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Why Agencies Of The Future Need To Be More Versatile

Agencies don’t just need to offer new services to stay relevant—they need to be more modular. This was the key takeaway of an Adobe-hosted panel at Advertising Week Europe in London, which brought together experts from both the agency and client side to discuss how their relationship is evolving. (CMO.com is owned by Adobe.)

To In-House Or Not To In-House?
Brands are eager to gain more control over their data and ad spend, which has many debating whether to bring these operational elements in-house and stop relying on agencies for the service. But as Alex Steer, chief product officer at media agency Wavemaker, told Ad Week attendees, the reality for most companies is more nuanced.

“Control doesn’t have to be a wrestling match between brands and agencies,” Steer said. “It’s about proximity, and a good agency leader will work with clients to serve their needs instead of fighting for control.”

His views were echoed by Phil Duffield, managing director of Adobe Advertising Cloud EMEA. Duffield said he believes certain expertise, like programmatic advertising, are better handled by agencies.

“What brands really want is transparency, especially transparency into how their data is being used,” he said. “And that might just mean developing a more open and collaborative relationship with their agencies.”

The End Of ‘High-Class Outsourcing’
Across the panel was consensus for a new dynamic between brands and agencies. Chris Swarbrick, head of technology at Omnicom, made the point that with hundreds of agencies to choose from, it can be overwhelming for brands to understand what they all do, much less choose the right partners.

“We are no longer in the era of high-class outsourcing,” Wavemaker’s Steer said. Instead, agencies need to be “accelerators of their clients’ vision.” This represents new territory for agencies, he added.

Speaking from a brand’s perspective, Kitty Poole, marketing director at Doddle Parcel Services, added that the agency landscape is not only bigger, it’s also more complicated.

“Do I get a large agency that can do it all? Do I go for a specialist? These are tough decisions for a business of Doddle’s size, so what I look for is an agency I can collaborate with,” she said. “I need to see them as an extension of my marketing team.”

An Opportunity, Not A Threat
This transformative period presents challenges for both sides, but it also presents an opportunity for brands and agencies to better serve each other’s interests.

Adobe’s Duffield used the challenge of fragmentation in the advertising supply chain to illustrate this point.

“It’s difficult for companies to deliver a true omnichannel experience when they rely on walled gardens to manage much of their customer data,” he said. “By joining forces with agencies to find solutions to these problems, we have a better chance of overcoming them as an industry.”

Poole conceded that it’s not just agencies that must evolve. Clients also need to stop treating agencies like vendors, which can be counterproductive and breed toxicity in the relationship. She acknowledged that brands should be more engaged in what their partners are doing, and they must upskill their teams to foster a more productive relationship that is beneficial for both parties.

Marrying Full Service With Versatility
Speaking at Ad Week the previous day, WPP CEO Mark Read broke down his agency’s four focus areas as it continues to transform: communications, experience, commerce and technology. Anyone who is managing a client for WPP should be able to comfortably discuss these four things, he said, but few have the necessary skill set.

Read’s approach reflects a wider trend among large agencies, which understand they must broaden their services and build new expertise. For Adobe’s Duffield, the need to diversify is not just reserved for agencies. He explained that Adobe’s strategic acquisitions of Magento and Marketo last year were motivated by customer demand for an end-to-end offering, covering everything from traditional advertising to ecommerce and shoppable experiences.

While a full service offering is valuable, it’s more important to be versatile than to be everything to everyone, Omnicom’s Swarbrick added. Similarly, Wavemaker’s Steer said the term “full service” is outdated as it implies all or nothing, rather than the ability to serve each customer’s specific needs. Quoting the phrase “big is a collection of smalls,” Steer added that brands will increasingly value a modular relationship that offers a full spectrum of services but with the option to tap specialist needs.

For brands, Poole said the idea of full service is hugely attractive for companies like Doddle, especially given the challenges that go with asking multiple agencies to collaborate. However, she also said agencies have some way to go in building the necessary skill sets and adapting their approaches to work in a more modular way.

Personalization Through Technology
The panel also reached consensus about technology’s role in personalizing customer experiences.

“Personalization is crucial, and today that means more iterations, more work, and more outputs,” Poole said. The only way to manage this larger output, she said, is with help from technology.

Omnicom’s Swarbrick went so far as to say it would be impossible to serve customers’ needs today any other way, especially as brands become more data-driven. Citing data capture, activating data, and dynamic content optimization, Swarbick said there are simply too many pieces to manage without technology. Here, too, agencies will need to help brands understand how these systems are being used.

The panel expressed optimism about artificial intelligence (AI) and its ability to help fuel greater personalization, but raised some caveats.

Adobe’s Duffield brought up the challenge of data fragmentation within most businesses. According to Adobe’s “Context is Everything” report, nearly half of businesses said their data is stored in too many systems for them to draw actionable insights from it. Encouragingly, they are investing in ways to unify and consolidate their data and break down silos, and more than one-third (36%) are already using AI to personalize their services.

Poole was cautiously optimistic. She is highly receptive to AI or any technology that can solve a business problem, she said, but there needs to be a clear business case. Both agency leaders agreed, but added that AI shows enormous potential. What brands need is to set clear objectives and develop an understanding of how AI can serve their specific needs. Otherwise they risk ending up with a vanilla solution that will do little to differentiate them.

Linking Art And Science
When asked whether AI and data-driven business are killing creativity, the consensus was that both pieces must work in tandem if brands are to best serve their audience.

“You can’t create a good experience without good creative,” Duffield emphasized. “It’s the underpinning ingredient behind everything your audience values.”

Brands today must find a way to marry the art of creativity with intelligence. Great creative is what breaks through to customers, Poole acknowledged, but without the right data and analytics, brands won’t be able to get the right creative in front of the right people at the right time.

There is work to be done in this regard, and it’s affecting results. According to Adobe research of 600 brands across Europe, only 31% said they are getting personalization right. Much of the tension between data and creative comes down to the metrics teams set for themselves, which tend to focus on internal reporting rather than business objectives and outcomes for customers.

All four panelists were adamant about the need for change. To paraphrase Steer, a business thrives when it is data-driven, not spreadsheet-driven.   

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