Econsultancy, in association with the IPA, has just released a report on the future of agencies.
There are many trends addressed in the report, including strategic shifts in advertising, flexible client engagement models, varied remuneration models, the war for talent, and the combination of human and machine intelligence.
But, one area I wanted to highlight is the often trite but nevertheless important ‘left-brain right-brain’ debate.
The report’s subtitle is rather more poetic (‘systems and empathy’), and there’s plenty of content within that goes some way towards a definition of what this means for agencies in the current landscape. Here’s a brief summary for you…
‘Waves of commoditisation’
Some of the people interviewed for the report spoke about the squeeze on traditional areas of agency margin. The squeeze is enacted by technology and automation, staffing costs as agencies employ broader and scarcer skills, and changes in client procurement.
To defend against this squeeze, agencies have to change their propositions, and report author Neil Perkin draws an analogy with city planning and the thinking of social innovator Charles Leadbetter.
Leadbetter describes ‘systems and empathy’ as the two categories of ingredients that combine to make brilliant cities:
- Systems for process, methods, reliability, scale, efficiencies and uniting disparate components with a common purpose.
- Empathy as in affinity, human connection, insight, and rapport – in order to understand, come together, find common ground, share and exchange.
A lack of systems leads to chaos, and a lack of empathy leads to incompatibility, discord, coldness. Perkin’s simple chart (below) visualises this dynamic.
In Leadbetter’s example, London was at its best during the 2012 Olympics, a time when ‘lots of people [used] efficient systems to have a highly convivial, charged, shared experience’.
What does ‘systems and empathy’ mean in practice, for agencies?
For agencies, systems equates to the adept application of data, technology, and technical delivery at scale. And empathy means human-centred insight, understanding and creativity (everything we associate with creative advertising).
Perkin and his interviewees for the report argue that agencies have to understand the full spectrum of systems and empathy (even if they do not offer every service along its length) in order to create their proposition.
Context is changing quickly so agencies must act fast. Large consultancies (traditionally good at the systems bit) are acquiring creative and design talent. In the other direction, agency holding companies are beefing up their data and technology expertise.
Propositions to suit the customer experience revolution
Agencies must understand their expertise in systems and empathy, because this dynamic is present in the increasing prioritisation of customer experiences amongst clients.
Businesses increasingly need agencies that can not only strategise and design, but build and execute, as they:
- replace legacy systems
- join up data from multiple channels
- reinvent processes
- transform the client business in response to consumer and competitive context
- move from products to services
- commoditise comms and look to deepen client engagement
- build new platforms and capabilities
Agencies must make the most of clients that are not just designing services, but are targeting continuous improvement. Focus on front-end experience and digital design needs to be supported by effective back-end integration.
As Perkin points out, “The lines between traditional classifications are becoming increasingly blurred, the need for flawless integration ever greater.” This blurring leads us to the logical conclusion about agencies that are fit for purpose – that they must look beyond the marketing department.
Agencies must look to move beyond marketing
The customer experience revolution is bringing down the walls of client silos and promoting cross-functional capability. As this happens, the marketing department (as the voice of the customer) is becoming more influential.
Agency propositions must mirror this change, and emphasise their significance across the business. In short, the future of agencies may be competitive but it is also widening in scope.
Subscribers can download the Future of Agencies report today.