Four changes that can save the agency business model

Quoting a study by business design consultancy Blueprint, the article describes a broken business model which is sucking the life out of its talent. The report is stinging, with mention of ageism, perks to mask poor culture, creativity being managed out and a general inertia.

As somebody who has worked for agencies both large and small, specialist and full service, there are some points which strike a chord with me. A culture of long hours, conformity being rewarded, the race to the bottom and the lack of incentive for innovation all ring true.

But I remain bullish that there is another, better way.

This, for the most part, is due to the fact I have seen many times what affect an agency can have on a client’s business. The bringing together of expertise and ideas to transform the communications strategy and drive their business forward.

I have also countless examples of where agency and client can work in true partnership to deliver collective goals. Relationships built on mutual trust and respect, not on getting the upper hand or purely commercial terms.

Unfortunately, in certain areas of the industry this trust has degraded. And both parties are at fault. Clients and their procurement teams capitalise on the competitive nature of agencies to squeeze pricing, leaving little to no reward for innovative solutions. Agencies gleefully follow the process in the desperate bid to win business of one another. And to battle the resulting declining income from fees, less than transparent practices are adopted to make up the shortfall.

I still believe in the agency model

Despite all of this I still believe in the agency model. But it has to be one built on trust and partnership. On innovation and experimentation. On a relationship where the two parties evolve their working practices, behaviours and plans as they go. All with a collective goal in mind.

How do we make this happen?

There are a number of behavioural and industry changes which need to happen to make this a reality, and it won’t happen overnight.

Change 1: Relationships built on partnership

Most clients say they want this, most agencies too. But more often than not agencies are told what to do or given just enough information to do their jobs, nothing more. And agencies for their part, don’t invest the time and effort in understanding their clients’ key business challenges, they focus purely on what they are contracted to do.

In this scenario clients don’t get the best out of the agency, and the agency themselves become easily replaceable.

Change 2: Agencies must admit they don’t have all the answers

When faced with a problem it is always tempting to want somebody to give you an answer.

“How do we deliver X% uplift?” “What should our strategy be to deliver our numbers?” – I will let you in on a secret, we are all guessing!

Nobody knows if the strategy we put forward will deliver your results. Our forecasts are a best guess, if not completely made up. Agencies can’t be expected to have all of the answers, and we shouldn’t claim to. But if you know your goals and work in partnership, you can work together to achieve them.

Change 3: Fair fee structures

Every client wants innovation. What is new, different, emerging that we should be considering or doing as part of our strategy? Very few are willing to pay for it.

Very few agencies are rewarded for being innovative and even when ideas are presented, only a fraction ever get approved. And how can you find the time to be innovative when the client fees barely cover the time needed to just keep the campaign afloat? More needs to be done to address this balance.

Change 4: Agencies must know their limits

The only way to stop the race to the bottom is for us to stop running. Our industry is dependant on is becoming more transparent with our pricing practices and that starts with being honest about the fees we need to charge. I have not met a business leader yet who reacts badly during a negotiation when I explain what can and can’t be done with fees. If you are honest, you gain respect. But everybody needs to take the same approach or we all suffer.

This is what we are building at Fast Web Media. We work in partnership with our clients to deliver their business goals. If their budget doesn’t cover their brief we tell them, and we are honest about what can be done. If more agencies adopt this approach, we can get back to being an exciting and ground-breaking industry which people are proud to be a part of.

The agency model is not broken, it just needs a little TLC.