Dear Agency: It's Not About You


The business model of every advertising, marketing, and public relations agency is facing a number of daunting threats. That’s just a fact.

Still, many really good agencies keep analyzing their future success based on their own reputation of success, not the demand-driven marketplace for what they do.

If you’ve read any book about running a successful company, there is ample evidence a certain level of inward obsession is healthy. But success leads many communications agencies to grow far too obsessed with their own reputations, culture, people, and work. Many come to think of themselves first as “We’re the agency that [insert your agency's greatest hits].” They trade on that credibility to create demand and bring in clients.

The problem is not that this doesn’t work. It’s that it works really well for a short period of time.

It also most benefits the sunsetting careers of the agency’s founder or executive leadership team – the individuals who will cash out right around the time the agency realizes its model isn’t sustainable without that reputational currency. Almost all agencies stumble at that point. Not because leadership was so crucial to its survival. Rather, the outsized value given to those roles masked a reality the agency itself wasn’t as valuable as it thought it was.

If you’re an agency founder or leader reading this, that’s a harsh assessment to internalize. But internalize it you must. Because it’s really not about you and your agency. It’s just not.

Building and sustaining an agency this way papers over the need to be constantly keeping pace with what clients actually needed. Acknowledging that exposes a complicated tension between actually measuring an agency's raw performance and fuzzy growth based on the perception of success.

I’m not saying reputation and relationships aren’t crucial factors in every agency’s success. I’m saying it is given too much weight in support of an agency’s short-term success – at the expense of rigorously adapting for long-term relevance.

The Reality of ‘Eventual Irrelevance’

Agencies spend a lot of resources evaluating their success, growth and longevity. They will reinvent process, shuffle people, merge departments, and try to scale success through replication.

Fewer look externally at what’s driving the marketplace and are willing to accept the hard truth: everyone in this industry faces the same threat of irrelevance.

Relying too heavily on internal reflection often allows agency leadership to conclude things are in pretty good shape. They end up believing future success will keep up so long as they stay focused on replicating prior success.

Along the way, they are ignoring shifting dynamics in the industry and emerging client markets. Moreover, they discount the reality that today’s revenue streams are always in a state of change. They ultimately miss new revenue opportunities and dismiss radical changes in how human communication is becoming more effective.

In the interim, new agencies fill the void. These firms start stealing market share and attracting clients. By the time the old guard notices, it’s too late to change and catch up. Or worse, they catch up to the new way of doing things just as the market starts shifting again. It can become a constant state of providing something clients eventually realize they don’t really need.

Believing in an “agency-first growth strategy” is fairly common. It also leads to all kinds of systemic problems that eventually bring down great agencies. Pick up your local business journals Top 25 Agencies list from ten years ago. You’ll likely see many are gone, merged, or relegated to whispers about becoming “not what they once were.”

Like Everything, You Can Blame Amazon

Every agency today, whether they know it or not, is standing at the same precipice. The black void below is scary. It’s full of unknowns and it’s not clear what lies therein.

One thing is known: It’s not going to look like what we’ve modeled our business around for the last decade’s media consumers.

We are facing a kind of “Amazonification” of our industry. Clients often don’t need Agency of Record relationships. Things are becoming project-based and on-demand. Clients will work with a dozen specialized agencies all servicing overlapping needs. They'll call when they need you – and wanting a need met without a fuss. They will have their own in-house creative and implementation teams. They want options over ideas. Speed over strategy. It all has to be backed up with rigorous data and constantly trackable.

What impact does all this have on advertising and communications agencies?

Pricing. Clients have more agency options than ever. Like it or not, there are a thousand agencies that can do what you do. (Read that again: You are replaceable based purely on what you can do.) This is putting downward pressure on client expectations of what things should cost. They may want more for less. Many want less for less. This is because what they need is so specific and targeted, and they understand the bloat that often accompanies media plans or ad buys. Clients are asking for more transparency on why things cost what they cost and a demonstration it made any difference in moving the needle. The qualitative “Feeling Successful” is being replaced with a “Why-Did-We-Spend-Any-Money-There” request for data-driven outcomes and any agency re-investments. 

Purpose. What exactly is the role of the agency going to be? It’s time to rethink the notion of “an account” and the belief agencies should always be seen as their clients’ partners. Sure, this sounds nice. Honestly, what agency wants to be an order taker? The truth is, while there will be some agencies tasked with embedded partnership roles, the purpose of the agency is increasingly going to be fixed in solving a specific problem that may be entirely devoid of a strategic need. Strategy may be baked before your team is engaged. Your job will be to solve a specific problem and show how it was solved.

Services. Every agency pretty much offers the same general services. Yet many still focus their business development around pitching service offerings and capabilities. Tools, information, and analytics are becoming more valuable than that full-service mantra. What tools do you own such that I have to work with you? What consumer insight or analytics do you have that no other agency has? How are you alone able to reach my customers in a way I’m not even aware of? This means agencies might reconsider pouring business development funds into happy hours and networking forums. Start putting your energy into the creation of hard proprietary tools and assets that will knock out your competition or create an entirely client new market.

The hard truth in all this is that every agency has traditionally had access to the same level playing field. Anyone can get a billboard or air time or news coverage. But that’s changing. And it’s changing in part because fewer clients care about getting access to what agencies have always been able to gain access to. 

A big question in all of this is: Where exactly does the agency fit in anymore? That’s a question more and more of us are asking.

Those wanting to examine potential answers will be around to grab new revenue opportunities that will exist in a reborn New Agency Economy. Those who snort it off as not their problem because, well, right now everything is awesome?

Let’s check those business journal rankings in a few years.