After so much talk of transformation during a turbulent time, it felt like agencies would come out on the other side of the pandemic renewed and aligned with changing client expectations — so why do so many feel like they’re still frantically treading water?
David Van Schaick, founder of DVS Strategy and former CMO of The Marketing Practice, has the answers.
‘A lot of agencies are finding it tough,’ he says. ‘Budgets are being paused and delayed. It’s quite unpredictable what a client’s going to spend and when they’re going to spend it. So that’s creating more short term pressure. How do they adapt? [...] There needs to be some changes in how agencies think about and position their relationship with a client.’
Until now, most marketing activity has typically been a simple partnership between an in-house team and one or more agencies. But this is increasingly no longer the case.
Warning: proactivity required
You don’t have to look far to find agencies embracing new commercial models. Many large agencies are consolidating and uniting different disciplines in a bid to appeal to big-ticket clients like Cisco or Intel — Just Global (formerly Just Media) and Merkle B2B (formerly Merkle DWA and Gyro), for example. But what should those without such broad reach be thinking about?
David believes that changing how an agency’s activities generate money plays a key role in the path forward. ‘An agency’s incentive will often typically be to do the work on time, under budget if they can, and get to the next place of revenue. Whereas actually that’s just going to create an incentive to do things faster and cheaper.’
‘There’s a lot that can be done there with technology and so on, but a lot of agencies are going to have to think about how to shift that focus towards value. And I don’t think clients are going to do it for us. So the agencies have to be making those first moves.’
Is production the problem?
The trouble is that marketers can find themselves stuck in the endless cycle of production, instead of being accountable for that value creation.
It’s a common pattern, and many feel the traditional pitching model is to blame, in which agencies do their best thinking up front, give away their most valuable ideas for free, and then get paid to deliver the lower-value work surrounding the campaign.
It’s particularly tricky when your main point of contact at a client isn’t accountable for value creation on their end either. The temptation to go over their head and get more involved with the business looms large, but circumnavigating your contact is a dangerous game unless you establish a legitimate way to have those conversations.
‘You’ve got people like Accenture and some of the bigger agencies coming into this B2B consultancy space, and they’re going to have those relationships at the senior level, so they’ve got an advantage there,’ says David.
‘But I have seen some of the big network agencies set up, for example, separate consultancy arms so that they can have a different kind of relationship, at least in the early stages when those two conversations are too hard to join up.’
It ain’t what you do, it’s the way that you frame it
So, how can smaller agencies go about tying themselves to client success rather than outputs when there isn’t yet a solid commercial model that rewards procurement, clients, and agencies for creating value together?
‘I think one of the areas that they need to look at is how to shift away from [being] capability based. [People say] “We’re a creative agency”, or “we’re an ABM agency”, or “we’re a performance agency”, and some of those will continue — and that’s fine,’ says David.
‘But if your ambition is to talk about value creation, be part of that bigger conversation, and think about different commercial models, then you need to start framing yourself as a specialist in delivering certain outcomes. Perhaps, instead of ABM, which is quite downstream from the conversation, ask “How are we helping to improve the deal quality in a business?” Win bigger deals, entry into new markets, drive market penetration.’
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