For marketing agencies to survive, they must start looking more like the consultants.
This is one of the bigger themes that seems to be cropping up lately in the marketing industry. It’s happening for a bunch of reasons. There is a large push from brands to develop in-house marketing capabilities. This is not only a smart move, but a strategic one as well. For years, marketing was seen not as a profit centre, but an expense. Marketing was the place where the business went to spend its dollars on getting attention and acquiring customers (beyond sales). Now, it seems like many businesses are (rightfully) following the sage thinking of management legend, Peter Drucker:
“Because the purpose of business is to create a customer, the business enterprise has two-and only two-basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
While Drucker didn’t say this yesterday (it happened long before then… around 1954), businesses are realizing just how important marketing is, and how – when done right – it can be the difference between a commodity brand and something that looks a little closer to Apple.
So, what value does the marketing agency bring to the mix?
There is no doubt that the marketing business is facing challenges. There is no doubt that agencies are faced with mass consolidation, as the major holding companies need to feed their engines of growth (look now further than us. Our agency, Twist Image, was acquired by the largest holding company, WPP, in 2014 and rebranded as Mirum in 2015). Our reasoning was driven by a competitive marketplace, and the need to add products, services, geography and more to ensure a future of growth and innovation. In this world of consolidation, the major accounting/consulting firms (Accenture, Deloitte, etc…) have begun to offer marketing and communications services, while also acquiring several agencies to bulk up at speed. Those who have been exposed to both sides of the consulting and agency space are keen to have these ad agencies look much more like consulting operations.
This begs the question: were agencies not offering consultative services before?
Some might argue that the difference is that consultants offer business solutions that results in serious business growth, while agencies have been relegated to providing production and media services that only create a place where attention is served. Some might argue that a consultancy is about the people that the brand hires, while agencies have been relegated to the things that the brand is buying. What’s missing is another truism: consultants tend to be led, hired and directly engaged with the CEO, while agencies tend to (sometimes) work the CMO or – more likely – a director/manager level professional in the marketing department. Consultants have such broad scopes of work, that being able to “produce” and not just “tell” a brand what they should be doing is a logical and strategic business play, as these massive consulting firms also need to show growth and future-revenue opportunities.
Agencies have always been consultants.
Maybe not every agency, but the better ones (that most of us know, love and respect). The better agencies have always supplied brands with the right people, able to not only do the work, but have the experience from previously working with a competitor, or working on a brand that sells to a similar audience. Agencies have been working (tirelessly) to invest in their people, teams and knowledge. Agencies have always been a strong partner to the marketing department (and others in the organization, when given the chance). Unfortunately, in recent times, procurement and other business issues have forces agencies to act more vendor-like. While it’s easy for the consultants to point this out as a core problem, this change was not created by agencies, but rather by large brands in an attempt to commodize and drive down the cost of marketing. Consultants may not feel this now, but they (eventually) will.
Being more than an agency that answers to a creative brief.
In a perfect world, agencies would do more than answer the creative brief. Now, internal marketing teams need to validate their own jobs, salaries and roles within the organization. The shift from a few mangers handling the relationship with the agencies, to internal marketing professionals working to optimize the agency’s role (while validating their own) is a reality. It’s not that agencies have not been acting like consultants for a very long time, it is that the world is changing. Brands have very different marketing teams than they did years ago. Brands are looking for ways to save money – each and every day. Consultants are doing their best (at the CEO level) to ensure that all output of their work is billable within their own organization. Agencies, are being brought in through procurement and managed through one department (the marketing one) within the organization, without a relationship to the CEO. Smart agencies still get it. Smart agencies still are hyper-consultative. Smart agencies look more like business solutions organization than a production facility.
It’s not that agencies are not like consultants. It’s that consultants have a vested interest in making a brand believe otherwise.