Is the current agency model a joke?

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Zoe Dunn
Zoe Dunn

As an agency veteran myself, I feel mostly qualified to critique the current agency model. There are so many talented professionals who work for agencies. But the client/agency relationship is dysfunctional, and we need to fix it! Ultimately everyone will benefit: clients will get more of what they need, agencies will be more profitable, the work will improve, and customers will have deeper confidence in brands.

But what is the best way to fix the problem? Simple. Agencies must get out of the strategy business.

The problem with strategy in the agency model: it's too self-serving. It's a built-in conflict of interest. Let's say you are a digital agency evaluating appropriate communication channels and tactics against your client's business objectives. It's impossible for you to recommend programs that are not digitally based. Why? Because you cannot fulfill on a print campaign, for example. So you bring your strategist to a meeting with the brand team and recommend a strategy that centers on, say, a mobile app. But is that really what's most effective for the target audience or best for the brand? Perhaps, but perhaps not. And either way, your view is limited.

And it's not just digital agencies. Big, traditional agencies regularly avoid recommending a small, targeted campaign like email because of the low margin. They can't bill much against an email template design, or a segmentation and content strategy plan, compared to a television ad. And email, while extremely effective for the appropriate brand and audience scenario, takes a lot of effort to manage, both internally and by third parties. If your agency doesn't specialize in email, then they won't want any part of it. There's simply too much risk that they will disappoint the client, and not turn a profit.

Another inherent issue is that strategy is typically a money pit for agencies: strategists are paid far more than many other roles. They are often billed out at up to three times the negotiated blended rate. So, strategists can't spend enough time with the brand: they can't work closely with the brand team or develop a deep understanding of the customer's needs. They're in and out, digesting what they can and spitting out strategic recommendations that their agency can actually execute on, versus what is really best for the customer and brand before moving on to the next assignment.

Brand teams are also held hostage. They are overwhelmed by their competing responsibilities to manage budget, partners, internal politics, and their own career growth. There is simply no way for the brand team to get a comprehensive strategic view, which makes it hard to show real ROI because each tactic has to be evaluated individually. Truly integrated campaigns are almost non-existent. And when it comes time for planning the next tactics, brand teams can become complacent because they don't know what to do next. “Let's just do what we did last year,” says the brand director, “and cut that underperforming search campaign (that wasn't strategically aligned to any other online or offline efforts anyway, causing it to fail miserably).”

What do I recommend? Let the agencies do what they are phenomenal at: creative and execution. And brand teams? Get back to your strategic roots. Over the years, brands have become too reliant on agencies to lead their strategy. Brands should take back control and lead the overall strategic effort to bring everything together so that when it's time to evaluate, optimize, and plan, there is a clear roadmap for agency partners to execute against.

Brands, does this sound too difficult? Think about this: with an agency leading your strategy, how many times have you built and rebuilt the same programs, often achieving the same results? How many times has your brand strategy been to connect the tactical dots instead of beginning with an integrated strategy that directly ties back to your business objectives AND your audience's needs? The current approach is not serving your budget or your customers well. What do you have to lose?

And agencies, before you panic, think about how much more profitable you would be without having to carry the strategy overhead, without struggling to constantly staff them and cover their costs. Win-win!

Brands, agencies - I welcome your feedback!


Zoe Dunn, a principal at Hale Advisors, has held senior agency positions at DVC Worldwide, imc2, and Sapient.
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