Recently, we analyzed some of our new client wins, and, to no one’s surprise, several of our relationships had come as a result of partnering with agencies. Instead of competing at the same trough for marketing dollars, we joined forces to win new business that neither SIGMA nor our agency partners could have won independently.
And when you think about all the changes that are happening in marketing services, this team approach makes perfect sense. The dramatic shifts caused by fragmented media and social computing are changing the way marketers use agencies. New skill sets are being sought, and often times, they cannot be found in one place. This post contends that agencies, especially independents, can partner with the right technology and analytics firms and compete head-on with the larger agency networks which have used acquisitions to broaden their marketing capabilities.
The Agency Model Is Broken
Last year, Sean Corcoran from Forrester Research (www.forrester.com) wrote in “The Future of Agency Relationships” that “Agencies continually reinvent themselves to serve their clients – they have to quickly adapt to changes in marketing strategy, media, technology, and society.” Let me first spend some time describing the driving forces behind these changes. My doctor says that a good understanding of the symptoms can shed much light on the prescription.
- Marketers are befuddled. The demand for new and more technologically-based services has confused many marketers. It is very difficult for them to distinguish one set of capabilities from another. Just last week I attended the annual DMA conference in Boston, and it struck me how many of us look and sound alike. It’s no wonder that the agency model is breaking when clients can’t distinguish who does what.
- Technology and social computing are changing the landscape. In the course of history, each new medium has re-shaped how agencies do business. For example, newspapers in the 19th century, television in the 1950’s and the Internet in the 1990’s all created new paradigms for agencies. Social media and continued digital advances are creating another wave that will cause agencies to investigate new competitive models.
- Marketing strategy is rooted in new capabilities. Branding was the key driver for agencies in the recent past, as clients wanted to engage more with customers on an emotional basis. The importance of digital channels now puts a premium on direct marketing practices over mass media targeting.
- The agency/client relationship is fundamentally altered. At one time, agencies were envied because they “had a seat at the table.” Major strategic and marketing decisions were made with the agency as a key member of the team. In the last decade, this preeminent position has been eroded because clients, in an effort to minimize fees, started to consolidate agencies, use purchase orders, negotiate with procurement departments, etc. Marketers must now manage a group of agencies, often working at cross-purposes, rather than a single point of contact.
Team of Record vs. Agency of Record
Agencies have long sought the coveted “agency of record” relationship, but the changes described above are making this more difficult to obtain because of the abundance of new skills required by the changing marketplace. These skills can be obtained by partnering with select companies that bring desired skill sets. For example, wouldn’t it be better to partner with an analytics firm that has dozens of statisticians and analysts versus hiring one person internally at the agency? The breadth and depth of skills would likely satisfy more client needs than an independent agency could muster with the addition of one or two analysts.
At SIGMA, we’ve partnered with agencies on many occasions and, to be honest, sometimes it has worked and other times it hasn’t. However, I still believe that if the right partners are selected and a proper working relationship is established, then the team of marketers can provide solutions sought by clients in today’s market. If you think about it, this is what the large agencies have done through acquisition. They’ve developed networks of skill sets that can be sewn together to create complete client solutions. In short, I believe the term “agency of record” is dead and a new one — "team of record" — will take its place.
Here are some tips on how to make partnering work:
- Rethink your mindset. In our experience, we’ve had to make a cultural shift where the agency is now our client and not the ultimate user of our services. On the other hand, agencies need to recognize that they can’t handle everything in-house (especially data and technology).
- Assess the cultural fit. This should be a long-term relationship and not one for a specific opportunity. Team members must have a good cultural fit, a thorough understanding of the client’s business, and proven track records.
- Test the partnership idea. A good way to start is to pick a partner(s) and test them on one client. It would probably help to use a more tolerant client for the guinea pig as there will be some inevitable hiccups.
- Devise ground rules. Get as many details ironed out in advance. Who will talk to the client and how will they be portrayed (as part of their firm or “white-labeled” as one of your associates)? Make sure all the billing details are agreed upon, such as who will do the billing and what the terms will be. Create a way to brainstorm new ideas since this is one of the key benefits to the team concept.
The competitive landscape is changing quickly. Independent agencies and marketing services providers must work together to provide seamless solutions to clients. Large agency networks and technology companies are making significant competitive inroads and partnering is one strategy for countering their success.
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