Forget 'The Agency of the Future.' Fix 'The Agency of Today'

The Agency of the Future remains a perpetual possibility only in a world of speculation The hard facts of the present argue that it cannot be achieved Not enough is being done to fix The Agency of Today Instead The Agency of the Future will emerge as a weakened version of The Agency of Today amp8211 even more underpaid understaffed with junior people relegated to execution rather than partnership developing too many nonstrategic deliverables competing with inhouse agencies trying to prop up holding company margins and downsizing whenever income or profits are threatenedDownsizings and cost reductions have been the quotstrategies du jourquot for the past two decades weakening agency capabilities while clients39 brand challenges have grown enormously The Agency of the Future cannot emerge magically from the selfdestruction that downsizing and now COVID19 has wroughtIt isn39t as if agencies have failed to innovate or change They shifted from commissions to laborbased fees globalized their operations embraced digitalsocial media disciplines adjusted to the loss of AOR responsibilities continued to fight handtohand combat with procurement and significantly increased their new business pitching activitiesThese were tactical rather than strategic innovations though and wars are lost through tactical maneuvering when strategic matters are ignoredStrategically agencies failed at pricing and pricing is fundamental and strategic Agencies allowed their clients to grow scopes of work and simultaneously cut fees The mathematical result is a decline in the price of agency services Price equals income divided by output Income declined and outputs rose Price for agency services has declined by 50 in constant dollars in the past 20 yearsPrice is the ultimate measure of value in any industry Consulting firms are proud of the fact that they have maintained their high industry prices for more than forty years marking up their highly paid people at a 5x6x multiple of salaries Agencies by contrast have seen their multiples drop to 20x22x the relatively weak salaries of their people Agency prices continue to head south due to management inattentionDefending and enhancing the price of agency services has never been the priority of agency senior executives One finds scant evidence of priceenhancing discussions anywhere in Agency of the Future action plans or in the trade press If agencies and clients really valued agency creativity they39d pay premium prices for highly creative agencies and work This is simply not the case except perhaps in the case of Wieden ampamp Kennedy who are wiser in these matters than most namebrand agenciesPrice has not been a genuine concern of senior agency executives leading to the development of corrective action plans Executives grumble about fees of course but little is done to create or negotiate price premiums Instead agency executives harbor the continued belief that creativity and new business wins are the key factors to create business successWell the evidence is that the Agency of Today has downsized itself into nearirrelevance for its clients and COVID19 has only accelerated this process Instead of strengthened Agencies of the Future on the horizon we39re more likely to see strategic InHouse Agencies of the Future dominating the competitive landscapeIt does not have to be this way The crisis of the present can be used by agencies to engage their clients in serious discussions about scope of work size fewer but more effective outputs and new ways of paying for services by deliverables not by guesses at manhours For this agencies need to document and measure their outputs which they do not do and engage in serious negotiations to align fee income with workload outputsThis is Management 101 stuff though and it lacks the sex appeal of winning creative awards and gaining new clients who last only a few years in any caseIt39s time for agency CEOs to take a sober look at what has actually been achieved over the past few decades amp8211 not in technologies mastered not in awards won but instead at the depressed level of salaries paid at the staggering amount of work that is being demanded and at the inadequate skills that agencies are left with to solve their clients39 brand problems Downsizing has eroded agency capabilitiesAgency of the Future plans must begin with a recognition that current agency operations are a shipwreck amp8211 but if this is acknowledged then some serious planning can begin The first job for lifeboat survivors is to take a navigational fix Where are we now What course must we sail How long can we survive The captain must lead the lifeboat to safetyWatch Michael Farmer39s Leadership Conversation with Jack MyersPhoto credit James Stevenson The New Yorker The Cartoon Bank With permissionClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

APPLY FOR JOBS | SUBMIT YOUR RESUME | REGISTER FOR FREE MEDIAVILLAGE CONTENT

Forget 'The Agency of the Future.' Fix 'The Agency of Today'

Author

Publish date

Channel

Michael Farmer

APPLY FOR JOBS | SUBMIT YOUR RESUME | REGISTER FOR FREE MEDIAVILLAGE CONTENT

Forget 'The Agency of the Future.' Fix 'The Agency of Today'

Enjoying This Commentary? There's More to Love

Michael Farmer

Cookies