One of the most debated topics in marketing and advertising is whether “the agency model is dead or just evolving?” Many wise men have predicted the end of the agency model, referring to technological disruptions (AI), the elusiveness of the digital consumer, the corona crisis, shifts in talent, the rise of in-house teams and independent freelance collectives or the finality of the hourly billing model. Agencies certainly face stiff challenges, but can continue to claim their right to exist and relevance by remaining agile, adapting quickly to these changes and, above all, continuing to provide strategic and creative value that in-house teams on the client side find difficult or impossible to match.
Behind the AI hype
Rarely has a topic been so hot, both in the creative industry and beyond. OpenAI CEO Sam Altman recently predicted that AI will replace 95% of all creative marketing work. AI will certainly take over many repetitive tasks and automate copy and content whenever possible. The democratization of creative output by AI is irreversible. And yes, in some parts of the agency world, this will result in a painful gap in revenue if no provision is made to surf the AI wave that eliminates this piece of production work. For years it was the basis of many creative jobs at agencies. But I cautiously dare to say that it is unlikely that AI will ever become creative itself. Human ingenuity will always be valued and in demand. AI is not a fortune-telling tool that is always right, and besides, the AI tools will take you exactly where you told them yourself to look.
In other words, the more AI and technology will automate our creative work, the more our human-centric skills will become increasingly valuable. The ability to understand people and consumers on an emotional and human level (empathy), connect with them, think critically, solve complex problems, make connections and generate truly original or unconventional creative ideas are, as far as I am concerned, skills that AI or technology will not easily copy. Creatives will always be needed to create work that resonates on a deeper and more human level, away from uniformity and homogeneous output. So there are still plenty of opportunities here for the agency world.
The external eye: creative power
A crucial advantage of agencies is their “external fresh eye.” With this independent view, agencies can influence transformations and tackle the marketing myopia within a company. I regularly speak with CMOs and executives who increasingly report that they have underestimated the value of the external agency. In recent years, corpulent in-house departments have emerged that run internal operations and processes just fine with their UX, design and development departments, but they also acknowledge that the balance has tilted too much toward internal. As a result, they are primarily focused on processes and efficiency and too little on creativity and the customer experience that the client's customer is waiting for. Agencies that have pre-sorted for CX fortunately offer a vital component in integrating the customer experience that makes every customer contact moment a compelling and consistent brand experience. It is also often forgotten that agencies gain a lot of inspiration and valuable insights from other industries and sectors, through which creative cross-pollination can sometimes lead to unique brand experiences. This ability to see the bigger picture and weave creativity integrally through it is what gives good agencies their distinctive strength and where much of the future need of brands is going to be. So here, too, are opportunities for the agency world.
From vertical to horizontal
In fact, we see an important development on the client side. Over the past fifteen years, the digital transformation on the customer side has been tremendous. Almost all channels have been digitized in marketing, sales and service. The Netherlands ranks second behind the United States in the “IMD World Digital Competitiveness Ranking 2023” (the capacity and readiness of economies to adopt and explore digital technologies for economic and social transformation). But the downside of this transformation is that all channels have been vertically digitized independently, resulting in the well-known silos. In almost all cases, there must be horizontal integration of the customer experience, cutting across all channels and fed with integrated customer data. At this level, agencies remain invaluable, especially when they focus on customer experience integration as an integral part of broader strategic (brand) transformation. The client's need for fresh, creative perspectives and cross-functional expertise is sure to keep the agency model relevant and thriving for the foreseeable future.
Business focus
But there is also another important playing field that agencies will need to enter. After all, clients are also looking for agencies that, in addition to creative leadership and innovation, are also willing to commit to business objectives. I think this is a very good development that as far as I am concerned can transform the agency world to a position where we can again show our added value. This is more often true for top SME clients who have initiated a transformation at the strategic level with supported commitment and budget from the board. I am speaking to more and more clients and prospects seeking help in the area of CX integration, where we help them move from a product-focused organization to an experience-focused brand, leading to better business results. Creative agencies shouldn't just be there to make things pretty or “cool,” or to put a layer of varnish over core values. The ideal clients are looking for a two- to three-year partnership focused on business growth, where you will build together to transform the brand, aiming for industry leadership through a unique integrated client experience. Jointly entering into targets based on this will create the most ideal form of collaboration for client and agency, because this way the interests are truly parallel and the collaboration is focused on achieving growth and not winning an award or beautiful work. And again I hear the critics thinking “that doesn't work and we don't have enough influence on the KPIs etc.”, but that's Calimero behavior and that has never made an agency grow. Make the change. Adapt or die.
Less robot, more human
Staying and surviving in the old-fashioned and worn-out agency model is not an option, because in this case I agree with the critics: this model is finite. But I am cautiously positive about the future of agencies, provided they have already made an effort to take action on the above factors. We are all at an important tipping point, where the wheat will separate from the chaff. Where, thanks to the tsunami of AI and technology, we are coming back to the essence of creativity and the role agencies have to play in it. Where technology, AI, data and digital are going to become dependent again on a brilliant creative brand strategy or big idea. People want less robot and more human. The assembly line as of now is content through AI, but the strategic value of creativity is in the openness, humanity and the old-fashioned creative big idea. This has soul because it was carefully considered and made with love. What about the business sense? That comes from humans and not a computer or AI!
The future will always be uncertain and change is the constant thing. But I truly believe that change is the ultimate place where creativity will be needed most. Let's encourage our customers not to become too much robot, but to always keep on communicating with a human voice and identity. Let's help them take the integrated customer experience to a high level that will make them enviable in their industry. With this, we as the agency world can not only position ourselves as a strategic partner, but also take the lead in the exciting new landscape of the creative industry. The future may be uncertain, but for those willing to embrace change and continue to push the boundaries of creativity, a world of opportunity lies ahead. Let me end with an inspiring quote from Socrates, which perfectly sums up what I believe in, “The secret of change is to focus all of our energy not on fighting the old, but on building the new.”