Agencies are Fucked.

Back in the 90s when I first launched DEATH? Cigarettes, as a small fish in a big pond, it was clear that the Traditional Marketing Agency model was fucked.

Of course, nothing has changed. Previous Publicis CCO Nick Law summed it all up again in 2019 “If change doesn’t happen soon in our industry then we’re fucked. It’s as simple as that.”

Production houses are building direct relationships with clients and outsourcing creative talent on an as needs basis.

Tech companies and nimble consultancies are encroaching on traditional creative agencies from the digital front, through the social territory and through precision marketing.

Businesses are ‘in-housing’ creative talent.

The reasons are obvious, particularly for smaller companies: Cost. Flexibility. Specialization. Focus. Commitment.

So why are the bigger Agencies so stuck in the mud? Why haven’t they adapted, pivoted, inverted, pin & hinged, flipped (or any of the other buzzwords they use so casually)?

Why are these super creative talent-rich businesses so incapable of change?

Simple. Because the business of Agencies is anchored in ‘Keeping the Retainer’ rather than ‘Doing the Job’. They need a constant stream of money, and lots of it, to pay the creative types they employ. As an Agency, if you want to sign up an award-winning creative talent, it’ll cost you.

And don’t forget the beautiful creative offices, collaborative spaces, nice views, fancy conference rooms, marble reception area, graffiti art on the wall, craft tea, award shelves, happy hours and lattes. The eye candy. They need all that to keep the creatives happy and convey success to potential clients.

As an Agency, the minute you cash up for all of the above, you’ve got a fixed overhead that has to be covered (read ‘charged out’). So you need a fixed pipeline of cash.

You need a fix.

Jobs come and go. They are sporadic, unreliable. Retainers chug on. Naturally then, Agencies try to get clients on a retainer. And then, equally naturally, Agencies become addicted to the retainer, not the jobs.

A newer trick is to offer workshop days. Another massive bill to employ Prada-wearing executives and serve them up biscuits while they ‘look under the hood’. Same wolf, new clothing.

Agencies are locked into a structure that doesn't best serve clients anymore. Agencies serve themselves.

So Agencies have fallen into a trap of their own making: To increase revenue, they need to slow down the actual work and put more people onto the necessary work of selling more work to new clients. It’s a Ponzi scheme that drags the Agency's best creatives away from existing client work to focus on pitching for the new.

For every one of these reasons, Agencies become misaligned with the promise they make to their clients.

The traditional agency-client service model is costly, overhead-intensive and centred on the agency, not the client. It’s short-termist; a one-night stand pretending to be a long-term marriage.

It’s bad for business.

In many big Agencies there are a whole bunch of people whose job is to essentially sit around and wait to approve or disapprove someone else's work, happy to take the glory and dish out the blame.

For all these reasons, it’s rare that clients' needs mesh with the hourly rate necessary to support the overhead of the traditional model. Agencies really only exist to service large corporates with high workflow.

They should throw the littluns back in, but they don’t. They just rinse them instead.

Smaller clients are catching on, albeit slowly. The more agile are looking for teams with fewer people, shying from the retainer hurdle.

It’s understandable: when was the last time you put your mechanic on a retainer to upkeep your car? You don’t. You pay for the jobs as they crop up.

Truth is each marketing execution, each ‘job’, can be outsourced on an as needs basis if you have the contacts and the production capability to deliver. This flexible approach has another benefit; it means being able to contract the best talent with best practice for each unique application.

So why do clients still use Agencies?

• Management is lazy. Easier to offload the whole job onto someone else rather than ‘manage’ it yourself. And you get taken out to dinner. Nice.
• Management hasn’t got the depth and reach to get the best freelance talent and doesn’t know how to manage the talent when they do. (Tip: Creative talent needs to be hugged not squeezed).
• Management is afraid of the responsibility. If it all goes to shit then they’ll have to take the blame (and conversely, nobody ever got fired for hiring Saatchi & Saatchi).

But, let’s be fair, using an Agency makes perfect commercial sense if the client is at a scale where it can really benefit from the full roster of the Agency services.

When Chelsea play Man City, it’ll be a great match. The teams bring out the best in each other. It’s magic. When Chelsea play Accrington Stanley it’ll be mostly shit, especially for Accrington Stanley.

The prudent, smart, more frugal and agile businesses are turning to a more ‘hands-on-deck’ approach that's scalable and flexible. An intermediate, fractional model.

I often hear, "I just need a few seasoned people who know what they’re doing to get stuff done for us," or "I could just use a little bit of a Chief Marketing Officer" or "If I just had that one creative, I could spill over the idea into every channel" or "We need the Marketing expertise and top creative talent but we can’t afford the rates".

Increasingly I’m hearing, “Our Agency just don’t care”.

True that.?

They don’t.

The emerging fractional model, also called ‘The distributed model’ means clients get the maximum value for their money and don’t have to pay for fixed agency overheads.

Developing a distributed network allows business to have access to extra hands and expertise that can be adjusted as needed. Flexibility. Dialled-in, dialled-up or dialled-down.

‘The distributed model’ puts the client at the centre and is turbocharged by the power of creative entrepreneurialism. Freelancers are hungry, they care.

‘In housing’ talent, employing an in-house team, is another option, but then you’re really fucked if the talent ain’t so talented, and chances are they’re not, because otherwise, they’d have a job at an Agency!

Now to ‘Planning’ and ‘Strategy’. The sauce on the Agency offer. The ‘scientists’ of the Marketing community. The mysterious practice of deciding how and where to spend your money.

Agencies talk a good game when it comes to planning and strategy. They’ve got a 57-slide deck to share, quietly undermining your confidence, convincing you they know best. So you nod sagely getting ready to pay the bill.

Naturally, they charge a premium for this high-end voodoo. They normally trot in some geeky-looking sort in a corduroy suit who talks through screens of data and then uses this data to justify an intricate ‘Media Buying Plan’ based on a clever sounding ‘Media strategy’, with creatively named target audience groups. (Best one I heard recently was the ‘Secondary Vertical Gardener Group’ – the young planner clearly didn’t recognise the pre-woke connotation. Being woke, I didn’t enlighten her).

Expect to hear phrases like ‘Best bang for your buck’ and ‘Minimum threshold spend parameters’. Watch acronyms juggled fluently: TGI. ABC. KPI. CRM. ROI. CPA. AI. Be memorized by the jingo: Omnichannel. Geofencing. Long tailing. Attribution. Coolhunting. Clickbait. Mastige. Lordy! The show goes on.

And it’s brilliant.

The bamboozling end game is a spreadsheet looking suspiciously like something an accountant would be proud of.

It feels like ‘science’.

It’s not.

It’s expensive theatre.

But… and this is a fucking big ‘BUT’… at their best, the media planning nerds are incredibly valuable.

And that is why, the truth is, (no matter what they say and how much they protest) most agencies farm this mission-critical work out to media buying companies. The in-house geek normally isn’t up to much. They are waiting to get spotted. The best media buying companies employ the best geeks as a ‘value add’ for their high-spending clients.

These uber-geeks are the cream of the ‘Agency-geek’ strategic planning crop. And the ‘cream of the cream’ obviously go to the biggest and best media buying houses, who pay more. The high priest or priestess of these selected few, is the media buying house ‘Creative Director’. Fluent in the science, a Master of the Art, a Curator of the Content. These are the Wizards behind the curtain at heart of Oz.

In all honesty, as a Client in the Agency cash machine, you don’t see these types unless you’re spending shitloads on Media.

But, happily, these guns are for hire in the freelance network. Another reason to go down the distributed road.

So in summary, you don’t need to pay for Agency overheads or their shareholder's margin.

You can collaborate with freelance talent who are more flexible, more committed, operate with minimal overheads and provide the same or better output at a significantly reduced cost.

Agencies are fucked.

Footnote: For proof positive of ‘Life after Death’, join us to enjoy DEATH? Cigarettes reincarnate as a streetwear label: register now at www.deathcigarettes.com

? BJ Cunningham C/O DEATH? Cigarettes