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Why clients need agencies now more than ever

Published on Friday, 13th March 2020, contributed by Armadillo

Why clients need agencies now more than ever before

By Chris Thurling, Executive Chairman at Armadillo. 

Since I entered the industry in the mid-Nineties, the “agencies are dead” trope has periodically done the rounds. Various extinction events have been predicted: the Internet, off-shoring, in-housing, disintermediation, artificial intelligence and so on.

And yet, through all the challenges agencies have faced over the past 25 years trying to convince the corporate world that they “are not dinosaurs on the brink of extinction” or fighting back against the presumption that they aren’t “fit for purpose”, the agency model stubbornly refuses to die.

If anything, the evidence points to something that is instead very much alive. Despite the Brexit turbulence, UK agencies – especially niche independents and smaller groups – are flourishing. According to the annual Benchpress survey, 34% of agencies grew by more than 25% in 2017 and agencies turning over more than £1m per annum averaged a healthy 16% net margin.

Despite the data, a lot of the MDs and CEOs I speak to are worried that extinction is imminent and that an asteroid is about to hit planet-agency. And when you read comments from industry rainmakers such as P&G’s Marc Pritchard, who criticised many agency models as “archaic” and “overly complex”, you can understand why people continue to fret.

"There are bucket-loads of opportunities if agencies are smart, agile, gritty and willing to adapt."

A bit of fear isn’t a bad thing in business, it keeps you on your toes, and a drop of cortisol in the right doses can improve performance. But as a sector, we mustn’t let our fear of the future cause us to freeze. Some tough challenges have come our way, and there are probably more of them arriving at a higher speed than ever before. However, there are also bucket-loads of opportunities if agencies are smart, agile, gritty and willing to adapt.

All those headwinds that your business is facing, well, guess what? It’s likely that your clients are facing them too, tenfold. Imagine, for example, if you were running a high street retail operation right now, you would think being the CEO of an agency was a walk in the park. There are thousands of brands disrupted by the likes of Amazon, Uber and Google. These firms aren’t going to re-invent themselves by employing more accountants and lawyers or by just cutting costs – they need transformative ideas, and that’s where agencies come in.

My clarion call is for agencies to create clearly defined market positions, stay focused, be open to collaboration, have faith in the power of creativity and remain infectiously optimistic.

In another 25 years, I suspect that most of today’s agency brands will have disappeared, but I am pretty confident that the agency model, in some shape or form, will still be with us. Vive le agency!

This article first appeared in Decision Marketing.