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Why Some Agencies Are Dying

Guest Blogger: Geoff Livingston

Geoff Livingston, President of Tenacity5, recently attended my Managing Polygamous Clients presentation for the DC Ad Club, and he was inspired to write about the topic. Below is his blog post, which I'm sharing here:

I have experienced a crazy trend in the past six months, the client movement to have multiple and diverse agencies working together. Tenacity5 has already experienced five partnering deals with other agencies this year and it’s only July. I may have partnered five times total in the past five years preceding 2015. 

Sharing the revenue pie is not something most agencies do well. However, some agencies are suffering as a result. Others are dying. They cannot adapt to the new collaborative approach clients are demanding.

My friend Patrick Ashamalla sent me this year’s SODA Report (see the below chart), which showed that highly specialized players are taking a larger priority. Pair this with the the whole “agency of record is dying” trend and you have a movement.

CMOs don’t want to hire a generalist firm to execute their entire scope of work. It’s not reasonable to expect a one size fits all agency will do a decent job on all of activities in a significant scope of work. CMOs don’t believe agencies that say they can do it all. In fact, they find such claims suspect.

The Collaboration Economy

Corroborating this trend was Gary Duke’s excellent Wild Blue Yonder research presented to DC Ad Club last week. Gary dubbed this the Polygamous Client trend, and noted it is spreading like wildfire across the Fortune 1000. 

Those agencies who want to remain competitive need to become more agile, collaborative and highly specialized. Those who are not evolving and insist on the mass integrated marcomm agency role are shrinking.

“Agencies must take on a collaborative approach with other agencies because they simply don’t have any other choice today,” said Gary Duke via email. “It’s not only what clients expect — it’s what they demand of their agency partners. If it’s not in your DNA to play well with others in the sandbox, then you just better pick up your toys and go home.” 

Of the agency efforts I have participated on this year, some have been super fluid and one in particular was a disaster. And in that case the primary partner clearly wanted all pieces of the biz, was not collaborative or transparent, and ignored other agency/partner recommendations in spite of a clear lack of competency in some project areas. No surprise: The relationship and overall initiative blew up. 

The Nimble Agency of Now

Jeremiah Owyang likes to talk about Crowd Companies, businesses that share resources on the Internet. Well, the agency business has not quite devolved to that point, though you could argue that companies like crowdSPRING have eroded the bottom side of the market. 

CMOs want access to agencies or agency teams with wide spread resources, usually freelancers and other partners. That means an agency must work well with others, share scope, and bring on third party resources as needed. 

In essence, they want more nimble partners who have access to diverse capabilities. They want best of breed in every marketing function. Integration is still needed, but instead of it being under one roof, marketing organizations want agencies that can assemble or play with assembled teams that possess superior niche skill sets.

These are shared resources in many ways. That means integration is a result of project management instead of scope or overall billing. Project management across diverse creative assets becomes a necessary skill for the strategy lead. Duke hammered this point home over and over again in his presentation.

Here are some steps I am taking as a result of this trend:

  • Building a diverse agency partner network to refer and garner referrals
  • Doubling down on focus and expertise in digital content and platform creation
  • Avoiding services spread into areas that we are not good at, such as SEO, media buying, branding, media relations, etc.
  • Building stronger project management skillsets
  • Taking an adaptive attitude towards strategy, specifically be willing to drive or simply fulfill a role as needed.

Are you seeing a similar trend with your business?

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