Agency doctor: the current agency team will not cut it in the future

Agencies face a bright and promising future, but only if they move away from traditional structures and practices.

Richard Houghton: Associate partner, Agency People
Richard Houghton: Associate partner, Agency People

When asked to write 500 words on the agency of the future, the temptation is to draft a piece painting a picture of uncontrollable change that will leave the majority of PR agencies zombie-like, operating on near-zero margins, picking the crumbs from the table at which advertising and social agencies have the best seats. The reality will be different and it will be a case of evolution not revolution. Those agencies that get the people right, develop new structures and find new ways of charging will fly.

Of course agencies are going to be different by the end of the next decade. Digital and social media mean the services agencies deliver and the skills they will need to do so are going to be different. When you consider what is needed to deliver effective, robust campaigns in a multichannel environment – monitoring, planning, channel management, community development and management, content creation and evaluation – it’s clear that the current agency team is not going to cut it.

Golin and Octopus are two agencies that have taken the plunge in recent years and restructured to allow themselves to easily access specialists that can combine to apply the necessary skills for individual campaigns. But the vast majority of agencies continue to work with traditional team structures and management approaches. It may require another generation of leaders before agencies are fit for the demands of the social world.

This change in team structure and skills will also demand a new approach to talent acquisition, development and retention. We will need to compete and this takes money, so we will have to address the low margins on which much of the agency sector operates. As teams evolve so will the way in which agencies charge. Focusing on paid, owned and earned media provides opportunities to find new ways to generate revenues beyond simply selling time, with the associated issues of perceived value and over-servicing. We’ll see a growing emphasis on the value of creativity, so agencies that can develop creative strategies that engage customers will see very real revenue opportunities, without the need to implement.

While it is seen as dull by many, the successful agencies of the next decade will be those that can demonstrate the value they have delivered in a format and language that senior management can understand. This will not be a one-size-fits-all industry standard evaluation model but will have a replicable core and will be scalable.

All of this development will require clients to want it. No mass client demand, no commercial opportunity, no change beyond the mavericks. Developments will remain gradual and unless clients fundamentally change what they want from agencies they will have a great cross-section to chose from – big, small, network and independent – in 2024.

I’m excited about the future for agencies. There is everything to play for if you are willing to step away from traditional structures and practices – and to confidently demonstrate value.

Richard Houghton is associate partner at Agency People

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