At our event ‘The Evolution of The Agency Model’ we took a look at what is driving client-side changes and delved into how agencies are responding to this. During the second panel of the morning we started to unpack some of the different agency models we’re seeing in the market as well as what agencies need to do to embrace change. Here are some of the takeaways from this panel, hosted by Matt Dyment with guest panellists:
- Caroline Johnson, Director, The Business Model Co.
- Tina Fegent, Procurement Consultant and Director
- Jim Hawker, Co-Founder, Threepipe
With the agency landscape increasingly fragmented it makes it difficult for marketers to know what they need, as well as what they’re buying. In this complex environment brand-side marketers are searching for clarity around what agencies can do, what models they work to and their ownership structures.
On a mission to better understand this landscape, Procurement Consultant Tina Fegent, joined forces with The Drum to map the agency space and as a result pinpointed over 20 different models of client-agency engagement. These ranged from full-service collectives to in-house agencies and more bespoke freelancer-based collectives.
Speaking on the second panel at our event, Tina said that she was shocked by how many different models they uncovered, and acknowledged that there are probably even more out there.
In this oversupplied market, Tina said that there is a great opportunity for independent agencies with many clients bringing more indies into the mix for the power of their creativity and ability to ‘shapeshift’ the way they work together.
Caroline Johnson, Director at the Business Model Co, agreed with Tina saying that agencies need to make shapeshifting the continuum. “Agencies should be changing all the time and normalising the concept of change internally within the business,” she said.
Caroline has worked with leading independent and network agencies to transform their business models and said that at the moment she is seeing a lot of pain on both the client- and agency-side. “Everyone is feeling the pain of declining revenues and declining margins, especially with the pressure to invest in more, and better, talent. The truth is, we have gone through the tipping point of change, and now we’re coming into a time of renewal,” said Caroline.
She said that this new phase or renewal provides a very positive opportunity for agencies, “Clients are actually asking for new models, flexibility, new ways of working and new pricing models. For the first time you are genuinely swimming in the same direction,” she said.
The process of change
Speaking about his journey of transforming his agency, Threepipe, Jim Hawker talked about trusting your gut when it comes to evolving your agency model, saying that a lot of the changes he has implemented have just felt right to do at the time. The journey that Jim has embarked on was centred around merging and creating products which allowed the agency to change quickly without absorbing a lot of risk.
Jim has wholeheartedly adopted the ‘shapeshifting’ approach saying “we have been really flexible and have adapted a “f*ck it” mentality. We go out and try something and try to make it work. It is doesn’t, then it doesn’t,” he said.
This approach doesn’t come without it’s challenges with Jim saying that for many years he felt that the agency was moving too quickly for clients which frightened some clients off. But a lot has changed over the last couple of years and clients are now much more open to change and to working together to uncover new ways of working.
Change through the eyes of procurement
A question from the audience shone the light on procurement, particularly around procurement attitudes towards new client-agency models. Our panel agreed that with so many agencies still pricing on time, as an industry, we’re not helping ourselves. However, there is change that needs to happen on the client-side as well, with many big brands still conducting unnecessarily complicated, expensive, often procurement-led, pitch processes.
Tina spoke about how clients can be risk-averse to testing new remuneration models such as equity share. Although with so many different models available, Tina recommends that agencies thoroughly research different models and familiarise themselves with the IPA guide on remuneration models so that they can flex and present options to find the sweet-spot with clients. One-size will not fit all.
All of our panellists agreed that in such an over-supplied market, it can be hard for agencies to balance the cost of talent and delivery while remaining competitive on price. One way forward is to ensure you have the marketing team, procurement and yourselves in one room to work together to build and structure a commercial proposition that works for everyone.
We ended the conversation with some words of wisdom from Tina, saying that agencies should be brave enough to say no. The only way we will make progress as an industry is by forcing innovation and creativity in this area.
Quick wins for change
While there’s no secret weapon, our panel shared some tips to help bringing about change:
Change the conversation, change the game – If you find yourself consistently re-pitching for existing clients, add up the true cost to pitch to you and take this to them to talk about a new commercial proposition. As an alternative, you could co-invest that budget you would have spent pitching with the client matching it and use this fund to invest in innovation, testing new concepts and growing together.
Become a master of change – There is a real opportunity for nimble agencies to adapt new pricing models based around productisation. Some agencies are guilty of not being on suitable models for their services, look at tech and consultancy models for inspiration and try to find the right fit. Different rules apply outside of the agency world – take inspiration to adapt.
Don’t get stuck mourning the loss of retainers – Caroline Johnson spoke about the shift from retained work to more project-based work and highlighted how this is in-fact a positive move – “Projects are actually better than retainers, retainers are all you can eat,” she said.
You have to find a way to monetise your strategic talent – Invest in commercial, creative and strategic people and seek help from experts outside of the industry to help you navigate this change.
It’s time to call out the crazy – The biggest thing all agencies can do is to back themselves and their models and learn when and how to say ‘no’.