Technology has kept the economy soaring for the past few years, enabling tech agencies to choose their clients and set the terms of the relationship. Recent market ’corrections’ prove that the party can’t go on forever. So what happens to the agency business when the engines cool down and we have a ’soft landing’?
Technology has kept the economy soaring for the past few years,
enabling tech agencies to choose their clients and set the terms of the
relationship. Recent market ’corrections’ prove that the party can’t go
on forever. So what happens to the agency business when the engines cool
down and we have a ’soft landing’?
It will be a buyer’s market - something we haven’t seen in long
Agencies will again compete for clients. The current trend of
consolidating into larger holding companies makes agencies more
profitable, but it also makes it harder for them to properly serve
Clients held captive by high rates and agency demands for equity during
the recent gold rush are still feeling the sting of agency greed.
Agencies will be held even more accountable to cost-justify everything.
Unnecessary spending and marking up expenses will be a fleeting
Leaner, less-costly agencies will appeal to efficiency-conscious
clients, who will insist on paying for results, not plush lobbies or
conference rooms with skyline views.
Some clients may demand agency fees based on results. If this demand
comes from blue-chip accounts during leaner times, some agencies will
give in. Clients may want to pay project rates, and agencies, no longer
in the driver seat, will comply. Agency profit margins will be squeezed
even tighter. Like today’s tech start-ups, agencies will have to work
smarter, faster and cheaper.
Smaller, independent contractors/agencies can react and adapt to change
faster than a large holding company. As companies and agencies downsize,
economically astute clients will outsource marketing communications to
contractors who can pick up the slack.
Even in our next downturn, agencies will continue to have difficulty
attracting top talent. Practitioners have experienced the free-agent
economy and will be able to present themselves as the marketing
communications solution when money is tight. Senior marcom pros will
continue to ’just say no’ to adding two hours of commute time to their
day; there will still be work for suburban clients closer to home.
Trendy restaurants near a downtown agency don’t mean much when money is
tight and there’s a family at home to have dinner with.
Through boom and bust, the changing face of business will lead to more
agencies resembling consulting firms. Some agencies are already offering
telecommuting and flextime to compete with corporate side options and
A change in the economy will cause an evolution that redefines who is
fittest to survive. Undoubtedly, some kings of today’s jungle will
become the extinct dinosaurs of tomorrow.
Jon Boroshok is president of TechMarcom in Westford, MA.