Why Agencies Matter #agencypublisher

I’m about to make a fairly big statement. Here goes…

"Never have marketing agencies been more important than they are today"

It’s a big call, in the face of a lot of criticism of agencies around the world, and cuts being applied across the marketing sector. But I am prepared to defend this statement, because changes in consumer behaviour and media consumption don’t compromise, but rather underscore the need for marketing agencies to help grow businesses.

There are essentially five reasons why marketing agencies are more important than ever, and I am going to explore all five:

1. Increased media fragmentation
2. Decreasing customer loyalty/higher churn rates
3. Increasing reliance on analytics
4. ‘Elastic workforce’ future
5. Low risk innovation

Increased media fragmentation
It was actually a lot easier to be a marketer in the age of Mad Men. Print media, radio, early television and very limited outdoor and cinema advertising were all the media that anyone consumed. The audiences were massive and passive (not interactive and unattractive as some wags may put it), and on the client side, advertising was considered the most important mechanism for growing a business. Marketing was simple, attention was almost compulsory, and audiences generally accepted what was said in advertising messages.

But the media landscape doesn’t look like that now. With the internet, mobile media, video games, wearable technologies and fully immersive experiential environments, attention is being drawn here, there and everywhere, and audiences are increasingly questioning marketing messages.

In this complex and rapidly changing media market, firms need agencies more than ever, both to access the range of content platforms out there, as well as to customise messages so they fit with customer needs and protocols of communication.

Decreasing customer loyalty / high churn rates
One of the products of increased media fragmentation is a decrease in customer loyalty. As more channels have come online, there is more choice for the customer, and a higher chance of customers swapping between channels and suppliers for goods and services. In spite of the rise in loyalty programs around the world, customer loyalty has been declining since the mid-1990s. And there is no doubt that social technologies of the internet have helped to accelerate this decline.

For clients, this means that meeting customer expectations and a focus on customer experience is of paramount importance to customer retention. But that’s not often the core business of firms. Instead, agencies can become the specialists in managing customer experiences in marketing channels, while firms can focus their attention on business and production optimisation on site.

Increasing reliance on analytics
Of course, there have always been marketing measurement techniques. But as new customer tracking technologies emerge, and we know more about where customers spend time and what they do with content, the ROI for marketing spend can be challenged. And again, as the channels for access to content continue to diversify, the importance of tracking where customers are grows with it.

Firms must respond in a more agile fashion to changes in consumer behaviour to help improve both reach and retention. Analytics are the best means of achieving that. But data analysis for media channels is expensive and complex. Firms will not necessarily have either the analysis and interpretation skills, or access to data firehoses for adequate analysis. Only agencies have the economies of scale to deliver useful and actionable analytics insights.

'Elastic workforce' future
Much has also been written about the future of work. Pundits are noting the rise of automated jobs, as well as the development of more flexible, contract-oriented employment. But for firms this means you have a much more distributed workforce, as well as one which is less cohesive as a team.

Agencies can help here, too. Because agencies are experts at inspiring teams and identifying talent, I believe they will be increasingly used as a source of project-oriented contract engagements for firms, and even in ongoing recruitment tasks, because in an increasingly automated office environment, the uniquely human skills of idea development, interpersonal communication and strategic thinking will be located and concentrated in agencies.

Low risk innovation
Finally, the one thing that companies must not fail to do is to innovate. Driving productivity as well as brand perception, innovation is crucial for the sustainability of any firm, but the experimentation that’s required to innovate can be high risk – for reputation, stock prices and competitive positioning.

Agencies can be incubators for innovation because risk is spread across many projects rather than concentrated for one company and one project. And agencies can use the results of innovation experimentation to devise products and services that will uniquely fit the target market of any firm.

A few last thoughts
Reports of the death of marketing agencies have been greatly exaggerated. Agencies matter because they have the opportunity to view markets with a much broader lens than is possible within product and service-oriented businesses. The challenge for agencies is to ensure that they are shaping their processes to meet industry needs.

Keep any eye out for my other posts in the LinkedIn #agencypublisher of the Year contest.