Thrive In The Age of Hyperspecialization
LinkedIn Article by Tim Williams
September 15, 2014
Now that most national marketers employ the services of at least a dozen or more agencies, it should be increasingly clear to the marketing services industry that there really is no such thing as an “Agency of Record.” Instead, agencies serve as specialists in a constellation of service providers, and the trend toward specialization is increasing as the marketing environment continues to grow in complexity.
Today’s marketing programs are much like a modern-day aircraft, beautiful when assembled, but made from many different parts from many different companies. The new Boeing 787 Dreamliner is made up of sections supplied by specialized producers in countries literally around the world. The wings are made by an expert manufacturer in Japan. The landing gear comes from France. Cargo access doors are made in Sweden. The center fuselage comes from Italy. Couldn’t Boeing do all of this by itself? No, actually. Each of these components has state-of-the-art technology that Boeing wouldn’t be able to replicate without a massive investment of resources.
Like any undertaking of this scale, the development of the 787 has had its delays and hiccups. But the finished product is immensely impressive -- a leading edge aircraft made possible only through the efforts and collaboration of a federation of experts.
Similarly, today’s business landscape is populated with marketing technology and specialized knowledge that no single company (or single agency) could reasonably master. But of course, that doesn’t stop most firms from continuing to claim “full service” offerings, as if they’re experts in everything from ethnographic research to data analytics.
The forces of disintermediation have moved the marketing services business into the “long tail” described by former Wired editor Chris Anderson – and it's never going back. The manifestation of this phenomenon is that some of the most successful and admired brands on the planet -- such as Coca-Cola -- employ the services of well over 100 agencies.
Why do marketers seek out so many specialized providers? Because they are increasingly of the opinion that no one agency can possibly be good at everything. Mondelez International marketing executive Dana Anderson describes how digital has created thousands of new media. "It's just not possible for one agency to be expert in all these areas," says Andrews. "So we've significantly expanded our roster of agencies."
In the U.K., a new study by Marketing Week reports that “specialist consultants are gaining ground on agencies as marketers’ first port of call for business advice.” So when agencies insist on playing the role of “generalist” they move down on the list of trusted advisers, behind strategy specialists, channel planning specialists, experiential marketing specialists, service design specialists, and the rest of the focused firms that comprise the long tail of marketing.
Four key questions to focus your firm
The way to thrive, not just survive, in this ecosystem is to identify, embrace, and cultivate a unique area of focus, not run away from it. Your positioning strategy is found at the intersection of four areas:
WHAT ARE OUR CORE COMPETENCIES?
The task here is to identify not just capabilities but competencies -- services that can be delivered in a dependable, differentiating way. Defining what’s core to the organization is often the result of disaggregating a short list services and abilities — breaking them down into component parts to find what’s truly distinctive.
WHO IS OUR BEST CUSTOMER?
Defining an effective positioning strategy means having a clear definition and understanding of your best customer – the types of clients your firm is best suited to serve. This requires deep exploration of the firm’s experience in business categories, industries, market segments, and types of audiences.
HOW ARE WE DIFFERENTIATED BY HOW WE THINK?
Next, identify the standards by which the firm operates, serves its clients, and makes daily decisions. This is about how you’re differentiated by your unique philosophies, approaches, and methodologies.
WHY ARE WE IN BUSINESS IN THE FIRST PLACE?
Last but definitely not least, articulate a reason for your firm's existence that transcends making money. Your purpose is at the center of who you really are as an enterprise.
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By answering these four questions honestly and creatively, you bring into focus possible positioning strategies for your firm. Of these four areas, one will generally serve as the cornerstone of your strategy. For example, WHAT specialists are those who focus on a particular service, such as social, shopper marketing, CRM, etc. WHO specialists are experts in a particular category, such as healthcare, retail, and travel; or an audience, such as Hispanics, seniors, or women. HOW specialists have a uniquely differentiating business model, like a crowdsourced creative department or a virtual structure. WHY specialists are those firms who are explicitly devoted to causes or movements of some kind.
One thing is for certain: the marketing world (and the business world at large) is increasingly dominated by focused business models. The agencies moving up in Advertising Age’s annual size rankings are concentrated in areas like CRM, digital, public relations, and healthcare. The agencies moving down in the size rankings are (you guessed it) the generalists. This trend has been playing out for at least a decade, and appears be accelerating. Some of the "full service" model agencies that ranked 1st or 2nd just ten years ago now rank 10 or 20.
While it’s important to be aware of this trend, it’s even more important to understand the dynamics behind it. The disintermediated marketplace can become an opportunity -- not just a challenge -- if we stay focused on what today’s buyers of professional services will continue to need in ever greater abundance: specialized knowledge and expertise.