The Progression Of Agency Value

Over the past few months I've been working with the smart folk at Econsultancy on a project (in partnership with Adobe) to better understand the impact of digital technologies on agencies. A big reason for doing this is that, inspite of there being much chatter in the blogosphere on the future of agencies and the agency model, there seems to be a paucity of good research on how agencies are adapting to the many challenges brought by the rapidly changing communications environment.

As part of the research I interviewed a broad range of the great and the good from agencies across Europe covering many different types of agency including full-service creative, media, integrated, digital, and those that are more marketing technology focused (and incorporating the views of a number of well-known and respected voices in the advertising and media blogosphere). Importantly I think, the interviews also covered a broad range of job roles including agency CTOs, CEOs, Strategy and Planning, specialists, Heads of Innovation. The output is a 59 page report that looks at evolving agency behaviours and models, use of technology, differentiation and value creation.

As a key part of this, and in response to the feedback from participants in the research, I've developed a model for agency maturity in four key areas: data, technology, skills and culture. The overarching themes of this model are pulled together in a  framework that references the progression of economic value model derived from Gilmore and Pine's The Experience Economy (a HT to Richard Sedley for pointing me at it). Reapplying this to the context of agency maturity in approach to (and the use of) technology provides a useful framework for understanding the progression of agency value over time and the shift from delivering services, towards staging experiences, and eventually to guiding transformations for clients.

There are many themes that sit around this model, a number of which echo areas I've talked about here previously (agility of-course, structures characterised by small and nimble teams, the explosion of devices, touchpoints and data, the shift from one-way, campaign-driven mindsets to developing more participative experiences and longer-term platforms, the growing importance of earned and owned media assets). I look at what this means for the important stuff like how agencies work, the relationship they have with their clients, how they create value and differentiate themselves.

You may recall that towards the end of 2011, I did a big piece of research on client-side digital structures and resourcing (again for Econsultancy) which itself was a complex but fascinating project. So in many ways this is a companion piece to that, but focused purely on agency side. The common strand that runs throughout both pieces of research is the scale of change and transformation, and challenge but also opportunity, that was revealed on all sides.

You can download a free summary of the Progression of Agency Value report here, and the full 59 page report on the Econsultancy site.

Comments

[Hugh Anderson]

Excellent report. Very insightful. Should make a lot of people sit up and think about the future. One small question - why no PR agencies in the research, or are they included in 'direct/traditional'?

[neilperkin]

Hi Hugh. I didn't talk direct to any PR agencies as part of this research, although some of the agencies I did talk to have some form of PR that falls under their remit. Although the line between Media/PR/Creative is blurring, and PR could have well been included, we had to stop somewhere so looked to include creative, media, full service, integrated, digital, and marketing tech. It may well be the case that when we repeat/build on this research we'll include more PR

[John Cass]

Great report Neil.

One idea I'd be curious to hear your thoughts on, is this.. Have agencies been using the growing need for integrated digital marketing skills to partner with competing agenices to provide better ROI for clients?

In that while many agencies may compete broadly, they may in a client relationship provide only one key deep skill set to the client. As such it makes sense that the integration of services across digital strategies by agencies helps both the client and the agenices involved. More is done with less; 1 + 1 = 3 in this case.

I expect that you've seen brands encourage this sort of integration across agencies; for channels, strategies and technologies. But are you seeing such partnerships form between competing agencies initiated by the agencies despite those agencies competing with one another across their digital capabilities in the marketplace, but not with a client in question?

If so, does such a strategy increase the chances of gaining pitched business? Because its easier to convince clients there's greater ROI from integrating because the agencies are playing together?

[neilperkin]

Hi John. Whilst agencies seem more willing to partner up with other agencies that have complementary skillsets and capability, I didn't encounter many examples of competing agencies partnering up in the way you suggest

[John Cass]

Hi Neil,

Thanks for the insight. perhaps then this is where you have several agencies with minor roles with a brand. they have more incentive to partner.

[Nick Simard]

Great infography Neil, it does take time to build an effective strategy but the best part of it is getting out of the loop of Deliver services and Stage Experience.