Gini Dietrich

Agencies Must Evolve or Die

By: Gini Dietrich | December 10, 2013 | 

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. Join the Spin Sucks   community!

  • Seeing the same logic in chamber/association industry – unfortunate

  • 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 will be the winners will utilize new technologies better and faster and probably add a few newfangled titles/positions based on those new technologies which really have existed forever. 
    Like when that Ad Agency Project Manager said ‘Dude I like Creative Director better’. 
    ‘But your a project manager all project managers direct creativity, call meetings, divide responsibilities and work to keep the project on track and under budget’

    ‘But dude! I do it more creatively trust me…the team beer pongs during late night brainstorming meetings’

  • 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.

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

  • TomMartin

    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 >> which they’ll need to figure out and grapple with themselves. 
    In the end, CMOs (IMO) will be looking for agencies that can pull it all together at a strategic and planning level. Those will be the “of record” agencies with everyone else regulated to executional strategy and tactics roles >> wrote about that a few years back for Ad Age funny to see this many years later the point is still valid.

  • digitalbase

    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.

  • 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)

  • 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.

  • 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…

  • 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.

  • 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 and cents. Those that do will have plenty of work.

  • 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 an American digital leader within a large company and the other with the CCO of an American agency in China, and both report an organizational shift toward just that boutique-style team you mention.  We’ll see if they can really pull it off.

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

  • 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}”

  • 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 of things and into the heart of how companies work. 

    I personally believe that focus is the elephant in the room. Long term a business cannot sustain value based on being everything to everyone, you either have a core competency or you don’t. And if you don’t then the card to play is monopolizing oxygen and crushing competitors. If I were sitting in the c-suite at a major company I would be asking, “do we really want to be responsible for creating all our own content, distributing and promoting it, and managing the entire media & publishing process start to finish?”

  • 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.

  • 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.

  • Todd Lyden That would make me CRAZY!

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

  • 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…

  • 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. This definitely cuts both ways. But, we have to prove to companies that we can do it, otherwise, they’ll just give up and continue to have “no interest in changing.” 

    BTW – Do you have the link to the study? I couldn’t find it in the article.

  • 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.

  • 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 the wagons. It’s that “we’re not changing the product/service/brand – and you’re just PR, so what do you know of R&D or HR or anything? Fix the bad reviews and negative comments, get us some happy buzz and sales” attitude. When you’re asking for the social meets winning ads meets content driven meets data optimized integrated agency to prove results – but they don’t have any genuine influence on the business/brand itself – that old school mindset that silos Communications is as big a part of the problem. I guess my meandering point is: as we evolve, we need to show TPTB we do more than tell/sell good stories, we help build better brands and stronger companies. FWIW.

  • 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

    “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 the boutique in the first place. Big agencies, to me, seem to worry only about the their bottom line to the holding companies and risk avoidance equals stability.
    As far as integration, the hierarchy and back-biting of big agency, Direct marketing agency, digital agency, pharma agency, you name the specialty agency, is not something new. For years this industry has been splintered by ego resulting in no one wanting to come together for a singular message across a brand because nobody believes in sharing an idea. I think big agencies thought if they could buy up other agencies they could smooth out these egos. They were wrong. We all talk about it, but no one actually wants to do it.
    One last thing, as a creative, “big data” and “embracing a data driven strategy” shouldn’t be treated as exclusive from “winning awards”. “Big data” without creativity to help it connect to a consumer/user is just numbers, it’s the marriage of the two that makes something truly, IMO,  award winning.

  • 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:

    Quantity ≠
    But still, you’re definitely right about metrics. Those that can prove the results with all of this new media will win clients. Traditional PR work is slowly subsiding.

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

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

  • 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.

  • 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 “everything to everyone”.

  • 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.

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

  • StephenCHogan

    JeffSheehan SpinSucks DEAD ON!! #mixmein #socialmediamixr

  • susancellura

    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 mindset has to happen, IMHO.

  • 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!

  • 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.

  • JRHalloran But what *is* traditional PR work?

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

  • susancellura

    belllindsayAbsolutely and exactly!

  • lauraclick You’re most welcome! 🙂

  • 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.

  • 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 novels (Search Henry Wood Detective Agency on FB if you’re curious).
    The course I’m taking is like a Masters degree on the subject packed into four weeks. Taught by Mari Smith and Dennis Wu (who has run over 250 million dollars worth of ads for clients) it shows not only how one runs the ads, but teaches all the different nuances of building campaigns.
    Once this is understood, then one needs to do the real work…analysis.
    Analysis is the part that trips up most people, and as the article and many of the comments state, it’s what the client really wants…answers to the question, “Does it work?”

    As someone who has spent a good portion of my working life as an analyst, I can say that it isn’t just doing the math, ROI, CPC, CTR, it’s about asking the right questions.
    Which ads work better…by age, gender, state, likes Amazon Kindle, likes Mysteries, likes Novels, works for CBS, NBC, FOX, Oprah Winfrey Network, New York Times.

    What percentage of people will see an ad, but NOT click on it, and instead choose to research my books on their own?  <<<<  This question is harder to analyze, because it deals with testing ads that are designed to have terrible click through rates and watching how they perform with regards to conversions.
    Will my ads that target employees of news outlets get me some exposure for my novels?
    Should I try to target the Amazon headquarters and perhaps they decide to include my books in their email blasts?
    What about getting reviews, who gives higher ratings, men or women? Which gender is more likely to be a repeat customer?
    Then there is taking ALL of these questions and layering in each different ad copy. If women, age 50 – 65, who live in North Dakota, Texas, Florida, Georgia, turn out to be my best target group, which ads do they like best (Art Deco design with a clever line from the book or a meme with a bright background or a photo that tugs at the heart strings or…well, you get the idea)
    The point is, I have a goal (to reach Malcolm Gladwell’s “Tipping Point”).
    To do so, I will spend 12 hours per day, sitting at my computer, mostly thinking and looking at a spreadsheet with lots of numbers on it.
    I realize this was long-winded, but I wanted to demonstrate that being an analyst is more about thinking of questions to answer, than calculating a few key metrics, because answering the questions nobody else has thought to ask, is how one gains a competitive advantage.
    If an agency can give their client insights into where to invest their ad/pr dollars and explain why, then they won’t need to reduce their fees. But it take a lot of data.

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

  • JoeCardillo Did I just copy-cat you…?

  • 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.

  • 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.

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

  • ExtremelyAvg Holy moley!

  • 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.

  • 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.

  • Michael Franzese This: “Agencies and their clients (CMO’s) are not invested in each other, they are merely covering their own asses and hoping results happen.”

    I’m applauding you!

  • Randy Milanovic Never pitching or selling. Always providing value. Hundred percent agree.

  • 3HatsComm You know, this reminds me of a time when clients allowed us to travel with their sales teams (paid for it, in fact) so we could be better at communicating customer needs. It also goes to what Michael Franzese said about how CMOs used to be invested in the agency. We need to get back to that.

  • lauraclick I always say a social media expert is someone with a Twitter account and a keyboard.

    I couldn’t find the link, either.

  • JoeCardillo Social business makes me nuts. I think it’s a made-up phrase by the social media experts to ride the next gravy train. Do I think every business will end up using social media to communicate? Absolutely. But I don’t think a business has to be created around it.  Sorry, total side note, but you got me fired up.

  • RobBiesenbach My favorite one right now is, “Why are you pushing us to better our website? We don’t want our competition to know what we’re doing.” Um…

  • creativeoncall You know what else might happen…people will start spending money again – and stop hoarding cash – and agencies will get fat and happy because executives will stop asking where every penny is going and we’ll have another cycle. This time it’ll just be faster than the last time.

  • ClayMorgan In Spin Sucks, I show how long it took certain technologies to get to 10 million users. Radio, for instance, took 50 years. The iPod? Nine months. Things are changing so quickly, we HAVE to figure out how to keep up.

  • digitalbase Wait…Prezly will help measure results? I didn’t get that from visiting your site. I thought it was used to create branded and social media rooms.

  • TomMartin I think you’re right – and we’re already starting to see some of that. We are hired for strategy and planning and then coaching a team of internal communicators and marketers to execute.

  • belllindsay JoeCardillo Maybe a little. Don’t let it happen again.

  • ginidietrich JoeCardillo No that’s a fair point. It’s also relevant because agencies sometimes want to sell that gravy to companies/brands in order to appear smart, instead of being honest and saying it’s a bad idea.

  • ginidietrich ExtremelyAvg I’m sorry…I tend to go on a bit. *hangs head*. I just really really like data.

  • I hope I’ll be labeled the “Founding Father of Telepathic Content Specialty.”

  • Agreed.

  • That is true. I guess what I’m really getting at is everything is measurable nowadays. 
    Where certain businesses used to take your word for your work and see the results unfold in their favor throughout the coming weeks, now businesses are micro-managing every step of that process. 
    They want to see numbers and stats, even if it doesn’t really mean much. Our job is very heavily on the editorial/ social side of things. How do you measure that kind of qualitative work? 
    You can spend all day writing/ revising and editing one piece. Or spend the day coordinating and talking to one crucial contact. 
    How do you display that in numbers to a quantitative-minded client?

  • belllindsayThe above is in response to you.  🙂 
    By the way, did I tell you you look like an older version of my cousin?

  • ExtremelyAvg ginidietrich I love it!

  • ExtremelyAvg Kudos for getting your hands so dirty, mate. The Facebook Ads Power Editor is great for really knuckling into the audience segments. Looking forward to hearing your results!

  • JRHalloran belllindsay Part of our most important role is communicating with a client where they are at and working within that framework to put things in context for them. Make them take a step back and explain the process, the 50 ft and 100 ft level. Most quantitative minded clients need things to be clearly linked back to business goals. So take the time to explain this and help them understand the why. Also help them learn to explain the why to their team….I’ve found this helps alot as well. Not only does it help get the entire team on board but it puts them in the position of being an advocate for your work.

  • lauraclick belllindsay It was a ‘Laura’ moment! I feel ya woman!

  • JoeCardillo ClayMorgan I was lucky enough to hear Jeremiah deliver the collaborative economy keynote at the Vocus Demand Conference back in June. There’s incredible potential in the collaborative economy, that’s for sure.

  • ExtremelyAvg Danny Brown You just made me weep happy tears.

  • Danny Brown ExtremelyAvg Thanks, Danny. I’m really enjoying Power Editor. I’ll definitely be sharing once I have something interesting to report.

  • jasonkonopinski ExtremelyAvg Danny Brown You must love data, too!

  • When we are problem solving, there’s no need to sell. The benefits are obvious.

  • ginidietrich yes it does. I guess it kinda depends on what you are looking for in terms of measurement. The holy grail would be to report on media value for the generated coverage. We are not there yet.

    Right now we can help PR professionals with measurement in terms of newsroom traffic, email campaign effectivity and learnings on PR pitches (engagement of influencer).

  • ExtremelyAvg That second to last point you made, that’s what business are built on. And what makes the bad ones fall apart.

  • ginidietrich

    TheInkybee Thank you!

  • Pingback: Digital PR trends in 2014()

  • philipshaun

    I might
    want to thank you for your elegantly composed substance, its helpful and your
    written work style helped me to peruse it without any trouble.