An Emerging Agency OS – presentation from Google Firestarters 3

28Sep11

Below is my talk in summary and the slides.

There were some excellent builds on the ideas, which I will write about shortly.

Thanks to everyone who added ideas in the ‘unconference’ discussion and pub afterwards. So many good ideas. So much to explore!

 

An Emerging Agency OS

What’s broke?

-Our focus:

Outcomes have become divorced from outputs

Clients seek a profitable growth outcome, agencies seek rewards from a famous output

Clients like increased profit, agencies like making things

Consequently, clients don’t always value the same things as agencies do

Replacing a client with a new one easily costs £100k or more. Our failure to align is eating into our profit and morale.

-Our business model:

Agencies have two masters but only get paid by one.

Agencies are addicted to short term client cash whereas consumers offer an additional revenue stream.

Spend will slowly flow away from agencies to cheaper crowd and outsourced services. All areas will be affected, from strategy modeling, to production, to optimisation to ideas.

As marketing, products, services and media merge, agencies, with new partners, will be able to service consumers as well as clients.

What’s the need?

Client needs are simple:  Clients need Ideas, Innovation and (real time) Intelligence to power sales.

Agency needs are to attract best talent and to increase revenue to pay for that talent and any (currently lacking) R&D

-Talent: Agencies are full of inventive and productive people but servicing clients full-time undermines motivation. If they are to be kept in agencies, agencies will need to find better ways to fulfil them.

-Revenue: Agencies have loads of ideas but make too few. We can divorce ourselves of client only revenue by exploiting our existing ideas and engaging new partners to fund and develop our ideas to successful launch and customer revenue.

What are the trends?

Two agency types are emerging – those that value outcomes, and those that value outputs:

1) Outcomes agencies will worship effectiveness and will be built around the client’s business. They will become convergence consultants to deliver Ideas, Innovation and Intelligence (from any source) to grow client profit over time.

2) Output agencies will continue to generate big ideas, they will create fame for clients but will also develop new revenue streams for those ideas from direct to consumer products and services, thereby beating their addiction to short term client cash

All agencies need an AgencyOS – a data driven platform and structural/organising principle to deliver real time insight, development and optimisation.

The most successful agencies will deliver both ideas and effectiveness. But those will be rare as the increase of channels and approaches continues.

Implications

1. the agencies closest to the data will lead their agency partners and will gain new business The most successful agencies will combine both talents in equal measure.

2. in client organisations, the older generations will cede control to younger managers investing ahead of the curve for the real time and digital future that’s unfolding. This will come too slowly for some. Those that don’t answer customer’s immediate needs will quickly lose customers.

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6 Responses to “An Emerging Agency OS – presentation from Google Firestarters 3”

  1. I really wish I’d made it down last night, followed on twitter and got just a taste of the interesting and thought-provoking stuff in the air.

    Something fascinates me in the notion of “Agencies have two masters but only get paid by one”… something around how many shareholders an idea/work/output can satisfy.

    If you are the shareholder of an Agency group, you want work to be as profitable as possible – in this day and age that means easy-to-repeat, easy-to-manage work.

    If you are the shareholder of a client company, you equally want the company to be profitable, which in the short term means less outgoings on costs (eg marketing/agency costs are easy to cut) compared to what you’re selling.

    Basically speaking, the communications work perhaps has two masters, in the shareholders it reports to, both of whom drive it towards short-term, minimal investment mode.

    Which, perhaps, leads to an interesting variation on the prisoner’s dilemma (http://en.wikipedia.org/wiki/Prisoner's_dilemma).

    If the client moves from short term to long term thinking, and the agency does not, then the client overpays for the same, bog-standard work (as the agency doesn’t gear up in the way it says it would, yet still gets the reward). Client gets 0, agency gets +10.

    If the agency gears up first, then tries to persuade the client to pay for better, more long-term work, the client is then likely to turn around and say ‘very nice, but I only am prepared to pay for this…’. EVEN THOUGH they will benefit from the agency’s investment in work. Client gets +10, agency gets 0.

    Now, if both client and agency committed to proper, rewarding long term work, then I have no doubt both would prosper immensely… let’s say they both are rewarded with +5. Which is, year in and year out, a healthy reward.

    But that fear of losing in the short term, of receiving 0 if the other party doesn’t join them, forces both agency and client to retreat to short term thinking. Both receive a payoff of +2. It’s not amazing. It’s short of what they could get if they both cooperated.

    But the lack of trust between organisations means by and large they can’t rely on the other’s motivations. So they both retreat to short term positions, as it’s the logical way to maximise your return without relying on the other party.

    (sorry, I think I have overly commented……)

  2. Very interesting points! What you forgot to mention however is the importance of good client service people.

    Having worked both in client side as well as agency side (yes I might be slightly biased), I must say that a good account handler is priceless what comes to retaining the client. In the end they are the ones facing the client and If they are efficient, strategic and very likable, there will be an emotional bond between the client and the agency.

    It is very difficult to loose a happy customer and the client stays happy if you gain their confidence and listen … and of course if the client likes you it is easier to calm them down and explain if a “disaster” happens.


  1. 1 Google Firestarters #3 – the new OS for agencies « see what happens
  2. 2 Google Firestarters: The New Operating System For Agencies « Curiously Persistent
  3. 3 Google #Firestarters 3: Building A New Agency OS « BBH Labs
  4. 4 Staunen | NeueWerbung

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