Decideware

Steve Fajen argues in CMO Strategy that the agency model is not in fact broken, but is bent by three 'seismic marketplace fractures'.

He explains those three fractures, are:

1. Short-Term Accountability

Various forces have conspired to demand greater short-term accountability from agencies.

Those forces include: the rise of the agency holding company model and their drive for growth and economies of scale; the growth of media buying companies and their focus on accountability; the introduction of purchasing departments into the marketing department; the role of compensation consultants; and the search of the ROI holy grail.

2. New Compensation Practices

Steve quotes ANA research indicating just over half of clients are 'offering incentive plans to their agencies based on  performance goals' and that value compensation is the hot topic of conversation currently.

Value compensation shifts the emphasis of payment away from head hours to pre-defined goals - some of which are typically sales goals - encouraging agencies to think beyond delivering more than advertising alone.

3. Proliferation of Everything

Professionals and consumers alike are overwhelmed with information and this makes it difficult to focus on what is really important.

The Impact of these Fractures

The impact of these fractures, Steve argues is significant, including:

Short-term: Discontent -  '49% of CMOs polled intend to put their accounts in review this year.

Long-term: Reorchestrating the Agency Model - If agencies must be more accountable for achieving greater business success beyond traditional advertising metrics, they need a bigger seat at the marketing table to influence factors which drive those metrics, including sales.

The Next Step: 'A Blue-Ribbon Panel'

Steve argues the ANA and the 4As must better collaborate, perhaps via a 'blue-ribbon panel' to map out the future direction of the successful agency structure.

Author: Derek Groom. (Decideware)