How to excel as a future-proof agency

Brands simply don’t buy the traditional agency business model of creativity and advertising. Above-the-line and below-the-line have flat-lined. Just like any other industry has before, agencies need to rethink their strategy and business model.

The five characteristics of highly successful agencies have been created based on year-long experience with all types of agencies and numerous talks with C-level directors of agencies throughout Europe, who first-hand experienced that transparency and accountability wiped out the traditional agency model.

Did we miss characteristics or could you add elements to the model?

Five characteristics of highly successful agencies
Five characteristics of highly successful agencies

Successful agencies focus on the customer and the goals. Creativity in combination with technology is utilized to exceed targets and revenues come from a wide array of services and products.

1. Technology

Breed and nurture creative nerds
Breed and nurture creative nerds

Technology and data have changed, but not replaced, creativity. A successful agency is the agency that embraces technology and uses the power of data to find new perspectives on creativity and engagement. This of course has an impact on the structure of the agency, the key staff and the embedment of the right technology. The agency that successfully integrates technology, will be the one that brands will go to for advice on new marketing possibilities.

2. Creativity

Is there magic in data?
Is there magic in data?

Creativity has always been the asset of an agency, but this monopoly is changing. Data, marketing automation, storytelling and crowdsourcing all are essential developments impacting agency work.

Is there magic in data? Or is it something that kills creativity? Personally, I think that technology and data fuel creativity.

Because technological possibilities are endless and the pool of data is ever-expanding, we might have stumbled upon the fountain of youth for agencies.

Agencies can take a business process and automate it for a company, which is marketing in its own right.

Consumers today demand authenticity, expect to be heard and take everything in their own hands. If not, they can be brutal to a brand. Consumers are king and they know it.

The community can make or break a brand with its social voice and, when engaged, are a great way of increasing the reach of a campaign.

Sharing work online can generate leads and the crowd can create concepts for brands. As an agency you can choose to work together with industry professionals from your own network, or consult online portfolio sites like Dribbble.com and Behance.net, but you could also use the power of the crowd by bringing a project to platforms like Zooppa, Poptent and Tongal.

3. Collaboration

Specialisation or quality decrease
Specialisation or quality decrease

Agencies used to thrive well by a full-service, one-stop shop approach to their clients. Technological developments, competition from lean start-ups and economic decline have forced businesses in any industry to rethink their right of existence. Jacks of all trades will never excel at everything they do and therefore lack competitive edge.

Brand owners need to justify working with agencies, therefore, not only you should be able to convince clients of your added value, your client needs to be able to sell your strengths internally as well. So better keep it simple.

Be it creative, strategic or technical, focus makes your agency end on top.

In order to improve company results, some agencies replace senior staff with juniors and try to get rid of overhead (like account management and project management). Eventually, this tactic is self-destructive for an agency.

The only way to be agile and offer full-service is to collaborate with specialists. Agencies with a strong network have been able to reduce employee costs and overhead, and proved to be more agile and adaptive to change.

When you work with the same people on the same type of clients every day, tunnel vision is imminent. By hand-picking the specialists per project, you ensure the best possible result for your client.

Collaborating with other agencies can give you an international reach, while keeping a firm grip on your local market.

4. Recurring revenues

Kill old business models
Kill old business models

Agencies can overcome the risks of revenues from projects only by developing more business from recurring revenues.

Marketing and advertising agencies are great at sales and marketing. For their clients that is, marketing for the agency itself most often is snowed under in other priorities.

When most of your revenues come from projects only, predicting long-term revenues is difficult. This makes investing in the business risky and thus it impacts the long term value of your agency.

Some examples of recurring revenues for agencies are:

1. Revenues from licenses

2. Revenue sharing

3. Subscription services

4. Commission

5. Scalability

Scalability
Scalability

Internet has made the barriers of country borders and different languages irrelevant. Imagine the unlimited potential of the world as your marketplace. And back to reality: now think of your biggest limitation. Scalability, right?

Take a look at companies who have had the lack of scalability since the middle ages: manufacturing companies. For them, scalability was introduced during the industrial revolution. Assembly lines were implemented in the early 20th century and machines took over a lot of the hard work. In quite a lot of cases, manufacturing companies had to focus even more, because product design got disconnected from the actual production, think of Nike for example. Today, the sales for manufacturing companies has been scaled too via online platforms like Alibaba.com, so the manufacturing company can do what they do best: manufacturing.

Ironically enough, agencies have traditionally been servicing manufacturing companies as their clients. Just think about it: Nike, Coca Cola, BMW or Burberry are all in manufacturing and have adopted the economies of scale.

In order to become a future proof agency, as a marketing agency, now it is time to focus on what you do best and make it scalable.

Agency work can be scaled for example by:

1: Outsourcing

2: Creating frameworks

3: Developing an ecosystem of agencies and technology providers

About the author

For over a decade Walter van der Scheer has been working closely with agencies from all over the world, supporting them with the optimization of marketing automation and implementation of new business models.

Follow Walter on Twitter (@wvanderscheer) and Google+.

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