The marketing agencies of the future: 4 new models

The world of large marketing agencies is undergoing a major organisational change. Up to now, the landscape has been dominated by a small number of globally operating agencies, which have grown over the decades through theacquisition of small, specialised and verticalisedagencies in the five macro areas of:

• creativity and branding;
• digital
• media planning and media buying;
• public relations;
• market research.

These small agencies are financially dependent and accountable to the parents, but are completely autonomous operationally and often in competition with each other. Each agency performs back, middle and front office functions internally, thus not integrating and optimising resources at group level.

This model, however, is crumbling for three reasons:

• Due to pressure from the external market, with new technological developments, new platforms and an increase in production costs.
• Due to clients who are increasingly looking for teams capable of creating an omnichannel and integrated customer experience and who are no longer willing to bear the costs of coordination between different agencies.
• Due to the high level of internal competition between agencies within the same group.

The spectrum on which large groups can act to respond to these pressures and create more integrated global agencies therefore concerns the back office, middle office and individual business unit functions. In particular, there is a move towards group-wide centralisation of back and middle office functions, thereby optimising costs and offering different solutions for operational business units.

4 new agency models

#1 Status Quo

This model tends to centralise back- and middle-office functions at the group level, while individual agencies continue to operate as individual brands.

#2 Discipline Driven Business Units

In this case, the various business units are rebranded, linking them both to the type of activities they perform(branding, media buying, PR, market research, digital) and to the group, which internalises the back and middle officeactivities.

#3 Interdisciplinary Business Units

While back and middle office are centralised by the parent company, this model also provides for grouping three of the agencies’ core activities into a single business unit: branding and creative services, media buying and digital, while PR and market research remain separate units. This is because digital activities are now integrated into every strategy, so they act hand in hand with branding and media buyingactivities.

PR and market research remain stand-alone units because they generally require very different skill sets and activities than the other functions, e.g. reputation crisis management. The market research activity remains independent because it has to provide neutral information in order to be useful to the other units.

#4 One Brand, One Agency Experience

In this model, all operational archetypes(branding, digital, media buying, PR and market research) are integrated into one business unit, delegating the back and middle office functions to the parent company and the highly specialised services to the other units.

This is an extreme reorganisation compared to the structure of the current model, but it allows for fully integrated marketing experiences, facilitating co-ordination and information transfer.

Given all these possibilities, what is the best model?

Certainly, the choice depends on many factors. First of all, the business and growth strategy of the parent company; if, for example, the group aims to grow through acquisitions of other agencies, surely the most suitable model is one with fewer business units, since it allows for easier integration.

Another determining factor is the customer base; these must be ready and structured to interface with integrated business units, which is not easily managed if they are organised in vertical silos.

Finally, another determining factor in choosing the new model is the readiness of management and figures within the agency to change, since it implies new habits and new balances of power.