Gini Dietrich

Agencies Must Evolve or Die

By: Gini Dietrich | December 10, 2013 | 
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Agencies Must Evolve or DieBy Gini Dietrich

A new study conducted by the CMO Network on Forbes asks nearly 2,000 chief marketers a bunch of questions, including the best ad agency of the year, how important is integrated marketing communication, and how they feel about measurement, the agency model, the pitch, and more.

The chief marketers mostly commented on the relationships they have with the large agencies, particularly those under holding companies.

What’s interesting is their feeling on how well digital is being integrated into the agency model, with some going as far as to say agencies are “acquiring assets, but having difficulty integrating digital capabilities.”

In fact, nearly three quarters believe agencies are not adapting well to the digital age. A typical comment was, “I think they have given up adapting and are laying low. I see very little interest in changing.”

The World Has Changed, But Marketing Has Not

I see very little interest in changing. I see very little interest in changing.

I can’t get past that statement.

The world has changed. The way we get information has changed. The way we get our news has changed. The way we communicate has changed.

But the organizations responsible for communicating with us have very little interest in changing.

In fairness, people spend more than 30 percent of our time online, but nearly all marketers allocate less than 20 percent of their budgets to online communication.

But the bigger issue – and I’ve seen this myself with the exception of one or two global agencies – is they are hiring people with large Twitter followings or big blog readership to build their digital departments, but they’re not welcomed by, integrated with, or even officed near the more traditional departments.

Like their chief marketer peers, they are overwhelmed by the explosion of communication channels available, but have no idea how to integrate, message consistently, or work with other agencies to do what’s best for the client company.

So they add a department that does good work online and call it a day.

Where is the Accountability?

Not only that, agencies are being asked to reduce their fees, work with more than 50 other agencies (in some cases), and prove how their efforts are driving business.

One respondent went so far as to say:

For years agencies weren’t accountable. Now they are and the model is crumbling. Advertising that doesn’t drive business will lead to a quick end to the ad budget and perhaps the agency as well.

The industry, as a whole – both PR and advertising – doesn’t have a uniform way of measuring results.

Because of that, those who can tap into a client’s key performance indicators and prove how their efforts are driving more business, will win.

Agencies Must Evolve or Die

Those who can’t? Well, a respondent voiced a warning:

Agency masthead doesn’t matter. It’s the team of three or four people that makes the difference. Everybody has a hub-and-spoke wheel, everybody has proprietary insights, and everybody has an angle. Who has accountability? It is an industry that is a few short years away from crashing on itself. It is boxing – very shortly a mixed martial arts model is going to come along and, like boxing, ad agencies will largely become irrelevant.

This is good news for boutique agencies that can provide a team of three or four people with specific industry expertise, prove accountability, create metrics that work, and measure results.

You can read about the entire study in, “What Are 10 Great Ad Agencies of 2013, According to CMOs?

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.

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81 Comments on "Agencies Must Evolve or Die"

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Todd Lyden
2 years 5 months ago

Seeing the same logic in chamber/association industry – unfortunate

Howie Goldfarb
2 years 5 months ago
The problem with big agencies is they move so slowly. You would think with so much money and people resources they would know everything cutting edge. As with all industries disruptors exist. Unlike many other industries barriers to entry are low. You can’t just start a Southwest Airline with 2 people in a room and a few credit cards for funding. But you can for PR/Advertising/Marketing and even Tech which is driving this all. I will add to my comment this week that the agency of the future is the agency of today…except it is the future. The only changes… Read more »
ginidietrich
2 years 5 months ago

Todd Lyden it’s not surprising…we spent a gazillion years building organizations that have become laden with red tape and politics. Without the ability to move quickly, those companies die.

ginidietrich
2 years 5 months ago

Howie Goldfarb What do you mean you can’t start an airline with two people and a few credit cards??

TomMartin
TomMartin
2 years 5 months ago
Have to say ginidietrich I’m not that surprised. Having lead the effort to build a digital department within a full-service agency prior to launching Converse Digital – I can say I’d totally agree with the CMOs here.  Agencies say they want it but really, they only want it because it’s billable. They continue to fight a data-based approach to building work that helps a buyer along the buying process vs building work that wins awards.  But the digital side has its own problems >> http://bit.ly/1fg9ka6 which they’ll need to figure out and grapple with themselves.  In the end, CMOs (IMO) will be looking… Read more »
digitalbase
digitalbase
2 years 5 months ago

ginidietrich you have hit the nail on the head there. 

Being active as a sales rep (and co-founder) for a startup trying to sell a product that allows agencies and brands to start measuring their PR efforts, i learned the hard way that it’s hard for those “large” agencies to change the way they are working.

Howie Goldfarb i like to compare em to oil tankers, unable to turn around.

PR Industry leaders are talking about “the future of PR”, saying PR agencies need to embrace digital, start changing/evolving and think about accountability. If you ask me, that plan is being executed way to slow.

digitalbase
2 years 5 months ago

ginidietrich i don’t see the direct link with big data here. A lot of agencies are struggling with simple digital/technical challenges (mobile first, mail merges, PDF press releases, email pitching, CRM’s, actionable metrics). I believe big data is way over their head (for most of them)

jasonkonopinski
2 years 5 months ago

digitalbase TomMartin I’m with Tom on this. Big data is being heralded as the key to unlocking consumer behavior online, but the frameworks and the tools themselves aren’t fully mature yet. The agencies that will be most successful for many years are those that embrace a data-driven strategy and execute based on sound reasoning vs. notched the belt with another Webby.

Todd Lyden
2 years 5 months ago

It’s not even the red tape or the bureaucracy with alot… what should be nimble organizations (such as an agency) are just beholden to “the way things are” ignoring how the internet has changed the playing field altogether…

digitalbase
2 years 5 months ago

jasonkonopinski TomMartin agreed. I am only trying to stress the fact that you can’t expect those “traditional” businesses to change overnight. 

If they are still blasting out PDF press releases through their office mailbox, not looking at the effectiveness of their message, i don’t think they are ready for big data either…

It might all come down to the “I see very little interest in changing” quote.

ClayMorgan
2 years 5 months ago
A lot of industries are going through what agencies are experiencing, particularly in the broader definition of “media,” which would include agencies, marketers, etc.  A change started very slowly in the 90s and is now moving at the speed of light. A lot of companies like to say they are changing with the times but when you look at their structure, organization, methods, strategies and tactics you have to wonder. I believe that agencies that fall under the broad heading of PR will have to prove their ability to meld traditional and digital and prove their worth in hard dollars… Read more »
creativeoncall
2 years 5 months ago
I think one could have leveled the same criticisms at agencies for the last fifteen years or more, and in all that time I’ve been expecting the old model to crumble, and yet it hasn’t.  What’s different now, as you note, is the ability of non-traditional agencies to account for their results. Inertia and the CYA nature of many client decision-making chains will keep the old behemoths alive longer than one might think… but you are right, the boutique agencies with the right teams should have a major leg up.   That said, I’ve done two interviews lately, one with… Read more »
Randy Milanovic
2 years 5 months ago

‘Not’ acting like a traditional ad agency is our biggest competitive advantage.

RobBiesenbach
2 years 5 months ago

Interesting. I’d love to see a survey of agency people about the roadblocks they face from CMOs in trying new things and getting stuff done. But who knows, maybe all these restless CMOs are ready and eager to pull the trigger and devote time and money to innovative strategies …

I do like the idea expressed in your last pull quote, that ultimately it’s the people on the team that matters not the reputation of the agency. Once again, though, big brands are so often risk-averse: “Nobody ever got fired for hiring {Insert Mega Agency}”

JoeCardillo
2 years 5 months ago
Been thinking about this a lot lately. Still figuring out my own framework, but the main threads/questions so far:  + Inefficient as it may be at times, who’s underwriting the value from agency model as it collapses? CMOs are not wrong about large agencies, but the actual underlying change (shifting power in storytelling and communication from gatekeeping to collaborating, sharing, co-creating) isn’t exactly something marketing departments at brands are mastering, either.  + Ideas like “Every company is a media company” and “Social business” raise a lot of problems / come with unquestioned assumptions that reach way beyond the communications side… Read more »
Danny Brown
2 years 5 months ago

I wouldn’t agree with the statement, “The world has changed, but marketing has not.” Instead, I’d say it’s more people have not. Marketing has shows it’s adaptability and fluidity at moving with the times – probably more than any other vertical in its niche (PR and advertising specifically).

Like most things, it’s not the tool that’s to blame, but the people wielding it.

JoeCardillo
2 years 5 months ago

RobBiesenbach That last point is a good one. It’s easy to make generalizations but there’s a marked difference between large holding company type agencies and medium to small many of which are doing well.

ginidietrich
2 years 5 months ago

Todd Lyden That would make me CRAZY!

ginidietrich
2 years 5 months ago

Danny Brown That’s a good point. Thanks for the feedback.

Todd Lyden
2 years 5 months ago

well, its the heart of your message today right Gert?
I saw the same thing in the Chamber model- membership is dropping because ALL business wants and deserves to see direct ROI…

lauraclick
2 years 5 months ago
I wrote about this awhile back. I think the problem is on one side you have traditional agencies that aren’t adapting and on the other side you have “gurus” and digital shops that understand the tools, but not communication strategy. I think the ones who understand both (and can measure it) will definitely win.  But, it’s not just the agencies that must change, we must help educate the companies about how to do business in this new world. Even though the old way might not be right, that’s all companies know. So, they still ask for proposals and tired metrics.… Read more »
JoeCardillo
2 years 5 months ago

ClayMorgan To add/expand on that first point: this is happening across a lot of areas. Two examples being IBM’s switch from hardware to cognitive computing/cloud and MakerBot’s effect on the production of everyday things. Shared/co-created value is a massive change, and the collaborative economy that Jeremiah Owyang talks about is at play.

3HatsComm
2 years 5 months ago
Lots of good points here, can’t really do much better. Big or small, I think you’re right ginidietrich – the agencies that evolve, that integrate and get a better handle of who and how and WHY customers behave, shop and buy the way the do, they’ll be the ones to come out ahead. And yes that starts w/ data, metrics, w/ creativity, knowing where digital meets the traditional road; and then showing what they’re really worth. To that end are my thoughts. Like many other comments, the ‘way it’s always been done,’ the powers that be (CMOs and their bosses too) circling… Read more »
Randy Milanovic
2 years 5 months ago

I had an opportunity to chat with Mark at {grow} a few months back about this topic. We discussed that it was not about projects or tools, that success was centred in the way each element interacted with the other on a conversation level. The social shares, dialogues and quality content that led to offer downloads, trust building and problem solving. Not pitching or selling. Solving.

Michael Franzese
Michael Franzese
2 years 5 months ago
“I see very little interest in changing” is the mantra here and across ALL agencies and brands. What I think is lacking from the argument is leadership. Agencies used to lead brands to new media and insights. Over my career I’ve seen that fall away to where everyone seems to be following someone else’s lead. Agencies and their clients (CMO’s) are not invested in each other, they are merely covering their own asses and hoping results happen. Boutiques do better in this area not only because they’re nimble, but because they are remaining true to the reason they started up… Read more »
JRHalloran
2 years 5 months ago
We sort of have the same problem with some clients. Many of them don’t understand how they have bad online reviews, even though their service is flawless. Part of the problem obviously is their reluctance to adapt to new media.  Their lack of an online presence clearly creates the opportunity for a competitor to bash them online with no one out there to defend them (let alone, know they’re still around). An online presence is everything nowadays.  As for accountability, it’s still going to be a challenge to prove qualitative work to quantitative business minds. I said this before but:… Read more »
belllindsay
2 years 5 months ago

Danny Brown Don’t hate the game, hate the player…? 😉

belllindsay
2 years 5 months ago

3HatsComm ginidietrich “…we help build better brands and stronger companies.” A-friggin’-men!!!

belllindsay
2 years 5 months ago

lauraclick Wouldn’t it be great if those two camps you mention could come together? It would be the supergroup of the agency world! Link to the study is at the bottom of the article, Laura.

belllindsay
2 years 5 months ago
JoeCardillo “Every company is a media company” – see, I don’t believe this statement. I think every company ‘can be’ a media company – but not every company has the chops to actually put it into practice. If you’re large enough – and your teams have uniquely varied backgrounds (i.e. journalism, production, etc.) – then maybe. But I think what we sometimes see are organizations – even the big boys – who try and do it themselves, and fail. Companies need to be prepared to invest some cash dollars into content development – and let someone with the skills *make* them… Read more »
belllindsay
2 years 5 months ago

RobBiesenbach “I’d love to see a survey of agency people about the roadblocks they face from CMOs in trying new things and getting stuff done.” – THIS. Exactly. Times a thousand.

belllindsay
2 years 5 months ago

digitalbase ginidietrich Howie Goldfarb And the larger, the harder. (yes, I’m aware that’s not proper grammar). 😉

StephenCHogan
StephenCHogan
2 years 5 months ago

JeffSheehan SpinSucks DEAD ON!! #mixmein #socialmediamixr

susancellura
susancellura
2 years 5 months ago
And there’s still the problem of educating the business as to what truly needs to happen to be successful – that is, integration, measurement, and it doesn’t happen overnight. A strategy that is well thought out based on research and implemented needs to be in place.  I was once told/asked, “I firmly believe and support social media, blogging, etc., but show me hard proof that it works in my industry.” A fair request. I did find evidence but it was also clear that the opportunity to take it to the next level exists. Now that is where the change in… Read more »
lauraclick
2 years 5 months ago

belllindsay Yes, it would be! A girl can dream. 😉
And, I have NO idea how I missed that very obvious link at the bottom. Duh. Thanks for pointing it out!

belllindsay
2 years 5 months ago

susancellura And let’s not forget – not *every* business/industry needs to do *all* things. Facebook might work for some, Twitter better for others. Blogging might be great – but adding visual content (videos, illustrated stories) might be better.

belllindsay
2 years 5 months ago

JRHalloran But what *is* traditional PR work?

belllindsay
2 years 5 months ago

Michael Franzese **Standing Ovation** – liked a thousand times over. 🙂

susancellura
susancellura
2 years 5 months ago

belllindsayAbsolutely and exactly!

belllindsay
2 years 5 months ago

lauraclick You’re most welcome! 🙂

JoeCardillo
2 years 5 months ago

belllindsay JoeCardillo That’s exactly my point. Some of this stuff gets repeated over and over and no one questions the assumption.

Related to Gini’s point on the Mark Cuban article, can anyone do 100% of their own PR, marketing, and content creation. Of course. Will it be good? Is it even a good use of time & resources? At a certain level of growth, I’d argue the answer is no to both.

ExtremelyAvg
2 years 5 months ago
Danny Brown You made a good point about the tools not being the problem. It is those who use them. Social media tools are easy to use, but not so easy to understand how to use them correctly. We all know that the number of followers isn’t at all important, it’s the quality. It is the same with Facebook marketing. An easy place to spend ad budget, a less easy place to spend it well. I’m devoting the entire month of December to learning how to place, and run Facebook Ads to try to build an author page to sell my… Read more »
Howie Goldfarb
2 years 5 months ago

If you have a 2 seater you can start because you can surely charge the gas and the local airport landing fees.

belllindsay
2 years 5 months ago

JoeCardillo Did I just copy-cat you…?

JRHalloran
2 years 5 months ago

Good question! I would say it was a little more research/ social-related (like picking up the phone and calling a contact or two). Now, everything just seems to be online-based, even the communication aspect.

belllindsay
2 years 5 months ago

JRHalloran True. BUT, communication is still communication (related: I am old) – the same skills are needed to connect with someone – whether via phone or now – via social or email.

JoeCardillo
2 years 5 months ago

belllindsay JRHalloran Just figured out my grandkid’s job title: Telepathic Content Specialist

ginidietrich
2 years 5 months ago

ExtremelyAvg Holy moley!

ginidietrich
2 years 5 months ago

susancellura I’m changing my stance on social a bit. Unless you’re a consumer business, I’m not sure it should necessarily be used for engagement and community building. I’d like to see organizations use it to motivate people to share their content so they can build awareness and credibility, enhance their SEO, and network.

ginidietrich
2 years 5 months ago

JRHalloran I would also say people who are not willing to do the work to create happy customers and look for a quick fix may be happy in the short-term, but livid later on.

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