5 Things Your Agency Doesn't Want You To Know

In today’s world, companies in every industry need to continually evolve to keep up with the rapidly changing expectations of the modern consumer. Marketing agencies are no different.

If you look back at the evolution of the advertising agency, you can see why the traditional retainer model worked …. over a decade ago. Now, many agencies find themselves struggling to survive and thrive while meeting the demands of today’s consumer. More than ever, clients require an agency partner that invests in the relationship from the start. To craft the agile solutions necessary to take advantage of emerging opportunities in the digital ecosystem in which they vie for brand resonance and recognition, an agency must be willing and able to develop a deep understanding of their client’s business.

After a successful career on the client side, I was wooed to agency life by the promise of big thinking, a creative culture, and a shared commitment to do great work. At that point, I was relatively unaware of the need for an agency-model evolution, and I didn’t realize how reluctant many agencies have been to change their processes and profitability models. I accepted an opportunity to lead a multi-million-dollar account, believing it was my extensive client experience that had won me the role.

I quickly discovered it was my client network, not my business understanding that made me an asset. In fact, the point of view I believed would help cultivate deep empathy within the agency for our clients, actually made me a pariah within the agency.

In an outdated agency model, one in which the agency is reliant on retainers and large profit margins to fund expensive executive overhead, fancy offices, and bloated salaries, the type of agility and responsiveness needed to meet the needs of our modern digital clients creates resource burn, costly revisions, and lower profit margins.

If you’re using an agency reliant on retainer-based resourcing and profitability models, these are the five truths you should know about how that outdated system works.

1. Availability is the greatest skill set

Often, traditional agencies staff a project with team members who are available, regardless of their expertise. This means availability becomes an agency employee’s greatest asset, rather than their domain knowledge. Clients are unaware that maintaining high employee utilization rates takes priority over everything, which leads to a lack of the subject-matter expertise that was sold-in during the initial pitch. The same problem exists if your business needs should change over the course of your engagement with the agency.

2. Your sales team is not your delivery team

If you think the sales executives and discipline leads that you work with during the pitch are the ones delivering the project work, think again. You might assume you’re paying those hourly rates for the people with fancy titles and years of industry experience—that they’re the ones working on your project day in and day out—but that is a myth of traditional agencies. These pitch teams hand the work off to a separate, lower-cost delivery team after the work is won. One of the biggest reasons for this gap is that agencies are chasing dollar signs, taking on work regardless of bandwidth and experience.

3. Profitability will always win over purpose

The title of this section speaks for itself. Your agency is constantly pitching. In fact, the bigger the agency, the more sophisticated their sales strategy. This can mean that your agency will pitch what they believe will make them the most money, not necessarily what is best for you as the client. Don't get me wrong – profitability is important, and you can still be profitable without sacrificing your purpose and the integrity of the work. To do so requires a greater focus on business needs and resourcing strategies, coupled with an authentic interest in client success.

4. Same dog, no new tricks

One of the biggest reasons this industry has gone virtually unchanged for decades might be because the people in charge are the same people that were running the show ten, twenty, thirty years ago! Today, women and minorities are creating opportunities for themselves and proving just how invaluable they are, but still, only one-third of the workforce today is classified as minority, and that goes for agencies as well. Why is this an issue? Well, why aside from the obvious – businesses that lack diversity are actually shooting themselves in the foot. A study done by the Harvard Business Review found that out of thousands of companies, the ones with more female partners were notably more profitable than their counterparts. Coincidence? I think not. Another study found that diverse teams overall were more productive and successful in accomplishing projects and working as a team. In 2012, the UK’s Institute of Practitioners in Advertising (IPA) found that the marketing and advertising industry is dominated by young white men, and while the number of men and women employed in the industry is about equal, only about 22% of those women were in management positions or above. It’s seriously time for that number to change. What comes from a room filled with diverse people? Diverse minds. Collaboration and overall creativity increases, leading to better results for agencies and their clients.

5. Jack of all trades, master of none

A lot of agencies like to fool themselves and their clients into thinking they are a one-stop-shop for all client needs. The reality is no one is an expert in everything. It’s better to do a few things exceptionally well than try to do anything a client will pay for, and deliver mediocre results. Within this ever-changing industry, it’s important for agencies to carry a value of transparency with themselves and their clients about where their expertise lies.

The good news?

Traditional agencies are dying off, although not quickly enough. A new approach is long overdue, one that embraces agility, encourages inclusivity of all perspectives and prioritizes scope and delivering work that will have the greatest impact on a client's business, rather than what will make their agency the most profit. At Knack, our mission is to change the way digital marketing is done – starting with a deep empathy for our clients and each other that influences how we recruit and resource our project teams, how we craft and care for our culture, and how we design collaborative spaces that enable great work from anywhere. This consultative approach means we invest from the start in people who share our business philosophy, and who are empowered to develop a sophisticated understanding of your business in order to craft solutions that deliver real results, not vanity metrics. We believe we are the first of a new breed of agencies who are growth-minded and intentionally designed to meet the demands of the modern client. Together, we can put the “Mad Men” agency era behind us once and for all.