Nevo Hadas, a partner at DYDX, writes that as more tools, automation and bots penetrate marketing departments, the agencies that don’t transform toward the future will be left behind, wasting time on tasks slowing down strategic decision making.
We no longer live in a world where brands reward agencies for creativity alone. In recent years we started seeing the influence of technology on the advertising industry like never before. While digital marketing is transforming the way we advertise and communicate, some marketing and advertising processes seem stuck in the ’80s. Some agencies still use manual job bags and methods that match the industrial age rather than the digital ways of working.
You need a sound admin system to run large campaigns successfully, but that doesn’t mean you need to run advertising processes dysfunctionally. Most marketers will tell you that their average cost of client service is between 25% to 30% of their agency spend. Furthermore, wastage like cancelled or changed briefs and missed flighting deadlines make up between 12% and 17% of the spend. That leaves roughly 55% of agency spend contributing to the successful execution of an idea that drives sales.
Marketers are quickly wising up to this. Investments in process automation in leading marketing departments mean that they can outperform agencies. Brief management, proofing and online review tools are now the areas that marketers control as agencies underinvest in their workflow systems and overinvest in their accounting systems.
Advertising is not about making an advert anymore. There is a disconnect between agency, media and strategy due to reporting inefficiencies. Digital can speed up responses, but you would be surprised at how few marketing departments have adequate real-time reporting linked to their creative execution. Very few agencies link UTMs back to briefs or KPIs – so reporting shows CPA or CPM but the brand can gain no in-depth intelligence and no long-term learning.
As agencies start moving towards automation and reducing their back-office costs as a percentage of fees, several things will happen:
– Retainers will increase because the value created by advertising will be more easily apparent in better reporting and sales results
– Agency structures will change – there will be fewer client service staff and more strategy and creative staff.
– Agency margins will improve. Less wastage, higher efficiency, and more transparency will make it easier for agencies and clients to identify mistakes and fix them.
Agency executives considering change frequently talk of the challenge associated with overcoming business as usual. By aggressively embracing agile practices, executives can transform their agencies into fast-moving teams that continually drive growth for the company and its clients. What separates an agile agency from the masses is a culture of accountability, experimentation, and learning.
