They say that if the only tool you have is a hammer, all problems are going to look like nails. Positioning the agency by channel “tool” not only creates a perceived bias, but also commoditizes the offering. For instance, a “creative” agency is more likely to recommend traditional channels (e.g., TV, Print…) because this is how it makes money. However, if the agency focused on the brand experience, it would be in a better position to recommend the best solutions for the business and customer. The solution might not even be advertising at all. It might be a new product or service. Some agencies are already moving in this direction. The market is also shifting: Advertising impressions, or “paid media,” are decreasing in relation to customer influencer impressions, or “earned media”. Plus, influencer impressions carry more credibility (see previous blog post, “Digital Dilemma” for more detail).
This shift is likely to continue disrupt the advertising industry as its increases competition. Agencies are becoming integrated shops. The agency’s comparative advantage is going to be more on segment or industry expertise and less on channel expertise. For instance, an agency might focus on the Millennium generation. The compensation model may also need to be revaluated. The model will need to shift from fee-based to a combination of fee and performance. This will probably make sense as agencies continue to have more to say about the brand experience in a holistic sense.
In the end, the blurring of channels and the reorientation of agencies toward segments and industries will be good for businesses and for consumers. And therefore, the shift will be good for forward-thinking agencies.