2 Major Factors Challenging Agency Business Models to Evolve

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The world is evolving fast and its effect has spread to the creative agency sphere. The world is collectively waking up to the benefits of a growth mindset over a fixed mindset. This growth mindset is drastically changing the agency-client partnership. It is forcing agencies to change or evolve their business models. Prospective clients are no longer asking agencies to demonstrate a specific capability. They are more interested in knowing how an agency’s business model is prepared to adapt or evolve to stay ahead of the curve.

2 Major Factors Challenging Agency Business Models to Evolve

Clients are now asking “With all of this change taking place, what will you do to help us stay ahead of the curve?”. For agencies to stay ahead of the curve they have to be able to evolve their business models to enable them to stand out in this already competitive industry. On this post, we will be discussing 2 major factors challenging agency business models to evolve. These factors are the themes of change that are already impacting how agencies work every day and how agencies are planning for future growth and prosperity.

2 Major Factors Challenging Agency Business Models to Evolve

AI is finally good enough for practical applications.

Just a few years ago, digital agencies were competing on the strength of their pay-per-click bidding expertise and proprietary optimization technologies. That has all changed thanks to automated bidding that’s available on platforms like Google and Facebook. These automation has streamlined the whole process and has done a way better job than we could ever do. The platforms have more data on the user than what is being exposed to external bidding control, and the bidding algorithms have become smart enough to consistently hit targets. 

As a result of AI taking on more of the platform-level optimizations, there is a decreasing need for agencies to employ as many technical experts whose skill sets are siloed by channel.  Now agencies should require more omnichannel marketers who can orchestrate a connected customer experience across multiple touchpoints.

People are seeking advice digitally.

According to a  Google report, mobile searches prefixed with “should I ___” have grown by more than 65 per cent in the past two years. When customers turn to search to determine their best options, there is a growing expectation that the search engine will leverage what it knows about them to deliver a personalized recommendation.

This trend has been accelerated by the rise of voice search, natural language queries and digital assistance, creating a significant opportunity for the “teaching” brands willing to produce enough content to support their customer’s entire decision journey. Glossier is an example of a brand that has very successfully leveraged a content platform to disrupt the beauty industry, allowing the product itself to take a backseat to the people who use it and how they use it.

For businesses in which the final transaction occurs at a physical location, online-to-offline attribution becomes critical in understanding how an investment in strategic content is driving revenue. For agencies who traditionally bill on a percentage of media spend, it’s an uphill battle to scale content practices and advise clients to shift budget from working media to pay for the content creation—despite the growth opportunities presented to clients looking for these services.

Source: Adage

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