I recently sat through a fascinating talk by David Abbott, recently retired from Abbott Mead Vickers BBDO. The erudite Abbott was expressing relief that he would not personally suffer the painful changes traditional agencies would have to make over the next decade, changes so absolute that if they survive, the companies we know today would be unrecognisable.
My experience in new media within a large network agency and now a small digital media agency has only fuelled my concerns that 'big' agencies need to change culturally and structurally very quickly.
Greater flexibility in small operations seems the most obvious point of difference. The simple fact that you start with a blank piece of paper means you can improve on what is good in traditional agencies and then go on to create new and better ways of working. This means the opportunity to develop workflow processes better suited to the new ways of working, which can serve as the foundations for removing some of the administrative drudgery that has dogged digital media buying.
A new beginning also means an opportunity to create environments of innovation and reward (stakeholder) that are better suited to the way work patterns have changed, the ultimate effect of which should be to attract the best of the talent pool.
An honest approach to staff and clients as a cornerstone of your business plan has huge business advantages. Loyalty and a highly skilled workforce translates to real competitive edge.
But training within larger agencies is quite often seen as a necessary expense, not a crucial investment. Employee-reward strategies more often than not are based on profit now, and not for rewarding innovation in new areas. The failure to restructure to accommodate the new skills has been an area where bigger agencies have struggled.
In the 80s, many large agencies were dismissive of the direct marketing phenomenon, and ignored it despite large amounts of budget disappearing below-the-line. This meant they then had to go out and pay top dollar either to buy direct marketing companies or invest in the necessary skills.
Unfortunately, the legacy of this lack of foresight has resulted in the mix of communication skills being isolated and never truly integrated.
We are seeing the same again with new media, but with some important differences.
One of the most difficult things for the traditional big agency to grasp has been the understanding that digital media is fundamentally different to other media, in that communications are also distribution. This has often resulted in a failure to understand the strategic business challenges facing clients.
Interaction is non-linear and this has been especially hard for the creatives to grasp, although many agencies have received some solace in grabbing the TV budgets from naive dotcoms that thought they could build a brand in 12 months.
Short-term strategic business planning and the need to deliver dividends and bonuses based on share price to the chosen few is the real betrayal of the talented and hard-working people at agencies.
The irony is that the traditional agencies have the relationships and core marketing competencies to exploit the new opportunities. It is frustrating to observers and clients that they have not moved quickly enough yet.
As the industrial society transforms into an information network economy, there is an urgent need to acquire new business perspectives. They will need to learn to operate with new rules if they want to survive and prosper.
This has finally started to happen, although I suspect it has been driven by clients, but it is a little late and still not on a large enough scale.
Alan McCulloch is managing director of i-level.