Diary of a Microagency

Posted by Rowland Hobbs on April 8 at 12:11 AM The media crisis--epitomized by the 140 character dispatches of shutters and layoffs chronicled by the Twitter stream @TheMediaIsDying—has created a great deal of introspection on the media business model. But what of the agency business model? Ample articles, blog posts, hand wringing, panel discussions and chest thumping from marketing agencies are calling attention to the Damocles sword hanging over print and broadcast journalism. Yet, few agencies have turned their inquiries on themselves. If “The Media Is Dying,” is the agency its coffin?

Media development and buys are happening, for the most part, in huge agency settings. The marketing communications vehicle driving our clients to their consumers is ultimately still centralized media. That vehicle is made up of editorial, advertising, inserts or online ads and agencies still predominantly rely on mainstream media to meet their clients' marketing needs. Big Agency + Big Media = Mass Coverage. That model has seen its day as the game has changed and we seek our “new normal”.

Clearly there is a movement to change how agencies help reach clients’ audiences. Yes, there are impressive campaigns on behalf of clients using social media and clearly it is a major force in the need to change. However, the business model of agencies does not rely on social media, it relies on big media. Revenue, either indirectly (reliance on editorial or creative format), or directly (media planning and impressions) is simply baked into the livelihood of the smaller boutique and the holding companies alike. This situation is deteriorating the outlook of the marketing monoliths such as WPP and Publicis Groupe, and we can’t expect it to turn around anytime soon.

Much like the media, agencies have known for some time that the landscape is changing. The lack of change isn’t a sign of stubbornness, but something deeper in the agency business model; something that is so fundamental to how we think about what a professional service firm should look like that it is rarely questioned. It has everything to do with uncertainty and fear.

We like to do what we know works and let’s face it: the big agency model has worked for big agencies for a very long time. It is this steadfast attachment to the traditional agency model that has precluded innovation. It is this model that is preventing a new batch of agency startups and the intrapreneurs (small groups of highly innovative individuals inside large organizations) from helping to solve both the crises in the media, and the future of the agency. Currently there are big agencies, boutique agencies and mercenaries set up using partner and holding company structures.

Partner Structures
Sole proprietorships and partnerships are created to benefit the owner or partners financially. Independence is good--the argument goes--spurring creativity, bucking the trend, and supporting talent. We tend to describe these agencies with sophisticated words like “boutiques”. Structurally, however, there is not much difference here between a small accounting and law firm. The exit strategy is to sell or grow. Value, profit and resources are mostly channeled to partners, and even in very progressive firms, resources don’t fund innovation separate from client work.

Holding Company Structures
When shareholders come into the mix, value is created and then driven outside of the firm. Innovation comes from acquisitions and intrapreneurs in existing agencies working in small clusters, but rarely from new strategic ventures. Hiring in the good times, cut backs in the bad: the shareholder model in professional service firms drives value away from talent and clients alike.

Clients have adapted
If “The Media Is Dying”, it has been for awhile. The long tail of consumer content consumption has been well evidenced, niche audiences have become more powerful, and the economic realities of keeping the fires of large media running are no longer working in their favor.

Marketers on the client side have made adjustments by creating their own networks of various groups to respond to the changing media landscape. They think of three to five people they trust at their global megalith, or their boutique agency alike. To understand the splintering of their customer base requires those account teams to have a deeper knowledge of their clients, rather than broader execution by people the clients do not know, or trust.

Introducing The Microagency
Microagencies focus on a specific industry, service, or expertise. Their teams are small, but each member of the team connects with the client, the end consumer, and understands the needs in that market through direct experience.

A microagency is connected, via a network, to other micro agencies. Knowledge, brand, cash reserves and development are banked here in the network and reinvested in each microagency. The value is not driven outside of the agency to partners or shareholders, but rather through the network of niche business owners.

Creating More Value With Microagencies
Independent agencies lack the resources of large agencies.


Yet, the large agencies often obfuscate the real value that is available to clients: the reality of what can be achieved through their reach is often presented in one way, and executed in another.


But lying at the core of the holding companies are groups of three to five people, true intrapreneurs who create strong value day in and day out. This is where the true value lies, as clients continue to support this work.


Microagencies connect series of small agencies together.


Even in the larger agencies, networks exist in similar ways around certain clients.


But fundamentally, the value is lost. The question from both the small and large perspective, why not create loose structures and networks?


The Diary of a Microagency
DMD network is a platform for entrepreneurs. The DMD network is: DMD Insight, integrated marketing; DMD Green, environmental management consulting; and DMDxd, human-centered product and service innovation. We are not large. Indeed we are only 20 people. But we believe that our growth lies in groups of three to five people, not one group of twenty, fifty or a hundred.

Over the next thirty days we will tell the story of each microagency. In so doing we invite discussion about the future of agencies, entrepreneurialism and the future of the media/agency relationship.
Topics: advertising, branding, design, grassroots, interactive, media, public relations        SHARE: