As the advertising industry contends with myriad challenges, the endless speculation over “the agency of the future” continues. How can agencies succeed in this environment?
It is possible to thrive in the current industry conditions. Adweek just published its first-ever list of the 100 fastest-growing agencies. I’ll dig into that later in this post. First, I want to look at some examples of what agencies on Adweek’s list are doing, taken from their coverage here and here.
What the Fastest-Growing Agencies Are Doing:
- Erich & Kallman: “Built an approach that keeps creativity a priority while cutting down on unnecessary administrative costs and infrastructure that slowed down the process.” Solved: bureaucracy inherent in legacy agency models; unnecessary meetings; slow content delivery; longer, inefficient work weeks.
- MediaMonks: Background in production gives it “a fresh outlook on approaching client challenges,” incorporating production into the creative process earlier. Solved: slow content delivery; agency-client communication challenges; viewing in-house agencies as a challenge.
- Falkon: Creates branded content at the “intersection of advertising and entertainment,” with a team of “hyphenated individuals” with multi-disciplinary capabilities. Solved: client-agency communication challenges; organizational bureaucracy; financial inefficiency; slow content delivery.
- Quirk Creative: Rejecting the “ludicrous,” growth-stifling pitch process to grow as a “no-pitch agency.” Solved: wasted time and resources.
- Quirk Creative: Specializing in video content. Solved: positioning challenges; lack of perceived area expertise; unfocused messaging; unclear value.
- Obviously: Getting beyond reliance on “ideas” and “talent” to authentically communicate what makes them unique. Solved: lack of differentiation; inability to communicate what makes them unique.
- O’Keefe Reinhard & Paul Chicago: “Partnering with talent outside of its walls,” including freelancers, studios, think tanks, and strategists. Solved: growth challenges; top-notch creative access; siloed thinking from a single industry perspective.
- Egami Group: Being “very open to working with other agency partners.” Solved: Can’t get a seat at the table; inability to be flexible; closed to new ways of providing solutions.
As these examples show, your agency’s path doesn’t need to be wildly different to solve significant challenges to its growth. You might be surprised to see that some of these are fairly “low-hanging fruit” actions. Can you incorporate any of these to solve your agency’s growth challenges?
Adweek’s 100 Fastest-Growing Agencies
Let’s dig into Adweek’s recently published first-ever list of the 100 fastest-growing agencies from around the globe for further inspiration. According to Adweek, the criteria for inclusion is that they must have provided three years of earned revenue from 2016 to 2018, with a minimum of $250,000 in revenue for 2016. Adweek audited the self-reported figures for accuracy, and the agencies were required to certify their reported revenue figures.
Among Adweek’s 100 fastest-growing agencies, the average growth from 2016 to 2018 was over 300%. Five agencies had greater than 1000% revenue growth. According to Adweek, “85 of the top 100 sat between $10 million and $50 million, and 23 had revenue of over $50 million, with several clocking in at nine figures.”
Small, New, and “Full Service” Agencies Dominate
Twenty-three of Adweek’s 100 are categorized as large agencies; 30 are described as midsize; 47 are classified as small agencies. The vast majority, 60%, have been operating for less than ten years. 30% have been in operation for between ten and 20 years. Just 10% have been in operation for over 20 years, and only two of those broke the top 50.
Geographically, 14 of the 100 fall into the category of “Global” (which excludes the U.S.); 5 are in the regional category “U.S. Southwest”; 13 are categorized as “U.S. Midwest”; 29 are described as “U.S. West”; 12 are classified as “U.S. Southeast”; and 27 are categorized as “U.S. Northeast.” Nineteen are in Southern California; 21 are in the New York Metro Area.
While the fastest-growing agencies span many different disciplines and categories, a whopping 60% of them are categorized as “full-service agencies.” 10% are media agencies, 6% are experiential agencies, 5% are influencer marketing agencies, 4% are branding agencies, 4% are production houses, and 2% are strategy agencies. The following categories were each represented by 1% of the agencies (or one agency each): B2B Marketing Agency, Consumer PR Agency, Content Studio, Creative Consultancy, Direct Marketing Agency, Entertainment and/or Sports Agency, Multicultural Communications Agency, and Promotional Marketing Agency.
I recommend reading through the agency stories to understand how they were able to carve out profitable paths and thrive despite often unfavorable market conditions.
Comparing the Fastest-Growing Agencies to “The Agency of the Future”
In recent years, I’ve written about the “agency of the future” more than once.
- poor website UX
- clinging to the past vs. finding solutions for future growth
- taking all new business indiscriminately
- neglecting a process-based approach to agency new business
Building on the conversation around what an agency of the future looks like, and incorporating more recent perspectives*, here are some qualities that have been considered either necessary or favorable for agencies of the future.
Qualities for agencies of the future:
- Flexibility (a.k.a. agility, nimbleness, adaptability)
- Data and analytical capabilities
- Efficient agency business operations (possibly outsourcing admin functions)
- Flexible staffing ability (a.k.a. ability to scale, tapping the gig economy)
- Partnership and collaboration-forward
- Exceptional creative talent
- Value-based remuneration model
- Experienced leadership
- Expertise in new technology (including AI)
- Smaller size (or larger size)
- Specialization (or end-to-end services)
- Ability to be profitable even in a project-based environment
- Ability to build and sustain stronger client-agency relationships
- Ability to earn clients’ trust
- Outcome-oriented; contextualizing creative work with business results
- Client-orientation vs. agency-orientation
- Effective positioning; ability to communicate what makes them unique
- Agency diversity (especially in leadership and creative directors)
(*For example, see coverage of General Mills’ CMO Ivan Pollard in Marketing Dive and The Drum; Adobe’s Future of Agencies; Lindsay Stein in AdAge; Florian Adamski in Adweek; Darren Woolley in The Drum; agency leaders debating the management consultancy model in Campaign; agency leaders reflecting on a recession in AdAge; and agency leaders discussing profitable models for the future in Adweek.)
What Sets These Agencies Apart?
Looking at Adweek’s fastest-growing agencies (which is, to be sure, a diverse group) it’s clear that many of the agencies share some of these qualities. For example, reading the agency stories reveals how they’ve been able to build partnerships and create new business structures for greater efficiency. And nearly half of them are small agencies. On the other hand, mid-sized and large agencies are also represented, so maybe size is not the most important factor in determining an agency’s success.
Adweek’s Doug Zanger wrote of the agency growth stories in the introduction to the 100 fastest-growing agencies: “It also points to talented, dedicated individuals and teams that ignore the noise around them to focus on what they do best: delivering big time for their clients and brands.” Zanger may have a point. Perhaps, more than any other single factor, the common denominator among these 100 agencies is the ability to deliver “big time” for their clients. Agencies that are able to do that set themselves apart, and if you think about that for a minute, it’s saying a lot.
I’ve seen a number of thoughtful articles recently about fallacies in agency thinking and considering where agencies are headed. Florian Adamski’s comparison of the advertising industry to the U.S. railroad industry is one example. Another is from Darren Woolley of TrinityP3. Woolley took agencies to task for being completely out of touch with their clients’ business performance and failure to position their solutions in the context of business growth.
In his article, Woolley rightly called out industry insiders for repeatedly claiming that agencies’ inherent value lies in their talent pool, flexibility, and creative offering. He points out that “these are actually not value drivers, or benefits, but simply a list of agency features,” which are no more than “entry-level attributes,” and really just table stakes for any creative agency. What’s disconcerting is that the industry insiders Woolley referred to were unable to pick that up on their own.
It’s critical for agencies to shift their perspective and get hyper-focused on solutions for client challenges and business outcomes. Some who know me are aware that my brother owns an agency. If he asked me for advice on how to navigate the current industry conditions, I would tell him to pay great attention to all of the qualities listed above for “agencies of the future.” But above all, to focus on delivering “big time” for his clients. Some of the future-agency qualities provide guidance on how to go about doing that. I would even consider incorporating them into a quarterly meeting to evaluate how competitive your agency is for each of those qualities on an ongoing basis.
How is your agency preparing for the future?
- Holding Companies and the Agency Model of the Future
- The “Agency of the Future” or Bust: A Look at Data, CX, and Tech
- 5 Things That Will Prevent Your Agency From Thriving in the Future
- 6 Agencies Taking An Off-the-Beaten-Path Approach To Their Business
- Why Accuracy and Authenticity Matter for Agency Positioning