Rethinking the Value of Marketing Expertise

3) Conglomeration of Expertise – Corporate engineers woke up in late 90s with a bold idea: Lets buy up a bunch of small specialized agencies and create a network of global services and revenue streams. This conglomeration allowed room for charging lower fees while making up the difference in volume. International footprints meant cheaper labor costs and globally delivered services and technologies, which also brought costs down–making these behemoths even more competitive and able to charge razor thin margins. This tidal shift turned the marketing services industry into a bottom-line driven business making it impossible for mid-tier agencies to compete. Brands loved the savings as well as the cache of being represented by these world class giants with well-established names and the promise of stability.

4) Measurement: A Friend and Enemy – The rise of Digital marketing provided another addiction for brands: measurability. The lure of online marketing was the real-time metrics that they provided. Once given a taste of this new elixir, now every dollar spent needed to be validated—and the metrics and data management industrial complex was created. Of the belief that now all media investments could be tracked directly to sales or clicks, brands stopped spending heavy dollars on creative and strategy and placed their larger budgets on executional services like search and performance marketing. Even brand marketing campaigns could be measured based on views, duration, completion, etc. This addiction to measurability created even more stringent margins–and created the industry of ad fraud, delivering fake results and hence increase profits.

5) DIY Marketing Platforms/ Access to Knowledge – The middle and bottom tier of marketers introduced a whole new industry of turnkey DIY automated marketing tools, designed to allow even the lowliest back office manager feel like a CMO. At the same time, Google evolved as the new encyclopedia Britannica (and Grad School) for the masses and Facebook’s two-click paid ad platform enabled a coffee shop owner to run highly sophisticated marketing campaigns for less than the cost of their linens. With powerful tools and endless info at her fingertips, everyone became a marketing expert. This revolution only further helped to diminish the value of marketing expertise. “$200,000?? My kid can do this for $50 bucks!”

So, what are marketing agencies to do?

1) Specialize - The Full-Service agency model is over. The conglomerate’s vision of the one-agency-for-all-things backfired. Heart Surgeons will always be more valuable than Generalists. Not only because healthy hearts are a necessity, but also because the perception (and reality) is that specialists have deeper knowledge, higher acuity, greater focus and hence demand a higher price. Once an agency can take ownership of a specific discipline, they can demand better pricing and set their terms.

2) Make Strategy, not Execution, the Lead – and charge for it - Executional agencies quickly become commodities. They essentially become sweatshops that can be dumped for the lowest bidder. Deep thinking and problem solving is a premium – and represents the most important aspect of what clients need anyway. A trend over the last 10 years is to dangle strategy out as a carrot to get the voluminous executional contracts. This has backfired as cheaper options and DYI automation tools become available to brands. Strategic chops cannot be outsourced.

3) Pick The Right Clients - Large mainstream brands have the luxury of choosing among the many – because every agency wants their business. This makes for a one-sided relationship. In today’s world, choosing the right client is as important as choosing the right spouse. Clients must become partners—not revenue sources.

4) Evolve and Expand your scope of knowledge – Now more than ever, marketing services are interconnected and holistic. A TV spot is not just deployed via traditional broadcast—it becomes your interstitial, pre-roll and social media content. Agencies must develop a much more comprehensive understanding of how their specialization is deployed, consumed, re-engineered and operationalized in today’s complex marketing ecosystem. Agencies that get the big picture deliver better results and help clients make better decisions.