December 6, 2007

Where is agency 2.0?

I got the opportunity (I wouldn’t call it luck) to work with many agencies across Europe for all the projects that we’re developing for MSN and/or Windows Live. This year alone my team worked with agencies out of the US, UK, France, Denmark, Belgium, Spain, Italy and The Netherlands and even as we speak the team is working on 5 projects with 5 different agencies.

Why? Or how come, you might wonder. There are 2 reasons for this. First of all not all agencies have the same competencies and I like to chose where I go with each project. And second, we develop quite a few activities for all European markets that initially were created in one of the countries, and so we end up working with the initial agency as well (at least for part of it).

All of this is just an introduction to what I really want to say though. All the agencies we work with have their own competencies, their own way of doing business, their own strategies … and what not. Still they all the same problem. Over time agencies have been able to optimize how to do agency business, the problem is that this optimization is very agency centric and doesn’t always benefit the client (that is me in this case).

Let me give you an example. When an agency develops a quote for a project we ask them, they will look at who internally needs to be involved, how much work there is at it, etc… Since the designer, accountant, senior strategist all have different rates per hour work, they will calculate how much time each of them will have to work on the project times their specific rate and that will be the quote you eventually get. Price looks good and you give your OK to the agency and that’s when the fun starts. When you get the first designs for instance you might not like it at all and ask a new design – mmm – there was only one concept round foreseen in the budget they gave you, that’ll be extra. It will be like that until all goes live are gets launched. And who benefits from this? The agency does, it fits in the way they plan things, but you as a client pay for a solution don’t you. Not for 1 or 2 designs, iterations, copy changes, … or whatever.

Another example is related to outsourcing. I get the impressions that agencies, especially digital agencies, are outsourcing more than they used to. From an agency point of view I can understand. Look at the complexity of all things web and how fast it all is moving. As a result you don’t try and get all knowledge in house, but you work with subcontractors. What’s new? Nothing you might say, if it wasn’t for the fact that subcontractors are also passing more and more jobs on to yet another subcontractor and then that might be a problem. Why? Commission here, commission there, who do you think pays these in the end?

Anyway, with more and more agencies adopting new ways to get the connection between their clients the advertisers and the consumer, I think it’s time they rethink themselves as well and look at how they can serve their clients, their customers a bit better. Just a thought.

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Join the conversation! 30 Comments

  1. Hi Kris:

    Do you think the Dell/WPP deal might actually deliver Agency 2.0?

    More here:

    http://humanvoice.wordpress.com/2007/12/05/can-marketing-save-dell/

    Tom O’Brien

    Reply
  2. Reality check: an agency could go out of business if it only gets paid for ‘solutions’ (who defines this) and not some measurable metrics. Then you might have the right solution for your project, but the agency may not be around for the next pitch you do.

    Also, you kind of contradict yourself: apart from the fact that subcontractors make the price go up (which is true), if you’re looking for a ‘solution’, then who cares who actually executes?

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  3. @Robin: Why should an agency go out of business for offering the solution I need? I’ll gladly pay for that solution. I also didn’t say that that is after we see the results of a campaign either, it’s defined when we consider a certain campaign to be what we need.

    And thanks but I don’t think I contradict myself on the subcontractors as I don’t care indeed who actually creates the solution, I’m just saying these extra layers can (and sometimes do) cause extra troubles.

    Do I have the solution to what it should be? No I don’t, but I do want to open up the discussion and I do believe it’s too agency centric for the moment.

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  4. The thinkings behind this hits all the agencies not only the online guys…

    It is not new, these days agencies are perceived too expensive but at the same time they are looking for rentability and don’t seem to find it.l
    Look at the poor state of the brand activation agencies of the great networks in Belgium, very few still exist and when they still do they are very small.

    I understand that clients want solutions and don’t want to overpay for it, but I have the feeling that they want more and more for less and less, they are consumer and shoppers after all…

    Let’s look at this as a shopper, if you go to Aldi you go for cheap prices, no advice, no brands, no choice, no fun, no innovation, only “me too” and copy of “A brands”, but you can accept it for the basic stuff and in the same day you go to Delhaize and overpay, your fine food products and some other nicely designed products you will never get at Aldi.

    Same situation in the clothing business, if you’re looking for a cheap but nicely cut costume you probably will enter Zara and go home with a piece of clothes produced in a Chinese “sweat shop” that won’t last for ever… but ok, what else can you expect for the prize you pay?.

    If you want “sur mesure” you enter a small tailor shop that will offer you a solution but the price will be different!
    And certainly if during the different fitting session you keep gaining weight or changing your mind on the colour of the fabric.

    “My tailor is rich”… right! And I can live with that, beacuse he deserves it by delivering quality and service.

    It is obvious that as a shopper goes to different places with different expectations, I am sure that advertisers are shoppers like other and when they go to an agency they must know their expectations in terms of creativity, innovation, price, experience…

    Once they know their expectations and they communicate it clearly to the agency, they should pay a fair price for it, allowing the agency to keep investing in people and technology to be abble to keep servicing the clients the way they deserve it.

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  5. Thanks Alex for chiming in. I agree with you that advertisers are shoppers and to refer to what a friend once told me, the agency/client relationship is always at a ‘low’ when talking about money.

    That said, my team worked with the small 3 person agency from ‘around the corner’ to agencies like AKQA. And I know that they each have their competencies and as such also price. Which is fine. I’m prepared to spend money for the solution I want, but I’m not prepared to pay for an extra day since the creative had a day off and it took more hours to come up with the design (or whatever).

    Reply
  6. Kris – cool post and much to my liking. ;-)

    Tom – The WPP deal is nothing more than an in-house agency ploy to win the Dell business. There is nothing new about the model. My 2 cents.

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  7. Great conversation, Kris!
    I strongly believe that the AgencyWorld is well overdue for an overhaul. In fact, I fully expect a wave of business consultants to decend on the rich agency pickings any day now … once they have a model that can demonstrate the linkage between brand value, activation and the balance sheet, McKinsey & Co will cherry pick the brightest minds and wipe the floor with what/whoever is left.

    This will also solve the problem of budgets — accurate measurement will show the correlation between brand value and share price etc. It won’t all be science at the expense of emotion, of course, it will just be a whole lot more accountable.

    Same for outsourcing … at a certain point you lose ownership of the execution. As and when agencies start putting some skin in the game they will also be more judicious about which parts of their strategy/creative/technology they relinquish to their disjointed and unresponsive supply chain.

    Hmmm … feel better now ;)

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  8. Woah, Gavin downloads a rant. Love it.

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  9. I guess what I wanted to say was: it’s not ok getting charged extra when a designer took the day off and his hours still get put on the time sheets.

    But fundamentally, for a large part they pay their employees based on the time they spend, not on the results they achieve (note that this goes for almost any company in any industry, it’s just the way it is). Judging ‘results’ and ‘solutions’ is too much dependant on one’s opinion, it’s not a good way to determine the price of something.

    What do you consider a solution? It might not be the same definition your co-worker would give, and it might not be the same as the agency folks would give. In the end, we’re all trying to make money, but I sincerely believe there are agencies that simply understand the client’s needs better, and succeed in creating messages that express those needs better.

    I look at your first example, and I ask you: if the agency comes up with a design you’re not entirely happy with, and then again, and then again, and then again, and again. They would have put in 10x more hours than expected, for the same price you bargained for. That means less time for other clients, right. Of course, if this should occur that probably means the agency isn’t very good, but then again you might not have been clear on what you asked for …

    It’s easy to say ‘agencies should change they way they do business’, but it’s not easy to come up with a way for them to change without looking at the whole picture (the economic reality for starters).

    (Again, sorry of my earlier comment seemed a bit offensive, was just joining an interesting conversation when I should have been long asleep :) )

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  10. Robin – if an agency fails to come up with the good again, and again and again it is absurd to expect the client to pick up the invoice for work that is not acceptable.

    It is also the agency’s responsibility to make sure that they fully understand the brief before they start on any work that involves money.

    What we have here, is a post from a very senior manager, responisble for the EMEA markets at one of the largest corporations on the planet. If Kris thinks that something is going wrong, that agencies need to rethink their business practices then they should listen. They should listen very carefully indeed.

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  11. The Kaiser: I agree that Kris is in a much better position to judge, just voicing my opinion and hoping some agency folks will give their perspective here as well.

    Would love to hear from you both what you think a ‘good’ agency should be like?

    Reply
  12. Robin … The Kaiser has a great series on this topic. See http://www.thekaiser-edition.com/?cat=11

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  13. @Gavin & The Kaiser: thanks for adding your comments. This little conversation has sparked some offline conversations as well just before the weekend with some agency people, interesting. I would have hoped to see more agencies giving their opinion right here though.

    @Tom: Didn’t find the time earlier on to read the link you posted. I agree with The Kaiser on this one though, this is just an agency trying to win a pitch. It’ll probably be business as usual when the DELL account is in.

    @Robin: In your comment you give the proof that the whole agency model today is very agency centric: “But fundamentally, for a large part they pay their employees based on the time they spend, not on the results they achieve”. I know this is the case, and that’s all fine with me… that’s how they should probably deal with all this internally. Let’s say you would have had to pay for the Plugg.eu website. Basically you and the agency would agree what it would ‘sort of’ look like, what content and features you needed, … to which the agency would make a quote. Then it’s up to you to agree whether or not you think this budget is right for the ‘solution’ that is presented. Let’s say you do, what happens when the first designs come in and you don’t like them? You give your feedback and you want a new design… and are you willing to pay more because the 3 hours design that were foreseen have already been used? Don’t think so, at least I wouldn’t.

    And this is even only one example showing this agency centric approach, there are many others.

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  14. [...] I’ve gone on record (albeit in German during one of the werbeblogger late night podcasts) and said that every single agency, regardless of size, is capable of producing content that would challenge anything that is currently on the market; whether that be film, television, literature, online, radio, games or events. The skills, ideas and creativity of the people that work within the agencies is, however, being wasted by the people running them and a business model that is increasingly neither meeting the needs of “consumers” nor those of the businesses that are their clients. [...]

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  15. Just to crystalise something that’s been implied in some of the above:

    In the creative industries, the ‘solution’ is not just the final deliverable, it is the entire service provided to a client INCLUDING understanding what they need, what they like and what they have to spend. When a client rejects an end-solution for subjective reasons, the agency has partly failed in their job, which was to understand them (their subjective tastes/biases) and sign off thinking before huge amounts of time is invested.

    Maybe it’s helpful to point the finger at being end-solution-centric and not just agency-centric (although the two are closely related)

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  16. [...] Kris Hoet – “where is agency 2.0“ [...]

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  17. [...] Where is agency 2.0? « ‘Cross The Breeze Excellent discussion about the problem with agencies. How they quote for jobs vs. the return for the customer. All from the eyes of someone responsible for hiring agencies, working with them and then dealing with the work and results. Another must read. [...]

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  18. The process of getting to a solution can not be part of the solution.

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  19. yeah, sorry – I fudged that more than crystalised it.
    Point was, an agency’s service is not just handing over the final thing. If end-solutions are dismissed for subjective reasons and a lot of development time is wasted, then the agency handled the process badly. And the process is a huge part of the service. Innit.

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  20. Andy. Cool – I get what you’re saying now. To me, the process/service part is very subjective with the solution/product being objective.

    Both cost money. If the client starts spending time thinking about the quality of process/service then something is going seriously wrong.

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  21. right. i was just trying to clear up that process isn’t a magical vacuum into which additional budget can tumble without question. if the process requires an element of experimentation, then some boundaries and check-points need to be agreed. I love being sensible. It will mean I save money on clothing when I’m older.

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  22. I’ve always been in favor of accountability. If an agency doesn’t deliver, it hasn’t done its job correctly. Now the key question is: when has an agency delivered?

    The only valid answer I can think of, is measurable KPIs. Every campaign starts with a communication or business objective. I don’t think Microsoft (or any other sain company advertises just for the heck of it.) So basically, the exercise that an advertiser needs to do is ask himself a clear question: “What is my goal and what is that objective worth?”
    The agency willing to commit to that goal at the given price is your agency.

    How does that resolve the design issue? Simple: you pay the agreed price and the agency will be responsible for delivering results. If the objective is sharp enough, the design will have to be cutting-edge, the tone of voice in the copy will have to be spot-on. The execution will have to be damn close-to-perfect. But you shouldn’t care about that, the agency should: they are the ones that committed to results. If their campaign doesn’t work, they’ll have to adapt (and yes, they will have to do that a lot; in true 2.0 spirit, the campaign will be a perpetal bèta).

    The agency willing to do that, is your 2.0 agency. The client willing to trust an agency that much, is your 2.0 client.

    (sorry for the double post of the reaction, you can delete the previous one, I was posting under another account when I published it)

    Reply
  23. [...] agency debate is raging on, with notable bloggers questioning agency quoting practices, briefless content development and how to go about hiring an [...]

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  24. Thanks all for keeping the conversation going while I was at LeWeb3, enjoyed the comment stream :) Just too bad that almost no agency joined this conversation.

    I’ve been thinking on the train on how we could get this conversation more in front of the agencies, together with the whole Content Manifesto: http://www.thekaiser-edition.com/the-content-manifesto/

    Reply
  25. We could always dare Luc to post it on his blog.

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  26. I reckon you can define the terms of ‘the solution’ to the satsifaction of both parties if you try a bit – using metrics that can be measured.

    And another thing – whether they had a ‘solution’ in the contract or not – I bet Nintendo didn’t argue with their agency when they sold out of Xboxes before Christmas and stopped their advertising because they didn’t have any left to sell.

    Reply
  27. [...] Futurelab wonders whether it’s time to kill the art department. Kris Hoet wished he could find Agency 2.0, integrating marketing functions, instead of having to work with a myriad of specialised [...]

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  28. Dear Kris, I enjoyed reading your article as the pain you describe is the reason behind the fundation of Emakina. We still name ourselves “Full Service Interactive Agency” as it’s easyer to get for prospects but we are actually an Agency 2.0.

    First, we integrate all the specialists : we don’t outsource, we don’t use freelancers. This is why we had to grow up to 275 people as the complexity of our work, the challenge we take with our customers need a lot of talent and brains. We work all together in the same agency to help our customers reach their business goal, we take the overall responsibility on the final results. We do not waste time getting business from another contractor or finding who else could be guilty for failure of a project.

    Secondly, you may have notice that our motto is now “Interactive Solutions”. Not “billing as much as we can while trying to achieve something the customer will like” ;-)

    We work in forfeit model with cost estimate per project when we start a relationship with a customer. And we forecast several round of changes for creation. The good news that our talent usually get it right the first time ;-)

    … However, once our customers know how efficient/reliable we are, how creative/innovative we are, and the added creative value we deliver, day after day, we often move together to a time & material billing model which is the only way to pay the right price in the service industry. It’s a matter of getting their trust and their is only one way : begin honest through the all company from the CEO to the simple worker.

    We offered several time to be compensated in a percentage of our customers revenues, or per clic/registration/customer acquisition, but we where so successful that our customer prefer to pay the time our creation cost instead of the real value it create to them. This is unfortunate, and I still hope to get rich one day being paid the right price for our work ;-)

    In the meantime, if you want to experience an Agency 2.0 today, just try Emakina.

    (Sorry for the self promotion but I took your article, comments and twitter invitation as a provocation ;-)

    Reply
  29. Thanks for the comments Brice, and yes it was kind of a provocation I guess so I’m glad to see you stepped in. I honestly hoped to see more agencies here than is the case now.

    And yes, maybe I just need to give Emakina a try, who knows I just might. Let’s discuss in 3 weeks, we could maybe even place a bet on it. We’re in the right place to do so then aren’t we ;)

    Reply
  30. [...] agency 2.0? (Cont’d) 11 12 2008 Right about a year ago I wrote this thought: “With more and more agencies adopting new ways to get the connection between their clients the [...]

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About Kris Hoet

My name is Kris Hoet and this is my blog dedicated to subjects such as advertising, gadgets, interactive, internet, movies, games … and whatever things that interest me. More at http://crossthebreeze.com/about-cross-the-breeze/

Category

advertising, ageofconversation, consumer, internet, marketing, media