A recent op-ed by the Managing Director of Rawnet demonstrates how agencies can abandon traditional models made obsolete by digital media and thrive in a new era.
Companies across all sectors have struggled to match the blistering pace of technological innovation, but that task has proven especially challenging for advertising agencies. Working to appeal to very broad demographics of people, often for companies in a wide variety of industries, these firms must stay ahead of the technological curve to both maintain market reach and stay profitable in an era that is quickly rendering their traditional model obsolete.
But the savviest in the industry are proving that the agency is far from extinction. A recent op-ed written by Adam Smith, the Managing Director of Rawnet, demonstrates how some agencies are adopting new technologies like AI and shifting their approach to keep up with the pace of disruption in their industry.
Smith argues that agencies no longer can offer the tactical benefits they once did for brands. As a result, agencies now get most of their increasingly limited revenue from full-time equivalents like headcount or through kickbacks. At the same time, the marketplace has never been more competitive or oversaturated, which has forced vendors to participate in a race to the bottom in terms of cost and quality of work that has predictably further depreciated their value to brands.
Unless agencies can offer dirt-cheap prices, many of the tasks they’ve traditionally taken on can now be performed more efficiently in-house, often by new AI-enabled technologies. This shift is forcing agencies to adapt by shifting their focus from delivery to strategy. Instead of continuing to deliver singular actions, Smith argues, agencies need to develop new perspectives and techniques. These then should be combined in a holistic manner, as agencies should draw on knowledge accumulated from every industry they work in to help clients find additional value in their new technological capabilities.
As Smith puts it, “The agency of 2018 must offer insights that make an immediate commercial impact, it must bring a wealth of knowledge from field experience across all sectors, and it must offer a new perspective.”
In order to evolve and thrive in the current digital ecosystem, all agencies need to place an emphasis on transparency with their clients and move away from broad, vague terms like “digital strategy.” For Rawnet, this meant redefining their services to concretely reflect what they had to offer, including value proposition design, product and service development, and bespoke business applications. Though these are specific to Rawnet, all agencies will need to similarly distill and redesign their core services and offerings.
Agencies shouldn’t look at this tech-inspired disruption as a threat or burden, but as an opportunity to expand their capabilities. To do so, these firms will need to quickly abandon traditional models, completely restructure their operations, and seek out efficiencies. There’s no one simple way to adapt and evolve, but this rapid transformation of the advertising and marketing landscape is already underway and agencies need to take note.