Agency Symposium - Progressive Agency Models, Tim Williams

Progressive Agency Business Models

Presented byTim Williams

Advertising agency income “per unit of work” has fallen 40% during a steady 20-year decline.

We need to disrupt our own business

80%

We need a new Agency OS

There is just as much money being spent in

marketing. It’s just that less and less

of it is spent in “advertising.”

OVERDEVELOPED SERVICES

Satisfied client needs

Overserved markets

Many providersLow margins

“A full-service, integrated agency

offering a wide variety of services.”

OVERDEVELOPED SERVICES

UNDERDEVELOPED SERVICES

Satisfied client needs

Overserved markets

Unsatisfied client needs

Underserved marketsMany providers

Low marginsFew providersHigh margins

OVERDEVELOPED SERVICES

UNDERDEVELOPED SERVICES

Content Strategy

OVERDEVELOPED SERVICES

UNDERDEVELOPED SERVICES

Service Design

OVERDEVELOPED SERVICES

UNDERDEVELOPED SERVICES

Behavioral Economics

OVERDEVELOPED SERVICES

UNDERDEVELOPED SERVICES

Satisfied client needs

Overserved markets

Unsatisfied client needs

Underserved marketsMany providers

Low marginsFew providersHigh margins

Sustaining Innovation

Disruption Innovation

“Garage will be a strategic and entrepreneurial shop that will concept, create and invest in innovative products, experiences, content and technology that will help to redefine the idea of what a modern, global brand is.”

John JayWeiden+Kenned

y

Marketing InventionBrand Performance InventionDesign InventionProduct Development InventionRetail InventionEditorial InventionMedia Buying InventionSocial Media InventionMobile InventionDigital Publishing InventionApp Development InventionStartup InventionResearch InventionHuman Resources InventionPartnership Invention

Marketing Invention

Product Development Invention

App Development Invention

Media Invention

InnovationMobileDesignCreative EffectivenessBranded ContentCyber

Innovation

“Traditionally, agencies have created value for their clients through better and different communications. But brand behavior can now come to life in digital products, services, and experiences.”

Will Nicholls

Creating value for marketers in ways that have nothing to

do with a “message.”

New role for agencies

“Instead of being executors of communication campaigns, we must become inventors, architects and conductors.

The brands we all love see themselves that way. Nike and Apple, for example, don't really make anything. They invent products but leave it to their vendors to build them. It's much better to be an Apple than a Foxconn.” John Winsor

Chief Innovation Officer, Havas

CEO, Victors & Spoils

Agencies as product

developers

Agencies as intellectual

property owners

“Advertising is not a service business. We’re a product business, like publishing and other businesses that deal with intellectual property.”

Jeff HicksVice Chairman, Crispin Porter +

Bogusky

Work for hire?

All campaigns, trademarks, service marks, slogans, artwork, written materials, drawings, photographs, graphic materials, film, music, transcriptions, or other materials that are subject to copyright, trademark, patent, or similar protection (collectively the “Work Product”), developed or prepared by Agency or its employees, agents, contractors, or subcontractors under this Agreement, are the property of the Client, provided: such Work Product is accepted by the Client within twelve months of being proposed by Agency and Client pays all fees and costs associated with creating, and, where applicable, producing such Work Product. Subject only to the two aforesaid Conditions (the “Conditions”), all title and interest to Work Product shall vest in Client as “works made-for-hire” within the meaning of the United States Copyright Act. To the extent that the title to any such Work Product may not, by operation of law or otherwise, vest in Client as a work made-for-hire, or any such Work Product may not be considered a work made-for-hire, all right, title, and interest therein is hereby irrevocably assigned by Agency to Client. In order to assure that its employees, agents, contractors, and subcontractors do not possess proprietary rights in the Work Product that are inconsistent with Client’s possession of such rights, Agency will, as necessary, obtain the assignment and conveyance to Client, or to Agency for the benefit of Client, of any proprietary rights that such persons or entities may have or may have in the future to such Work Product.

Work for hire?

Intellectual property ownership is standard in

other industries

Music

Motion pictures

Television

Publishing

Photography

Illustration

ADVERTISING = ONLY 25% OF REVENUES

“The bulk of Anomaly’s work for the likes of Procter & Gamble, Sony, Virgin, Anheuser-Busch, and PepsiCo revolves around new product development, brand strategy, design, branded content and technology.”

“There are many reasons why ad creators are embracing new ventures. Some are frustrated with providing ideas in exchange for a set fee and want to reap revenue from product sales. Some agencies hope the initiatives will engage employees in fresh ways.

Deutsch, for instance, hopes these kinds of ventures will help the firm recruit sharp workers and hang onto good ones they already have.”

Making money while you sleep

Agencies as talent networks

“With technology, it is now possible for networks to create value in a much more powerful way than organizations can. The expertise that drives organizational value now resides in a network of relationships outside the organization itself.”

Agencies as talent networks

Agencies as talent networks

Agencies as talent networks

Agencies as talent networks

Agencies as talent networks

THE OLD HOLLYWOOD MODEL

THE NEW HOLLYWOOD MODEL.VS

Agencies as studios

Agencies as

Studios

Agencies as

Studios

Agencies decoupled

“Decoupling is the most powerful force in advertising

is the past 60 years.”Avi Dan

Forbes columnist

IDEATION EXECUTION

IDEATION EXECUTION

LUMBERYARD

LUMBERYARD

Agencies as marketing labs

“Innovation doesn’t look like traditional advertising. Agencies have to stop looking for ad-shaped answers to business challenges.”

Renny Gleason,Weiden+Kennedy’s Portland Incubator Experiment (PIE)

Labs

Labs

Labs

“Be 20% more selective in chasing new business, and invest the cost savings in agency R&D and developing intellectual property.”

Tom Finneran4As

As part of the brief:“What is the marketing invention

that will deliver the desired behavior?”

“What do you already to that you can productize? Spend a day to catalog what you’ve already done and figure out how to make money from it in some other way.”

Laurie CootsFormer CMO, TBWA/Chiat/Day

Apply the same creativity to revenue generation as you do to solving client

business problems.

You are not just in the service business

The typical agency income portfolio

Low-RiskLow-Reward

Low-RiskLow-Reward

Medium-RiskMedium-Reward

High-RiskHigh-Reward

The innovative agency income portfolio

“Doing these types of projects really keeps us evolving as a creative entity.  We're able to evolve our compensation with new revenue streams and evolve what we can be, which I think is far more than an advertising agency.”

Neil RiddellExecutive Director of Product

Innovation

“Agencies that can’t find ways to generate value in today’s emerging value ecosystems will find themselves marginalized by the innovators who do.”

Renny GleesonWeiden + Kennedy

“All profit is derived from risk.”

Peter Drucker

www.IgnitionGroup.com

[email protected]

@TimWilliamsICG

www.linkedin.com/in/TimWilliamsICG

Thanks and stay in touch

www.ignitiongroup.com