The marketing industry has been changing faster than ever. Brands have swung from hiring small agencies to building in-house creative agencies, and they may now even be heading back to network agencies. How should agencies adapt to the changing landscape, from the people they hire to the business they chase?
Kabeer Mamnoon, co-founder and CEO of Ready State, moderated a panel discussion on May 3 at the iMedia Agency Summit in Lost Pines, Texas, called From Agent to Ally: The Modern Agency's Survival Guide. Here are edited highlights of the conversation.
Kabeer Mamnoon (CEO of Ready State): Thanks for coming. We are going to talk about how to build an agency that can evolve and adapt to a changing environment. What are today’s environmental variables, and how can we set up our systems and processes to evolve when things change more like an organism than a mechanism?
Woody Meachum (group director of digital strategy at OMD): At OMD in Chicago, I handle State Farm insurance and BMO Harris Bank. I'm bringing the gigantic-agency role to this panel.
Brian Easter (co-founder of Nebo): At Nebo, we have about 80 people, and I'm humbled to be on this panel with these guys.
Kirsten Cutshall (president of Steel Branding): We are a family-targeted marketing firm in Austin. We are only about 25 people, but we tend to get really close up with our clients as a consultant. We handle great brands in consumer packaged goods, health care, and education.
Mamnoon: Brian, yesterday, you asked, "Are agencies even agencies anymore?" What did you mean?
Easter: Thanks to firms like Epsilon and even some of the bigger ones, there's a fusion of agency practices, from providing traditional professional services to building products. Running an agency is hard enough; layering in other things adds unique challenges.
Cutshall: We're really benefiting from the fact that the world is remembering that we fall on the marketing spectrum, under the P of promotion. With pretty much anything within the promotional space that we can help our clients with—brand, product, pricing—we get way up close to our clients. We are able as a smaller, more agile firm to offer a lot of consulting.
I used to hate that word. I promised myself I would never try to be a consultancy or a chin-scratching philosophical type of firm, but we really are called on to give a custom service offering. We make sure that either we've got the skill in-house, or we access it. It's been a fantastic opportunity for us. The changes in the market we look at as exciting. We don't let them scare us. We tell our staff not to be scared because a smart person always has a job.
Mamnoon: You talked about agencies evolving into providers of IP and product and consulting. Are agencies skewing more toward productizing their offerings?
Meachum: Yes, though we still want the business consultant seat at the table. Rather than media, we consider our services and approach oriented toward marketing or business objectives.
Cutshall: Right, though our agency will never have the access to the CEO of those gigantic brands. When there's something that's outside of the scope of a brand manager, we get brought in. You guys are getting it at a different level.
Easter: What both of those points speak to is that the agency industry is in crisis. We've been running on a hamster wheel, chasing clients, chasing projects, chasing talent. At some point, somebody's like, "Hey, maybe we wouldn't have to chase this hard, if we had this IP, or if we built this product, or if we built this collection of things."
That might mean taking more of a consultative point of view. Looking at this paradigm, we should all be asking, "How do we have more fun? How do we become more sustainable? How do we have an environment that gets away from what's traditionally known as agency life?"
Cutshall: We had to think about whether to get really big. We have decided to stay small and don't aspire to grow any bigger, because for us the value that we can add is knowing how to solve the problem with what's available. Many small shops overlook that as an advantage and feel like apologizing for it. We don't apologize.
Mamnoon: It seems like staying small is the right decision because of the kind of service you provide. What should agencies sell, if they want to grow fast?
Easter: It comes down to purpose, and to finding and addressing conflict. If you fuse the two, you end up asking, why do I exist? That helps you decide whether to be a 5,000-person agency or a 20-person agency.
It's really about understanding who you are and why people come to work every day and want to work for you vs. somebody else. In an agency, the moment that you lose the momentum, the drive, and the passion of your staff, you're a dead man walking. You need to have a purpose and identity and conflict to solve.
Meachum: A big agency is actually a bunch of small teams. My State Farm team has 12 people. We're all super passionate, and we try to be flexible and nimble within the organization.
Audience member: How do you think about staffing for projects?
Meachum: It comes down to your identity and understanding of why people should work for you and want to work for you. First, we filter clients that align with our human-centered purpose. Then, we recruit for projects.
Cutshall: If you're experiencing an increase in project business, then there needs to be a review, as you would tell a client to do, of what you're selling, how you're pricing and whom you're selling to.
We did the good old business school review of our product, which I think agencies are very poor at doing. What we sell, even though it's a professional service, is a product. We changed our product offering. We changed some of the capabilities we offered. We changed the markets we were going into. We changed the targeting that we had on our sales groups. We're 90 percent retained now.
People ask, "How are you doing that?" I say, "It has nothing to do with how we're selling. It’s about what we’re offering."
Meachum: Sometimes, the hardest thing is to say no to a project. But if you're constantly doing one-offs, then productize, automate. Figure out a way to do it efficiently, and go out and sell that. Otherwise, you're going to kill yourself. You're going to lose people. They'll get burned out.
Cutshall: We're about to do a series of projects for a client over the period of a year. We just added a layer of executive communication and a layer of really abstract internal company communication promoting the project, and turned it into a retainer format with solid, tangible outcomes.
We are afraid to say no when we know it's going to shrink our business, or cost people jobs or bonuses. Rather than saying no, put yourself into a position where, if you say no to one crew, there's somebody else you can say yes to at the same time.
Mamnoon: How do we build companies and cultures that can comprehend these changes and run with them? How do we build agility deeply into our organizations so that if there is a change—in terms of what clients want, and there's a lot of pitching to be done—operations can withstand it, and the culture doesn't suffer? And what sort of people should we be looking for? One one side of the spectrum are really skilled practitioners at niche things; on the other side are brains on a stick who are good at everything but not really skilled at any particular thing.
Meachum: It comes down to ego. So many times, you get stuck in a problem because of it. You don't ask for help, thinking that your method is the only way to get the answer. A person with a big ego might not want to move or learn, and affect culture. If people below you are not willing to let go of their ego to allow for change, you're going to get stuck.
Easter: Other than ego, one of the things that makes change hard is also experience. If you have people that have had 10 years of success doing something one way, it's hard to move them. I said to our creative team five or six years ago, "I don't want to be the 2015 version of the print shops." We have to get out of this mind-set.
Audience member: How do you empower your staff to do that?
Easter: One thing we do is pro bono work that aligns with our purpose and our brand. If you approach more cause-based stuff with the outlook of, “Hey, we want to stretch ourselves and do something cool in an environment where we can fail,” you usually win 10 more things like that.
Cutshall: We do a lot of business training and have a lot of transparency. Everybody in our agency has the ability to see how we're doing in our adjusted gross income. All of our financials are on Google. Everybody shares them. People write notes in them and make memos. We converse with each other from projections to the P&L running across the year. Even our interns can see it.
Doing this helps our employees understand our principles and how the business works—not just the microeconomics of managing the job but also the macroeconomics. It starts discussions like, should we send this work out? Should we send this work in? How do we do this?
We believe that the more work you push to partners, the more you get. And we actually see it because there's a line on projections that will say, here's the work that came back from that partner. That kind of transparency leads to real material conversations.
Mamnoon: Thank you for being an amazing panel. We didn't get to 80 percent of the questions I have on my sheet, of course. We'll have to get to them next time.
Easter: Yes, next time.