing leader from a healthcare firm told Forrester, “No one agency does it all well.”

So in an era of adaptive marketing, what do agencies need to do?

First, think of themselves as idea providers — ideas that can drive the creation of great customer experiences.  And ideas that are generated in iterative fashion.

Agencies also need to understand that interactions will drive future marketing success.  Paid media is shifting from the foundation of campaigns to the catalyst of experiences.

Finally, agencies need to become more intelligent — as in relying more on analytics to drive customer insight.

Among Sean’s predictions are that the interactive agency of record will disappear.  Some will become lead agencies; some will continue to be specialists; and others swallowed up by others.  So it’s decision time for interactive agencies: become a lead agency or become a specialist.

Meantime if you’re a marketer, Sean says it’s important to get your own adaptive marketing house in order before you think about your agencies, among other recommendations.  For more insight, contact Sean on Twitter or scorcoran@forrester.com.


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  1. 11 Responses to “RIP: 20th Century agencies”

  2. By Mark Fairbanks on Apr 23, 2010 | Reply

    David, Very good post. One of the most important things Sean said is in the last paragraph. “Get your own adaptive marketing house in order…” Those of us on the agency side read a lot about what the future agency will look like. But honestly, we need to figure out what the client marketing department of the future will look like. The question is, does that need to become clearer before traditional and digital agencies settle into models for the 21st century?

  3. By David Deal on Apr 23, 2010 | Reply

    Good question, Mark. Based on my perspective from Razorfish: I think agencies need to push our clients to change rather than wait for them to do so. One way to do that is to draw attention to the clients who do practice the kinds of internal innovation that Sean urges (via case studies, PR, and social media). What do you think?

  4. By Uwe Hook on May 3, 2010 | Reply

    Anytime so-called experts talk about the future of agencies, they tend to forget the people agencies are supposed to serve: People that will buy the product. It seems Sean answered the wrong question perfectly.

    The real question is, how will advertising and marketing look like in the future? Will advertising become a pure demand creator, focus on developing platforms to co-create and collaborate with people? Will Marketing go back to its roots and focus on Customer Service and ensuring that people spread the message about the company? And, most importantly, will people take control of their own data, engaging brands on their needs, not the needs of a brand.

  5. By Sean Corcoran on May 7, 2010 | Reply

    Great synthesis of the research and the presenation David. I think Mark’s point above is right on as it is up to marketing leaders to drive this change (and that is why we targeted the research toward them). As for Uwe’s comment, I believe that is right on but to provide full context, our research started with defining “adaptive marketing”, which is our take on the future of advertising and marketing (see more here: http://adage.com/cmostrategy/article?article_id=143729). The point of this research is then to frame up the role of agencies in that world.

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