Today’s guest post is written by Paul Roetzer

Hybrid agencies will come to rule the marketing services world.

These emerging firms are tech savvy, offer integrated services, hire and retain versatile talent, and profit from diversified revenue streams.

They also build scalable infrastructures that enable them to readily adapt their business models and services to changes in technology, consumer behavior, and market demand.

Meanwhile, traditional agencies — PR, SEO, advertising, web, and content — that are resistant to change will struggle to remain relevant. They are slowed down by legacy systems that make it increasingly difficult to evolve and compete as clients seek more innovative strategies and services.

Unless traditionalists make dramatic adjustments, they run the risk of quickly becoming obsolete. 

A Disruptive Force

Let’s look at five ways hybrid agencies disrupt the industry:

  1. They drive change of outdated pricing models. Model firms are built on efficiency and productivity, not billable hours. The traditional billable hour system is tied exclusively to outputs, not outcomes, and assumes that all agency activities are of equal value. Hybrids don’t have to compete on price, but their ability to more efficiently provide services and deliver results is a differentiator, and gives them flexibility.Plus, they are able to produce profits through multiple recurring revenue streams — education, training, publishing, software reseller licensing, affiliate programs — so they can focus on strategy, execution and results rather than billable-hour quotas.
  2. They lead the convergence of services. Disruptive firms are built on the versatility of social-media and tech-savvy professionals. These professionals possess exceptional copywriting skills, along with dynamic personalities that enable them to build strong personal brands.Hybrid professionals are trained to deliver services across search, mobile, social, content, analytics, web, PR, and email marketing. They provide integrated solutions that used to require multiple agencies and consultants.
  3. They attract top talent. The most advanced and successful hybrid firms are talent magnets.They offer A players — the high performers — dynamic cultures and systems that give them autonomy, creative freedom, and endless career opportunities.
  4. They integrate technology into business and services. Trends and shifts in consumer behavior, business processes, software, data analysis, communications, and marketing philosophies have affected the need for evolved services and consulting. Prototype agencies integrate technology to create remarkably efficient agency management and client services systems that lower operating costs, while increasing productivity and profitability.
  5. They create more accountability through measurement. Marketing executives are drowning in data, with access to endless streams of information about prospects and customers. However, data without analysis is simply noise. |Leading marketing agencies turn information into intelligence, and intelligence into action. They build campaigns that consistently produce measurable outcomes, including inbound links, website traffic, leads, and sales. Hybrid agencies are leading the shift away from arbitrary metrics, such as media impressions, reach, advertising equivalency and PR value, and are challenging their peers to deliver data- and results-driven services.

The Future Belongs to the Underdogs and Innovators

Traditional firms that are unable or unwilling to evolve will fade, and a new breed of marketing agencies will rise to prominence. These hybrid agencies are risk takers that fight to remain nimble, always thinking like startups and acting like underdogs.

Their presence will be a disruptive force in the marketing services industry for years to come, shifting the balance of power and raising the bar for what’s possible when organizations seek marketing agency partners.

Your Thoughts

Are you seeing shifts in marketing agency structures, pricing, and personnel? How is the increasing demand for integrated services affecting agencies?

Paul Roetzer is founder and CEO of PR 20/20, a Cleveland-based inbound marketing agency, and author of The Marketing Agency Blueprint (Wiley, December 2011).