Why the agency model is broken
There are four issues the marketing industry needs to talk about, and resolve, before it can move into the next phase of transparency, says ntegrity director Richenda Vermeulen. This article was first published on Mumbrella.
As founding director of a strategy agency, I have seen what happens when there’s a lack of transparency, inconsistent measurement and best practice is ignored. If this were just an issue I was experiencing I wouldn’t be writing about it, but when report after report after report confirms this is the case for the wider industry, it’s clear that there is a problem.
Marketers, we need to talk.
We need to talk about wasted media spend
When it comes to measuring the impact of advertising dollars, digital provides one of the clearest ways to measure ROI. But too often we see thousands (sometimes millions) spent on campaigns with inordinately high bounce rates..
Transparency remains a serious and recurring issue, and cases like the Dentsu and Mediacom sagas demonstrate that the industry needs a massive clean up. AANA has made a new push for transparency, recommending marketers “seek recompense” if less than 70% of ads are in view, and not pay for those that aren’t.
In response, the industry tends to deflect responsibility rather than take recommendations on board. But whether it’s the head of the world’s most profitable marketing group saying that companies should be discouragedfrom trying to cut costs or Mark Ritson arguing that clients don’t get the results because they aren’t good at outlining their objectives, I find these ‘blame the client’ arguments hard to swallow.
Researchers from Yale found that our industry faces a conflict of interest because clients prefer performance-based online advertising models as they yield higher results, but advertisers dislike them as it means a lower profit margins. Instead, they favour awareness-based models.
We need to talk about wasted tools and resources
I recently attended an industry event where 77% of delegates came from companies with $100+ million revenue. Pre- and post-event surveys revealed that their number one investment priority over the next year was to “map the customer journey”, closely followed by personalisation and audience behaviour targeting.
Those we spoke to were seeking technology to help them do the job, but had been burned before by tools that cost too much and were used too little. This is a common finding of our internal conditions analyses: many organisation spend between $50-$100K per year on automation tools, enterprise social networks or CRMs that have barely been used.
Often these tools have been recommended by agencies that don’t provide plans for their implementation. This is exacerbated by technology companies selling products based on licensing not user engagement. That’s why it’s important to review what tools are actually the best fit for a brand’s needs and company culture to get the most out of it.
We need to talk about the reliance on campaigns instead of an ‘always on’ approach to digital
At Australia’s launch of Hired.com in October, the MD of Uber Melbourne said the company “doesn’t believe in paying for marketing. Only recently did we pay for our first billboard to get new drivers.”
That’s right: despite the thousand of hours Uber invests into social media, email and product development, they don’t see digital marketing as marketing. Rather, their ‘always on’ approach to digital has been an innate part of their identity and strategy from the start; the opposite to most large brands we encounter.
Research from McKinsey has identified that an ‘always on’ approach is essential in engaging consumers in a landscape that is never offline. They highlighted the fact that many brands still view their marketing through a linear funnel, rather than what is actually a continuous cycle.
These brands invest huge budgets in shouting for attention to capture a consumer’s interest for a few seconds. In this Age of Engagement, why are we still giving precedence to this short-term approach when the true value of digital is in sustaining lifetime value of the relationship?
We need to talk about the lack of digital acumen in organisations
A 2013 study by Adobe found that when it came to digital, most marketers doubted their skills, effectiveness and ability to measure impact. The reality is, if organisations lack digital acumen – especially in their leadership – they are vulnerable to being taken advantage of. The three points we’ve already mentioned are exacerbated by the fact that clients don’t always have the digital knowledge to push back and demand the best.
Meanwhile, few business are committing to up-skilling to solve this problem. That’s why we believe in helping organisations develop digital capabilities internally so they can recognise wasteful tactics that detract them from becoming digital-first organisations. But clients must also be willing to invest in the digital acumen that will help drive better, more successful and sustainable business choices.
So what’s the solution?
Usually, commentators equate the problems with the agency model to a lack of transparency. I believe it goes much deeper: agencies need to challenge themselves to be more independent, and consider new operating models in line with digital best practice.
At ntegrity, it means not taking a cut on media spend, not recommending tools without an implementation plan, emphasising digital transformation over short term campaigns and actively upskilling, training and recruiting staff until we work ourselves out of a job.
Often these choices mean making a commitment to long-term value for clients over our profit margins. And although it might seem counter-intuitive, this has been the heart of our success as an agency.