Can The Traditional Marketing Agency Survive?

Matt Kendall wrote an excellent article that was published on LinkedIn titled “The agency of the future is not an agency”. I couldn’t agree more with his conclusions. He articulated our exact thought process when starting The Wheelhouse Group. But the question that I want to explore is—is the traditional agency model still viable? You know, the old 2nd floor of a former textile mill with exposed brick, worn leather chairs, beanbags, candy bowls, cleverly named conference rooms and the iconic ping-pong table located no more than 12 feet away from the beer keg. Will that model still be around in 5 or 10 years?

Before I give you my opinion on that, let’s first explore the strengths and weaknesses of such a model.

Young talent: The traditional agency is a haven for recent college graduates who are hungry for material to stuff their portfolios. They are willing to work grueling hours for the privilege of working a stone’s throw away from a few people that they consider “legendary” in the marketing world. Of course, the ever-alluring perk of free beer and ping-pong are pretty high on the incentive list as well. The upside is that you constantly have fresh ideas and new talent. The downside is that a large percentage of the agency is made up of novices, hopefully under the watchful eye of a more tenured marketer.

Limited talent: Depending on how big your agency is, you may have the flexibility to outsource various pieces of your projects to experts. But the bigger your agency is, the less likely you are to have that option. So, when you have a website that needs to be coded, you can choose between Lex, your in-house coder, or… Lex, your in-house coder. No matter how frustrating Lex is to work with, he’s what you have and he’s the one who will be heading up your coding project. The upside to that model is that the agency generally has higher margin than they would if they were outsourcing, assuming that they have enough business to keep Lex busy most of the time. The downside is that Lex may not be a great fit for the project. But he’s all you have, so you have to use him anyway. And if you do decide to outsource it, you have the frustration of managing a vendor who may or may not view your project as a priority, and may or may not return your phone calls or emails.

Fluctuating talent: If you’ve been in marketing for any amount of time, you or someone you know has been part of a big layoff when a major client parted ways with the agency. We’ve all seen agencies that lay off 40-50% of their staff, or close the doors entirely when they lose a big client. The upside to this model is… …well, the only thing I can think of is that it gives you the opportunity to purge lesser talent, but that’s a pretty far-fetched “positive”. You’ve just put a bunch of people out on the streets so, in my opinion, there is no upside. The downside? Well, that goes without saying.

We could go on and on evaluating the traditional agency—and we may later—but, for now, let’s leave it at that.

Matt Kendall arrives at the conclusion that the new agency will simply be a network of professionals who are working collaboratively on a project. That can work! And we’ve seen it work quite well. But I’ve also seen it fail – usually due to oversold expertise or, more commonly, bad communication.

I believe that the future will be similar to what we’ve established at The Wheelhouse Group. We’ve simply taken this concept to the next logical step. And Matt almost arrived there with his comment:

“If working from home isn’t your thing, there are new and affordable share-space offices cropping up all over the city, like FishburnersWeWork and Work Club. Here you can work alongside other start-ups and creative professionals collaborating and cross-pollinating ideas and opportunities.”

We simply combined the two concepts. And, while I don’t know of any others structured this way right now, I’m certain that others will develop similar or identical concepts. We’ve created a cowork space for experts in marketing, and also operate collaboratively as an Agency. We think it addresses all the aforementioned “downsides”.

Young talent: We still have our share of fresh ideas, originating from internship programs and new members that join us through natural churn. But the vast majority of our people are experts with a thriving business in their specific area of expertise. So, when our clients sign with us, they are working with an expert throughout the entire process.

Limited talent: To a degree, we’re still limited to the people that are in our space; however, as the agency owners, we have complete flexibility to use whoever we believe is the right person for each specific project. And on the rare occasion that we don’t have the talent we need, there are no political landmines in the way of us working with anyone else.

Fluctuating talent: Because each expert in our space is their own entity, we’ve never gone through a layoff! Yeah, we’ve had people decide that it didn’t work for them economically but, at that point, it’s their business decision – which makes it much easier for us to sleep, by the way.

So, we have to answer the question that the title of this blog posed. Will the traditional agency model survive? Yes, I believe it will. There is still a place for the big agency who can build large teams around clients big enough to support them. But I also believe that there will be fewer and fewer of the small agencies, opting instead for a collaborative agency model, much like Matt Kendall proposed. We just like the best of both worlds—a collaborative agency, and all under one roof. It truly is the best of both worlds.