Collaborate to accumulate
The nature of agency relationships, with each other as well as with clients, is changing as collaboration become vital to survival.
In the discussions at the Digital Leaders’ Briefing last month, the question of agency relationships poked through a number of times.
It’s a perennial issue, and one that seems to be broadly cyclical. A period of clients wanting to save management time by having a single lead agency managing all the others is followed, in better times, by a period where clients want to hand-pick the agency for each role and channel.
This is a generalisation, of course, as on one hand the history of the marketing department over the past 20 year has been one of outsourcing more and more to agencies, while on the other there will always be clients that subscribe the “right agency for the job” approach. Likewise there will always be individuals who prefer a single point of contact and others who enjoy playing the ringmaster.
Two things, however, are changing the nature of the discussion. The first is the growing emphasis on collaboration among agencies. The second is the hollowing out of the UK agency sector, which has seen the medium-sized independents absorbed into the big groups, leaving a small group of big multi-functional agencies and a long tail of small specialists.
This picture is further complicated by the question of what constitutes a specialist. What, for example, is the difference between a specialist search agency of 100 people, and a similar-sized search department within a bigger agency? How much is specialist status within digital marketing merely a reflection of how new the specialism is, as bigger agencies and groups wait to see how much resource to commit to the new channel?
But collaboration seems the most significant force. Speaking at the Briefing, Nicole Yershon, Director Innovative Solutions at Ogilvy Group Advertising, stressed the importance of collaboration as a source of new ideas. Her argument was that no business can be expert in everything, so having a wide network of collaborators is essential.
It’s certainly crucial for the big advertising agencies as they try to adapt to post-digital world. Having finally come to terms with the internet, they now find themselves having to rethink once more as the future looks increasingly mobile and data-driven. With their primacy under threat - as demonstrated by the recent acquisitions by WPP - drawing new expertise and approaches from small, agile specialist collaborators looks like the only viable survival strategy.
At the same time there’s still a lot of interest, particularly outside London, in developing clusters of small agencies; turning a disparate group into a community that benefits all its members and allows them to punch above their weight. The philosophy of such clusters was summed up by Jon Bains, founder of digital agency Lateral and also of a cluster in Shoreditch, as being a way to allow small agencies to compete with WPP. And with the hollowing out of the agency sector described above, the need for small specialists to collaborate in this way becomes ever more pressing.
The crucial point then becomes the business model. What makes collaboration different from simply sub-contracting out the stuff you can’t do? And if collaboration is based on ideas, how are they accounted and paid for?
These are questions that will have to be answered in the short to medium term. But beyond them there is the sense that, if and when the cycle starts to turn back in favour of the ringmasters, the balance of power may shift too. One of the things the big agencies bring to the table is access to clients. But if more clients are adopting the approach Jim Stengel lived by as global marketing officer at P&G, that he’d work with anyone as long as they were right for the brand in question, access to clients - along with size - might not command the value it once did.