Opinions

March of the Big Agency Dinosaurs: Adapt or Die

Posted by Bob Sanders on August 18th, 2014 at 12:19 pm

As the advertising industry becomes more segmented and specialized, the multinational full service agencies will face increased pressure from smaller, more nimble boutiques. There is growing competition from niche providers, more efficient in-house capabilities, and new-breed agencies operating in a more flexible, responsive and dynamic environment.

On the client side, their sweeping changes are impacting the agency world. Many clients have already made significant organizational and structural changes. These companies have cut costs, restructured, and transformed into horizontal, process-driven organizations to address the need for greater quality, lower cost, and increased speed. The old corporate hierarchy emphasized specialization by function. And the old school agencies modeled their structure after the client – a move to match. It was so easy. Today, clients are pushing coordination and communication among individuals across functions. The traditional agency structure will not serve this new client well. Agencies are forced to employ fewer individuals with broader skills as opposed to many specialists.

While agencies are struggling with how to successfully meet these challenges, they represent just a few of the realities facing the advertising industry today. All those big issues are somewhat abstract and long-term in nature and require the strategic planning skills of a leader with vision. While agencies need to develop a strategy, or a point of view for how they will address these challenges, our experience indicates that there are more immediate and substantial opportunities available by looking inward and taking care of business.

The message here is to take a serious, in-depth look at the way your organization operates. We’ve done just that for agencies all over the world and have found similar underlying issues time and time again. We’ve grouped them into four broad themes. See if you recognize any of them.

Four Major Operational Themes Big Agencies Must Overcome

1. The Heisman: This is the old-school, very traditional approach of keeping everyone at arm’s length, including the clients. This is the department mentality:  everyone is wrong except for my department. In this traditional approach “we want to build walls, make our department the best department, at the cost of all other departments.” Because of this, the management has to act as firefighters or referees, spending valuable time settling disputes between departments.

This mentality results in:

  • “Walls” being created, limiting communication and workflow
  • The creation of an entire function that does nothing but facilitate communication and workflow: project management
  • Turf battles between departments, wasting time and money
  • Lack of focus on client needs/success
  • Little incentive for agency staff (other than account service) to learn the client business
  • Little client interaction with the “rest” of the agency, including senior management
  • More likely to develop vendor type relationships

2. The One Track Mind: The traditional agency employee has a tendency to focus on one discipline. Account service builds their presentation skills, media focuses on media, digital builds websites, and creative builds their books. The least appreciated people in the agency end up having the best understanding of the full scope of agency operations: project management and admin. This results in a lack of knowledge about true “integrated” agency capabilities and limits awareness of client work across the agency.

For the agency, this results in:

  • Ideological differences between functions
  • Lack of understanding, lack of cooperation between functions
  • Limited thinking
  • Compartmentalized thinking
  • Missed opportunities

3. Creative by Review: Most agencies lack quality assurance that is built into the overall creative development process. The focus is typically on the final product, the output, not on the upfront input, initial direction, or the process steps in between. Typically, a department will receive the direction but not all of the information. They will then proceed to work in a vacuum until the missing information rears its ugly head. How often do agencies have to go back and redirect the effort of the creative? Or revise a new business pitch at the last minute?

This results in:

  • Constant review cycles
  • Off-strategy concepts
  • Numerous errors and typos
  • Rush charges
  • Wasted time and energy

4. Status Quo Thinking: Too many agencies underutilize their resources. Many agencies could, in effect, get a bigger bang for their buck. By relying on outdated processes, not embracing technology, maintaining structures that have been around for 80 years, agencies are struggling to keep profits high.

The following signs are good indicators of underutilization:

  • Low revenue per employee ratios
  • High percentage of account people to creative people
  • Unprofitable accounts
  • No employee incentive to control costs
  • Lack of employee understanding of profitability issues

In order to seriously address these issues, we recommend taking a clean sheet approach. Agency leaders are traditionally responsible for implementing client solutions and rolling out major campaigns. And their staff are experts at the functional aspects of marketing, like art direction, copywriting, project management, brand strategy, and more. Today, there is a need for someone who is an expert at building adaptive operations on the fly.

Adapt Now. But How?

Over time, agency operations have taken on a life of their own. Each problem or glitch in the work-flow is patched and corrected until no one person can identify a single process. This is due to the fact that no one person within the agency is in charge and has knowledge of the WHOLE process, only their small portion or “piece of the pipeline.” Disconnects occur when communication between departments fails. Information is lost and the project may be in jeopardy. Today, agencies need to be faster, more agile, and every person understanding the whole process, and the overall goal, from beginning to end.

This is a different way of thinking for most agency leaders. To be successful you have to challenge every aspect of the traditional agency workflow. Existing structures, established procedures, functional titles, performance expectations are all on the table.

Most traditional agencies have five major processes that must be evaluated holistically:

1. Strategic development

2. Creative development & execution

3. Production

4. Media planning & buying

5. Project management

Find out as much as you can about each, and then tear them apart. Question everything. Question each step of the process. Question every activity; valuable or non-valuable. Remove any labor intensive processes, cut out bottlenecks, slice review cycles. Some of the largest areas we find, the real agency productivity killers, are duplication of effort and big process disconnects – where the ball is dropped and mistakes creep in.

Remember, the goal is to reinvent how you deliver value to the client. You can free up your team if you reduce the effort to just get work out the door. Eliminate waste and mistakes. Rework everything. This will reduce cost, speed up the agency, and improve use of your most valuable resources: your team.

Image via "March of the Dinosaurs."

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