Why agencies must move from a buffet model to à la carte service
The Media Leader Podcast
Just one in 10 (11%) major multinational brands believe the current agency model fits their future needs and one in four big brand marketers say the current agency model is “unfit for future purpose”.
Those are just some of the findings from the World Federation of Advertisers and consultancy MediaSense, whose Future of Media Agency Models report in October called for “a new breed of agile, specialist, tech-focused agencies”.
How should media agencies react and adapt? In a recent episode of The Media Leader Podcast, Ryan Kangisser, director and practice lead, models, at MediaSense, spoke with editor-in-chief Omar Oakes about how agencies are increasingly responding to marketer needs by moving to an “à la carte” model of service.
Listen to an excerpt of the episode or read a transcript of the conversation below:
The Media Leader: The study found that nearly all — 92% of brands surveyed — believed speed and agility are important but, despite that, less than a third are satisfied with how their agency delivers in terms of speed and agility.
I mean, what’s the issue here? This is client service. If these advertisers want something, why can’t they just get it?
Kangisser: Because I think if you consider just how many touchpoints, for one; the way that agencies have been historically organised has been around those very touchpoints.
For brands wanting to deliver this omnichannel, experience-led output, it involves a lot of people. They may be people within the same agency, within multiple agencies; you’ve also got the in-house element as well with those brands that have been on that journey.
It requires a tremendous orchestration of all these different people, stakeholders, data, technology, approaches, to bring it all together.
That’s really all in the pursuit of delivering to consumers what they want when they need it, but of course it’s not as simple as it seems.
Of course, with the potential around automation ahead of us, it should become easier and faster, but getting in the way of that is arguably certain processes and practices on both sides, which are holding back the ability to leverage the power of automation and deliver at that desired speed.
I would argue even within a consolidated model it may not always be as fast as within a decentralised, decoupled agency model.
The Media Leader: When you’re starting off a pitch process, when a big advertiser wants to review its media agency count, for example, they must be having this conversation with you beforehand. How are you getting these demands written into the briefs that you’re putting out when you’re running these pitches?
Kangisser: I think that there’s been a real shift particularly over the last two or three years where brands are being a lot more precise and intentional about what they want from their agency.
If you’ll forgive the analogy, it’s becoming less about the all-you-can-eat buffet and more à la carte, where they can be more directive about the capabilities, the type of operating model, the commercial model, that is required to support the organisation.
How that manifests is that in the briefing process brands will be very transparent about themselves and how they’re organised and structured, and therefore identify where and how the agency can better supplement or complement that model.
Now, they may well be looking for the agency to be that orchestrator or alternatively they may just be looking for an agency to supplement expertise in areas that the brand may not have. But I think that level of prescription is probably how that’s manifesting today versus what may have been historically, where you serve out a list of requirements and the agency comes back with how they choose to organise themselves around that business.
There is a key blocker — or enabler, depending on how you look at it — around the commercial model. Because of course many would argue — and it came out in the study — whether agencies are remunerated by fees or by commissions or deliverable-based models. That equally needs to be aligned with the desired change and the type of way of working.
Taking automation as an example: that flies entirely in the face of a fixed team model, because it doesn’t really incentivise agencies to be more efficient with what they deliver. Moving to maybe more output, outcome-based, there’s a lot more opportunity and incentive to move towards those type of models.
To summarise, it’s brands being very much more prescriptive about what they want from agencies.
The Media Leader: You used a really interesting analogy just now. You compared à la carte, which is what marketers increasingly want, versus what they might have had before, which is a buffet.
Now, Ryan, I’ve been to many buffets and I know that there are some good things, but that there’s a lot of fodder that you want to avoid. You want to get your money’s worth by going for the lobster as opposed to the pasta. But generally when I’m ordering à la carte I expect to pay more. Is what you’re saying, essentially, brands are going to need to pay more for this upgraded service? And are they willing to do so?
Kangisser: Yeah, I think it’s a combination of paying more, but paying differently as well, which I guess is the à la carte.
We’ve also written a lot about the crisis of talent in our industry. There are certain skills that are more scarce and are more transformational to clients and therefore carry more of a premium. We’ve identified that around data and insight, ecommerce.
Arguably, and this goes to the piece around integration, we need more of those integrators rather than just the deep channel specialists. That, again, comes out of the wash with that greater prescription around what we want. Part of that is being very precise about the capabilities that they need and we’ve seen the data around salary inflation in some of these areas.
I think there’s certainly a recognition that these skills cost more. But I think what brands are looking for is to balance that with some of the operational efficiencies that will come through automation or just better ways of working.