A CHANGING LANDSCAPE
As consultancies and digital platforms start to muscle in on agencies’ territory, agencies will have to adapt and improve their traditional models — and reconsider the model of holding companies
One of SA’S leading agency selection experts believes the current industry model is broken and that a new approach is needed for the sector to survive and service brands better.
Johanna Mcdowell, founder and CEO of the Independent Agency Search & Selection Company (IAS), says the landscape is changing rapidly because of the arrival of consultancies, digital agencies and new players in the agencies’ space. These new players, she says, are also offering creative products to clients that used to be provided by agencies — and getting the business.
The problem is compounded by clients who are demanding quicker processes from agencies; the way products are delivered these days is not necessarily quick enough to meet clients’ briefs and demands, Mcdowell says.
So is there a quick fix? Agencies need to have mathematicians and statisticians in their teams who are prepared to work with new customer relationship management platforms such as Salesforce and Selligent.
But it’s not going to be easy. Mcdowell says agencies are struggling to attract and retain this type of talent because digital platforms, consultancies and start-ups are recruiting in the same space. On top of these challenges for agencies, some clients are trying to solve more needs in-house, she says. “This trend has been cyclical in our industry and we still need to see if it works this time.”
Have agencies left things too late? Not necessarily, says César Vacchiano, co-founder and global CEO of the IAS’S international partner, Scopen.
“No other companies have taken the place of agencies just yet. Consultancies and digital platforms such as Facebook, Google and Amazon are trying to offer creative solutions to clients but have not completely succeeded. So there is still time for agencies to adapt and improve their traditional models.”
And, just as in other parts of the world, says Vacchiano, SA agencies are adapting, albeit slowly, to client changes and demands, static or declining budgets and very low growth.
Another issue the ad industry is grappling with, says Mcdowell, is whether the urgent drive for growth is now trumping creativity.
“Ideally, great creativity will produce growth for brands, and history shows that it can be relied on to do so. But sadly, and because of low growth globally, large corporates are demanding growth at any cost, which might mean less investment in great creative assets and more investment in immediate sales solutions or even in low-cost digital assets.”
Part of the future-fit answer for agencies, says Vacchiano, is relooking at the model of holding companies. “Big holdings will never be dead, but they need to restructure.”
A noticeable trend, he says, is a new combining of forces. “They are starting to bring together all their agencies under one roof, to benefit from their expertise in different territories and disciplines and make collaboration among them easier.” This could see them merge their media agencies and creative agencies again to better compete against the offerings from consultancies and other new players.
Mcdowell says that in SA this is being seen at all of the holding company structures, even as they retain their individual agency brands. This allows for conflicting client brands to be looked after in those structures and the positioning of each of those agency brands in different territories.