The “Why ad agencies should act more like tech startups” meme has been making the rounds for some time in the form of provocative tweets, panel discussions and blog posts. The conversation tends to focus on social media strategy and incorporating tech talent into creative teams. But this sidesteps the bigger picture: If agencies really want to act like startups, they need to reassess their relationship with ideas. To take the best of both models, it's worth first considering how they differ:
Tech startups are based around automation and efficiencies.
Agency business models are based around increasing billable services.
Agency creatives are paid on retainer to ideate. Outside the walls of agencies, freelance creatives are paid when an idea is produced. Both freelancers and tech startups understand that only the strongest ideas have value, and therefore they invest time accordingly.
Retainer-based relationships, by nature, encourage bureaucracy and inefficiency (anyone that’s ever had to pay a lawyer can attest to this). In advertising, its a vicious cycle: Clients demand heaps of work because they pay an arm and a leg each month for service. This heightened demand, in turn, increases the need for more agency resources.
This approach is becoming unsustainable. The media landscape is shifting from one in which marketing requires singular, broad ideas to one requiring multiple, hyper-targeted messages. Marketers still have big budgets and still need to speak to multiple demographics. But rather than spend a million dollars for a single message that speaks to everyone, they will spend a million dollars for 1,000 messages that speak to 1,000 mini-audiences. In order to facilitate this, how can agencies retool to increase volume without decreasing quality controls?
Using the Web 2.0 approach, we envision agencies becoming aggregates: decentralized networks of ideas and specialized talent where creative directors work more like creative curators, able to tap into an eclectic database at need rather than relying on a single, convenient team that must continuously justify their cost.
Hollywood agents have long known how to make a lucrative career out of identifying a great idea from within their network and building the perfect executional team around it, and like tech startups (but unlike agencies) money doesn’t change hands until the idea is a go.
Tech startups connect data: math is objective.
Agencies make emotional connection: creativity is subjective.
The business of buying media is already well on its way to automation thanks to the web. Though media agencies and tech startups swim in the currents of quantifiable data, emotional connectivity can’t be created via algorithms. Powerful, nuanced storytelling--copywriting, filmmaking, graphic design--communications strong enough to influence people’s habits, well, this simply won’t ever be automated. And it’s here that creative agencies are irreplaceable.
Tech startups exist to service an opportunity in the marketplace.
Agencies exist to service a client’s opportunity in the marketplace.
Startups and agencies alike always ask themselves, "What is the problem we’re solving?" If agencies want to think more like tech startups, they might focus less on clever storytelling and more on utility. In today’s media rich, attention-poor world, offering people something of use is the best way to cut through the noise.
Advertising that services a market need is nothing new: Michelin Tires created the Michelin Guide in the early days of the auto industry as way to get people driving from the city to the countryside. National Life Insurance created The Grand Ol’ Opry during the radio industry’s inception as a way to reach rural customers. As paved roads and radio connected the global village at the turn of the last century, what value can agencies provide consumers as the web builds new villages today? What keeps Nokia’s agency from creating the next Foursquare? Or Petco’s agency from making the next Angry Birds? Nike’s "Write the Future" and the Old Spice guy were the year’s best ad campaigns. I loved them as much as anyone. But I didn’t spend more than a few minutes with either--I was too busy devoting my spare moments to a relationship with Angry Birds and Foursquare.
Tech startups begin with the big idea, then seek to monetize.
Agencies start with a budget, then seek the big idea.
Tech startups are led by entrepreneurs with an appetite for calculated risk. They understand the need to keep costs low and generate market value. The successful ones are then rewarded by the marketplace. Agencies are led by marketers who are encouraged to increase (billable) costs and whose incentives aren’t directly tied a return on the investment. Instead, their reward comes from industry accolades. This is a conflict.
If agencies really want to act more like tech startups, they should be willing to personally invest in their ideas. Tech startups accept failure as part of the process. Understandably, trial and error isn’t well-regarded when working with someone else’s budget, But why aren’t more agencies willing to put skin in the game in exchange for a fair performance-based compensation? One where remuneration is tied to data-driven, quantifiable results? Lawyers, freelancers, Hollywood agents, and tech entrepreneurs are happy to work on contingency for winning ideas. If your agency (or client) isn’t willing to invest heavier in risks and rewards, then the answer is clear: Your agency shouldn’t act more like a startup. It’s simply not the model for you and there is no shame in that.
But if you have ideas that you believe are strong enough to survive in the marketplace without the patronage of a client’s budget, ideas worthy of earning consumers’ increasingly demanding attention, then put it to a WWED test--What Would Edison Do--in honor of America’s most successful tech entrepreneur who once said: “Sale is proof of utility, and utility is success.”
Adam Glickman is the founder of The IdeaLists, a creative platform that matches ideas with talent.