July 30, 2019

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

By Ben Lincoln

The pioneering search-consultancy Roth Ryan Hayes uses a variety of shortcuts to help bring marketers and agencies together. However, some techniques work better than others.

"We send out these questionnaires on behalf of clients and we ask the responding companies to complete a checklist of capabilities," says Matt Ryan, CEO at Roth Ryan Hayes, who admits he should have seen what was coming. "Small and large, north and south, east and west, digital or not, everybody checks everything off the list every time. So, our modest little firm stopped using the checklist."

Times and trends have changed since Roth Ryan Hayes canned the questionnaire. The marketing universe has become too complex and specialized for one firm to check all the boxes.

With rare exceptions (see R/GA below), the one-stop shop has either become a one-stop holding company (see Publicis Groupe and ICF Next) or is being picked apart by a slew of new competitors: tech-centric specialty shops, the consulting sector, and, increasingly, agencies are losing ground to clients who are, themselves, building new agency models (see Bayer and Quicken Loans).

"The in-house trend got underway with the idea that in-house teams would cost less, work faster, and get to market quicker," says Jay Pattisall, Forrester's principal analyst and resident agency expert. "All those things are true, but once you move beyond insourcing creative services, design, and production, it becomes a question of 'does the grocery store also need to grow the food?' In the end, it's about blending the best in-house and external-agency resources."

Nancy Hill, founder of Media Sherpas and former 4A's CEO, says no matter the model, the most successful agencies today need only check two boxes: "Whether you call yourself a media agency, a creative agency, a PR agency, or a social agency, your model must be true to your vision and you need to have an extreme dedication to helping clients solve business problems creatively."

With those criteria in mind, here are seven agency models — a mix of in-house, holding, and specialty — built to succeed in 2019 and beyond.

1. The Virtual Model

In today's candidate-driven job market, cushy work-from-home policies have become the table stakes of agency recruiting pitches.

But inside more traditional corporate environments, many CEOs bristle at the idea of letting employees out of their sight. Cue this cringe-worthy corporate memo from 2013 "Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together."

Grating as that sounds, Yahoo! wasn't and isn't the only mega brand tethering employees to their desks. At a time when corporate giants like Bank of America, Aetna, and IBM are reining in remote workers, PwC, one of the world's largest professional services firms, is giving its in-house creative team freedom to roam.

"The virtual model is baked into our company culture. Your laptop is your office," says Jack Teuber, managing director and creative leader, who created the current in-house group in 2014. Today, he leads 105 full-time employees who do award-winning work on schedules that work for them. "And they work for us because they get the work done. Trust isn't earned, it's assumed."

Teuber's in-house group services 48 different internal PwC "accounts" (tax, financial services, health care, etc.). He estimates that 95 percent of all account projects take place virtually through a combination of video conferencing, status calls, and online creative forums.

A handful of employees prefer to work in a PwC office while others opt for working from home or informal coworking spaces like the Chicago Athletic Association. Teuber adds: "We also have a Rhodes Scholar on our team. She has chosen to live in Hawaii. She used to live in Boston. Compare and contrast."

2. The Mad-About-You Model

Among the industry's major holding companies, the term "disruption" has both a familiar and frightening ring. To avoid becoming a disruptee, ad giant Publicis Groupe has become obsessed with its clients.

"We no longer view ourselves as a holding company, but rather a platform for our clients," says Carla Serrano, CSO of Publicis Groupe and CEO of the company's New York office.

The new client-friendly platform, called "Power of One," emerged in 2015 when the world's third-largest communications company reorganized its entire operating model. Publicis blew up its agency silos and broke down the business into four client-centric "Solutions Hubs." Clients now get a single Global Client Leader appointed to their business.

This crazy-for-clients strategy has proven effective. Late last year, GlaxoSmithKline consolidated its media account with Publicis Media, one of the group's four Solutions Hubs, which also include Publicis Communications, Publicis Sapient, and Publicis Healthcare.

"Having a single global partner was not a must-have as we set out on this journey," says Scott Grenz, VP and global head of media at GSK. "However, as we went through the review process, the Publicis offering in each phase of the brief was presented in a voice that was consistent not with where we were but where we were aiming to go."

Like GSK, Marriott International whittled its media agency roster down to one, powering a truly end-to-end Publicis Groupe solution.

"With Marriott One Media, we deliver breakthrough paid media campaigns to connect travelers with our brands and travel program that delivers the right message, at the right time, on the right device," says Andy Kauffman, senior VP of global marketing optimization at Marriott. "This has led to more-effective audience targeting, increased bookings, and greater ROI for our revenue generation programs."

3. The Earned-Media Model

In 2011, Fred Cook did what PR executives do best: He earned a placement. The New York Times headline read, "Account Executive Is Antiquated. Consider Yourself a Catalyst."

Cook, then CEO at Golin, sold the Times on his agency's new "g4 model," a massive operational reshuffling that turned the PR firm's then 700 do-it-all employees into either catalysts, strategists (now called explorers), connectors, or creators. The shift toward specialization was a proactive measure, meant to give the agency a head start in the digital arms race, and a seat at the proverbial table next to CMOs and CCOs. When Cook transitioned to chairman in 2016, a trio of successors stepped in as co-CEOs.

Matt Neale, one of Golin's co-CEOs, confirms that "g4 is still our organizing model," although, "new roles within our four communities have been created to reflect the client demand for data." For instance, Neale says mathematicians now work alongside media experts to reach the right influencers — just the kind of unlikely collaboration that helped the firm earn PRWeek's 2019 Global Agency of the Year honors.

For some clients, Golin now plays the role of lead creative agency. For others, the firm plays nice in the sandbox. But no matter the nature of the relationship, Neale attributes Golin's continued success to its PR roots.

"We earn attention rather than buy it through media," he says. "If an idea is strong enough to earn attention in the New York Times or on Good Morning America, it will almost always work in paid media. The opposite is not true."

4. The Modern Brand-Building Model

R/GA, which dates back to the 1970s, has blossomed into much more than an advertising agency.

"Yeah, we have an utterly unique model," says Barry Wacksman, global chief strategy officer, who has watched R/GA's headcount grow organically from 50 when he joined the agency in 1999 to approximately 2,000 today. "We've built a full-stack, end-to-end, one-stop shop across three categories of transformation: business transformation, experience transformation, and marketing transformation."

This three-pronged transformational approach is designed around the life stages of a company, Wacksman says. Stage one, business transformation, is the fastest-growing of R/GA's practices, built in 2012.

"Companies come to us for business transformation because they're being disrupted and they're looking for a strategic vision for the future," Wacksman says. He cautions that the antidote to disruption is not to make more ads. "It's taking that new vision and turning it into new products, services, businesses, experiences, ecommerce, AI, you name it. That's what we mean by experience transformation."

The third and final offering, marketing transformation, focuses on building modern brands — not by "telling stories," but by creating meaningful connections. Take the launch of the Samsung Galaxy Note9, a product only two generations removed from the battery-exploding device that nearly ruined the electronics company.

In addition to R/GA's unique model, Wacksman sees the firm's independence as a huge differentiator. With more and more patchwork agencies being sewn together via consolidation, Wacksman says, "We're the only model out there that was built from scratch, organically, and by design. Today, you see the holding companies trying to create diversification by jamming a bunch of things together. But that's when you run into a culture problem. We've been largely left alone to build the business as we see fit, as long as we deliver business results. And we do."

5. The M&A(gency) Model

The Barry Wacksman Theorem, which states that M&A (mergers and acquisitions) kills agency culture, is being put to the test by one of the newest agencies on this list: ICF Next, a full-service firm that debuted in January 2019. It carries a rich and unusual history.

Parent company ICF was formed 50 years ago as the Inner City Fund, an enterprise that financed minority-owned businesses in Washington, D.C. The group later became known as a policy and strategy powerhouse in the fields of energy, environment, and health care. After going public in 2006, ICF began strategically scooping up complementary parts. In addition to bolstering its government and professional services capabilities, ICF acquired the full suite of Olson agency partners in 2014 — giving it PR, digital, loyalty, and CRM credibility, along with a host of other commercial services.

The end product looks less like Frankenstein's monster and more like an integrated firm with the combined DNA of an agency and a consultancy. This amalgam now services an impressive collection of public and private-sector clients, including Amtrak, the Centers for Disease Control and Prevention, and MillerCoors.

"We can now bring together people with subject matter expertise in commercial marketing and public services like never before," says Jeff Olson, senior partner, strategy, and integration. "We can pull in aviation experts to inform work on hotel and air travel clients. And we have federal energy consultants who can help us win new business with consumer clients."

This unique cocktail of combined expertise is already generating massive growth. Since Q1 2018, the agency collective grew its total integrated sales by 65 percent and has seen a whopping 900 percent increase in pipeline opportunities during the same period.
 
6. The Lightning-Quick Model

Try as they might, agencies often struggle to keep pace with tech clients. In the financial technology space, where the learning curve is especially steep, one marketing team prefers to operate almost entirely on its own, and at its own speed.

"Nine years ago, we had a 30-member team and, today, we're a full-service agency with 250 people who produce 18,000 assets per annum," says Casey Hurbis, CMO at Quicken Loans, who joined the Detroit-based mortgage lender in 2017 after 24 years in automotive marketing. "Having an in-house agency with full-scale production helps us work at the speed of the game. And the speed at which we operate is blazing fast."

In the parlance of marketing agency executives, "moving quickly" is often code for demanding shoddy work for less money. Hurbis insists that both the quality and quantity of work are more important than cost savings.

"We have these 'isms' that are very important to us, and one of them is, 'A penny saved is just a penny.' So, what can we do with that penny? We can maximize our creative resources. A dollar saved allows us to do that much more content or media buying."

Those saved pennies have enabled a broad range of marketing activities for the company, including a 2018 Super Bowl spot. More recently, the company produced a deliberately cheesy interactive series, "Murph Murphy's Haunted Homes Emporium," targeting first-time homebuyers. The concept was initially pitched to the marketing leads by a room full of millennials.

"I still don't get the video," Hubris says, adding that he bought his first home 30 years ago. "But that's the point. It shouldn't resonate with me. It's about getting the best work and ideas and making sure that we're moving at the speed of the game."
 
7. The In-House, Non-Agency Model

Bayer, the maker of Aspirin and Claritin, made no secret of its efforts to take all its digital media in-house by 2020.

The company, which has already taken over strategy, planning, and optimization of all digital media, says it also plans to take charge of executional programmatic, social, and search, as well.

But with a shift to "all hands on keyboard," Josh Palau, Bayer's VP of media strategy and platforms, is reluctant to say he's building an in-house agency.

"Our model is being constructed by bringing in more digital expertise at the strategy level," he says. "But these are folks that work at Bayer. You see us in the lunchroom. We are not this different group of people who work in some isolated section of the building with a cute name like B-Squared."

Palau, who previously worked at Comcast and J&J, stresses that being an in-house marketer means something markedly different than being an external agency partner. For one, Bayer employees have a more vested interest in Bayer's success.

"I also worked at an agency," Palau says, "and I think there's a place for agencies. But I will go to the mat arguing that there's no way you [as an agency person] are as connected to the business if you're not living here."

Palau began assembling his team of digital experts in 2017, starting with analytics because, he says, "forget the cliché that we all want to own our data, I just want to see it and have access to it." Next, he filled search and programmatic positions. Now, Bayer's media strategy and platforms team stands 13 staffers strong, with three roles yet to fill.

"The smarter the people I have in the building, who do the smart type of work, the better we'll be organizationally," Palau says. "That's our lens for deciding what we'll bring in-house."

 

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