Choosing the right agency: Part V

Part V of our series in choosing the right agency, features the advertising agency. What do ad agencies do and what they don’t.

What is an advertising agency?

Traditionally, the landscape consisted of mainly advertising agencies, as the digital arena didn’t really exist. They made enormous profits through charging large monthly retainers, sizeable sums on top for ‘extra work completed’, then marked up everyday things, sometimes by 500-10,000% as clients weren’t aware of the original costs of things. Everything has moved on today. Traditional ad agencies still exist, through they’re shrinking in number and merging together to reduce costs.

The advent of the full-service advertising agency.

Thinktank brought the concept of full-service agency to the market in 1997 – 22-years later we’re hearing about one-stop-shops and full-service agencies, as if they had just been invented. The original agencies farmed out much of their work to third parties and hired film crews, repro houses and freelance art directors. The same still happens today. Clients (thank goodness) are a lot better informed than in the 90s, however whilst they may not be charged huge markups anymore, many freelancers still provide much of the work for clients, positioned as in-house agency staff.

The bigger picture

Clients now have a much better handle on what they want and the power is shifting towards in-house teams who cherry pick the individual agency services required. The need for big ideas still exists and clients are happy to pay a premium for this type of service, but the ad agency role is very much shifting to one of a consultancy led model. And, like it or not, at the top end, this is where the large consulting agencies who don’t yet fully understand creativity – are winning a lot of accounts.

The ad agencies who will survive this new landscape are the ones who merge or cut out the unnecessary fluff and oversized teams, replacing this with a more analytical eye which they’ll need to fuse with their core strength – creativity. Clients are looking to agencies to share some of this risk now and will approach agencies with a view to sharing some of this risk – making some agencies nervous about what they’re signing up to.

The truth of the matter is that much is being written about the changing landscape, yet the future looks uncertain because the rate of change is happening so fast that by the time an article has been written (like this), more change is happening.

marketing-led advertising communications

Thinktank’s ethos is that need comes from an understanding of what the end-customer wants. Effectively this means that a good advertising agency thinks first from the end-customer’s perspective to identify the need and produces creative ideas based on meeting these needs. Effectively this is marketing-led communications as the need is one based on the way that experienced marketers work. This is the opposite way that many advertising agencies or communication agencies work.

With a marketing-led ad agency service, the need is very much a marketing need, based on customer desire rather than just being creative and clever for the sake of it. In truth, if you understand the need and have the creative ability, you can serve a better solution than an ad agency, for significantly less. That’s what clients want –  the savings come through efficiency, knowledge and understanding and there’s never a compromise in terms of creativity.