4 Reasons for Agencies to be Optimistic
November 2, 2010 | Author: Tim Williams
While there are plenty of reasons for agencies to be concerned right now, there are just as many reasons to be optimistic about where the future is taking us (This of course applies only to the firms who are taking transformation seriously. If you’re stuck in the old model you actually should be concerned).
Many of the disruptive changes happening in our business can actually work out in our favor. Here are five of them:
1. Increasingly, the world’s wealth is created through the development and ownership of intellectual capital, which is the province of professional knowledge firms like agencies.
Prior to the Information Age, most of the world’s wealth was tied to tangible things like land and natural resources. Today, more than 70% of wealth results from intangible assets. A vast amount of the value of the world’s leading companies isn’t in their plants, factories, or physical assets, but rather the equity of their brands. Building brand equity is at the heart of what agencies do.
2. Fragmentation and addressability is creating more and more markets, and hence more marketers.
In the age of mass media, there were mass products and services. In the age of The Long Tail there is the potential for a rapidly increasing number of new markets serving very specific groups of customers. Now that media channels are truly one-to-one (even television commercials will soon be delivered to one individual household at a time), media and agencies are no longer dependent on “mass” marketers. Rather, there will be a whole new class of specialized marketers seeking help from professional marketing communications firms.
3. We are evolving into an experience economy, which agencies should excel at.
Over the past several hundred years, the economic model of marketers has moved from commodities to goods to services to experiences. As Joseph Pine and James Gilmore observe in the excellent The Experience Economy, creating experiences is the highest level of marketing. Agencies have the talent and potential to help marketers move to this level. But first, agencies have to redirect their energies away from the "production and distribution of advertising" to much higher level thinking. As TBWA/Chiat/Day’s Lee Clow preaches, “It’s all media.”
4. The ultimate objective of any business enterprise seeking professional services is transformation, and this is precisely what agencies do.
When you see yourself as being in the transformation business, the client itself becomes the agency’s “product.” The best clients hire agencies with the mandate “Change me.” It all hinges on what business agencies believe they are in. As Pine and Gilmore observe:
- A commodity business charges for undifferentiated products.
- A goods business charges for tangible things.
- A service business charges for the activities performed.
- An experience business charges for the feeling customers get by engaging it.
- A transformation business charges for the ultimate benefit customers receive.
More than any other professional service provider, agencies are in the transformation business. They do what other professional service firms (lawyers, accountants) cannot do – help companies completely reinvent themselves. What a great time to be in the agency business.
