The Year Ahead For Agencies: Experts Weigh In On 2021

Posted by Deltek Partner Guest Blog on December 17, 2020

The Year Ahead for Agencies

In our recent webinar, The Year Ahead for Agencies: Experts Weigh In On 2021, our panelists had such a great time sharing their valuable insights that they weren’t able to get to everyone’s submitted questions. Below our panelists tackle a few of those lingering queries.

Have you seen any shifts in agency structure to better accommodate clients’ needs?

As the industry continues to evolve, marketing-side clients have become less and less interested in the classic pyramid organizational structure so many of us grew up in.

Clients are seeking partnerships that provide them access to more senior-level talent at greater scale. This desire is shaping modern organizational design for creative organizations in a couple ways:

  1. Flatter organizations | Deploying more talent that can fluidly oscillate between ‘think’ and ‘do’
  2. Greater distribution of responsibilities traditionally held by account services | Creating multiple direct business partnership access points that mirror a client’s organization (e.g. data lead, strategy lead, creative lead)

                - Melissa Lentz, CEO, MAGNET Global Network

What was the biggest agency misstep in Q4?

When the vaccine news hit in Q4, we all took that breath of anticipatory relief and saw a glimpse of light at the end of the tunnel. The biggest mistake an agency could make in Q4 came next: Beginning to mobilize a return to the known and comfortable pre-Covid times.

This pandemic is less a drawn-out disrupter, and more so the inciting incident in a transformative movement that will change the future of work. No comfort or satisfaction will be found in reassembling the pieces we knew from the Before Times.

Agencies that will truly thrive in the future have seen this year as a step change. They have re-evaluated their creative process, client partnership models, and talent strategy. And upon news of the vaccine in Q4, they turbo-charged those efforts to ensure they catapult out of the pandemic – sticking a new landing for a new era.

                - Melissa Lentz, CEO, MAGNET Global Network


 

[Webinar] The Year Ahead for Agencies: Experts Weigh In On 2021


Our panel discussed their 2020 business experiences while giving advice on how to thrive in 2021.


Watch Now

 

Multicultural marketing: How can ad agencies target ethnic markets differently in 2021?

I am not an expert in multicultural marketing. I am middle-aged white man. However, I am self-aware enough to ask for guidance from leaders of two multicultural agencies, Rai-mon Nemar Barnes of Consciously in New York, and Eduardo Perez of PM3 in Atlanta. The following will provide you with of few of their guiding principles:

First, educate yourself

Whether you plan to hire consultants or take to social media listening of listening (e.g. #blacktwitter), apply your marketing skills to truly learn and then serve the audiences. 

Lost in translation

Realize that marketing effectively to ethnic/multicultural segments is not about language or the ethnicity of actors in ads - it’s about culture and mindsets and communication based on insights specific to those two elements. Adapting your general market campaigns into Spanish is not marketing to Hispanics; it’s marketing in Spanish. It is not marketing designed to connect and appeal to cultural cues and mindsets.

Shift the lens

Understand the difference between how the world sees them (black/Asian/Hispanic) and understand how they see themselves (Nigerian, Ghanaian, ADOS/Chinese, Vietnamese, Indonesian/Mexican, Puerto Rican, Colombian). Sub-segmentation is a critical element of multicultural marketing. 

Collaboration is the new currency

Do not jump in and create or solve FOR these groups. Create and solve WITH these groups. Hire and/or include these communities in the development of strategies, messaging, production and activation to ensure that you achieve both relevance and resonance.

Partner with a specialist

No explanation required. I am happy to make the introductions.  

                - John Harris, President & CEO, Worldwide Partners

During this period, how can we sustain/and still grow a responsible and sturdy business?

Regardless of whether you are thriving, surviving, or diving, you must lean in. This is not the time to remain comfortable or uncomfortable. We are operating within a very dynamic and evolving marketplace, so I would be planning everything - client plans, forecasting, resource management - on a 90-day basis. Optimize along the way to adapt to new market conditions, but keep your eye on the horizon. Don’t think of it as short-termism; think of it as incrementality.  

Lean into your positions of strength – what is the greatest value you can provide to your current clients that they are willing to pay you to do (at a fair price, of course)? Operationalize your organization around that position of strength. Then identify how you can expand that position of strength to grow existing clients and acquire new ones.

I’m not talking about a “pivot”, I’m talking about a “stretch”. Pivots are hard. It is virtually impossible to make a 180-degree pivot, credibly and effectively without a strong foundation (Try it. No really, stand up and try it). Now try stretching. It’s easier, because you’re extending from a strong base. An obvious example within our industry is experiential agencies, many of which forced into producing virtual experiences. The challenge they faced was that $200,000 live event budgets dropped to $20,000 virtual event budgets. A logical stretch, but not financially sustainable. A better example are the agencies who responded quickly during the pandemic to stretch their digital media capabilities within the programmatic space quickly and efficiently via platforms like Centro, and into the ecommerce space with Amazon marketplace platform Salsify. Relatively small investments to protect and expand their client base from a position of strength.

Lastly, stay close to your teams. They are your ultimate position of strength. Keep them informed, include them in the process, and listen. Transparency and empathy are your killer apps.

                - John Harris, President & CEO, Worldwide Partners


 

"Agencies that will truly thrive in the future have seen this year as a step change. They have re-evaluated their creative process, client partnership models, and talent strategy."
– Melissa Lentz, CEO, MAGNET Global Network

 

So many of our clients have taken marketing/social/content/design in-house over the past few years. This is partly to ensure a consistent tone of voice across activity/channels. What opportunities are there going to be for the small bespoke agencies to thrive?

Great question! We’ve been tracking this trend in our annual Global Digital Outlook Study with Forrester for several years now. In our 2020 study, 71% of client-side marketing leaders agreed that the in-sourcing of digital capabilities had impacted the extent to which they partner with outside agencies and 55% of agency leaders agreed that digital in-sourcing had negatively impacted their business. Interestingly, 42% of client-side marketing leaders had planned to increase (or hold flat) their spending with external agency partners in 2020 and 50% were only planning for a moderate decrease … despite the in-sourcing. So, what’s going here? 

A couple of factors to consider when looking at overall impact of client in sourcing on the agency business. First, spending on digital (in particular) continues to grow YoY. Even though some is re-allocated to in-house teams, the overall pie is larger and the piece for agencies isn’t necessarily smaller. Second, the impact of in sourcing varies significantly by service/capability area and very few marketers have in-sourced everything. Many marketers use a hybrid model with in-house teams running day-to-day execution and operations while agency partner focus on special assignments and new initiatives.

Finally, client-insourcing is at least partially related to the desire for more flexible and collaborative working models. In fact, “More Flexible/Nimble Working Models” was the #1 area where client-side marketers are looking for improvement from their agencies. And, when it comes to in-sourcing, they cited “Cost Savings,” “Time to Market” and “Flexibility / Agility” as the top benefits they’d achieved with in-sourcing.

This all adds up to show that there are opportunities for bespoke agencies who can collaborate closely with in-house teams, offer specialized, project-based services, help augment and train in-house teams and deliver work in a more agile and iterative way. If your business model is based on a retained team to run and execute marketing operations, you will be under greater pressure. If you can make some of the shifts above, you’ll find plenty of opportunity even amid this in-sourcing trend.

                - Tom Beck, Executive Director, The Society of Digital Agencies

Who is better positioned for the new (potentially tumultuous) year—larger creative agencies or smaller?

The market for digital, creative, experience design and marketing services continues to grow, and the needs of our clients change and evolve every year.  It’s a big tent out there and there’s lots of room for agencies of just about every size, flavor and persuasion. As I look ahead to 2021, I don’t think that “large” or “small” is what distinguishes those who are well positioned to thrive or, on the flip side, fade away. It’s more a matter of where agencies are likely to face more or less pressure. There is more pressure than ever for agencies to have the right mix of talent, specialization and operating model. And that’s what will separate the wheat from the chafe … to use a folksy adage.

Talent. Even coming out of a pandemic and global recession, great creative talent will be hard to find and attracting/keeping it is a combination of exceptional culture, clear values/purpose and a sense of impact with the work you’re creating. Even though most agencies are eager to get back to a “normal,” in-person working environment, many will operate with at least some partial, remote teams and that means more competition for talent with fewer geographic constraints. When it comes to exceptional talent at agencies, there is a growing gap between the “haves” and the “have nots.”

Specialization. The idea of a full-service agency that can do just about anything (or even a lot of things) appeals to a smaller set of clients. While some will inevitably value the scale and efficiency that comes with a “full-service” agency, the growth of in-house capabilities, complexity across mediums/formats/screens, intensive competition (both for clients and agencies) and a continued explosion of technologies from which to choose means that more clients are looking to their partners for specific puzzle pieces rather than the whole picture. Agencies need a clearer value proposition and clear sense of where they fit into clients’ ecosystems. Specialization doesn’t have to be too narrow or too niche, but it does need focused enough for clients to easily spot your glimmer of differentiation in a sea of sameness.

Operating Model. Competitive pressure, pricing pressure, project-based assignments, in-house teams and market pressure to move quickly and iteratively (but in smaller, beta-like chunks) favors agencies that are more agile, collaborative, flexible and laser-focused on client impact. Think of your agency more like a highly trained, Special Forces team rather than a large, standing army. Agencies that can successfully plug in and out of clients without requiring large, fixed retainers to support their high, embedded cost structures will have an advantage.

                - Tom Beck, Executive Director, The Society of Digital Agencies

Want to hear more from our panelists? Watch the full webinar here.

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