Brand-Agency Disintermediation Isn’t the Real Problem

Adam Kleinberg is CEO of digital agency Traction. Follow him on Twitter @adamkleinberg.

Last week, Digiday’s Giselle Abramovich wrote a piece that posits that the root of agencies’ tenuous position with the brands they serve “is the tendency of agencies to cede power — to brands, to tech platforms, even to publishers.” Giselle talks of the disintermediation challenge — but is that really an issue? Everything that’s been “disintermediated” today is stuff agencies weren’t even doing a decade or so ago.

My head is not up my ass. I do realize that clients’ relationships with agencies are evolving. In my blog, I recently noted, “The rapid growth of digital advertising technology has created questions about the value of agencies. Many agencies have shifted the focus of their services from consultant, idea-generator and brand guide to purveyors of commoditized services. Customer acquisition is becoming an automated business process. Even some aspects of creative development have become commoditized. Despite this shift, agencies still provide value in a real-time world.”

The role of agencies is rolling back to where it was years ago. The value has shifted — and continues to shift — but it hasn’t diminished. I think a question that needs to be asked is when does it make sense for brands to cut out agencies? Allow me to address Giselle’s Five Ways.

Service-driven content creators
Many brands today manage a portfolio of agencies rather than just one AOR. This makes sense because there are a lot more things that need to be done today than there were in the past, and it’s unlikely one partner can do them all. BuzzFeed, Yahoo and Vice are perceived by brands as just additional partners to get things done. Virgin Mobile CMO Ron Faris described the brand’s relationship with BuzzFeed as “like having an always-on, 24-7 newsroom,” so I popped on over to BuzzFeed’s iPhone app to check it out. Today’s sponsored content was a series of images of “desserts for geeks.” (And no, I don’t know what desserts or geeks have to do with Virgin Mobile, either.) Virgin Mobile had a text link at the top and bottom of the page, which led to a landing page that wasn’t even optimized for mobile. If my agency delivered an experience like that, we’d be fired. Makes you wonder whether BuzzFeed’s “always-on newsroom” is always on.

Moving marketing disciplines in-house
Some brands have been taking various marketing disciplines in-house. And sometimes they should. When a function is core to their business and they have the capability to do it in-house as well, or better than, an agency, why wouldn’t they?

We are seeing this happen in two areas. The first is social media. Community management is usually better done by somebody who actually works at the company.  Agencies were never in the customer service call center business; why should this suddenly become our domain just because it’s “digital”? But agencies do provide value in social. We have expertise in integrated content strategy — and those agencies that have been willing to change with the times are able to create quality content at the speed of conversation.

The other area is online direct response. Our client Shutterfly brought online direct response in-house because driving e-commerce revenue is the core of its business. Shutterfly engaged us for a year to help it develop that expertise in-house. That was the problem it needed solving. Brands consistently have challenges that need solving that they can’t solve on their own. The combination of programmatic buying tools and commoditized display creative is making customer acquisition a business process in organizations. If the core revenue generation mechanism for your entire business is reliance on a business process, maybe it makes sense for you to master that process — or maybe it doesn’t. It takes hubris and talent to think you can do something that isn’t core to your business as well as a partner whose entire business is centered on it. But for some, it makes sense. That’s up for clients to decide.

Getting closer to startups
Agencies used to be intermediaries between brands and technology companies. If there are specific functions that are core to their business that some brands are bringing in-house, then it makes sense that they would talk to those technology companies directly. Most of our clients hold their own licenses for social listening software, for example, even though we use those tools for their business as well. We also both use Excel to make our spreadsheets. Should I worry about them being closer to Microsoft?

Recruiting data scientists
Data is everywhere. Insight is harder to find. Regardless of whether or not a client is bringing a marketing discipline in-house, it is likely getting reams of data from external partners handed over to them. It certainly makes sense to have someone on board who understands it.

Dipping into the agency talent pool
Campbell’s has hired Adam Kmeic; MasterCard has hired Adam Broitman. Brands can just hire a couple of ex-agency people and lose their agencies. I know these guys. I’ve been to a dozen industry conferences with them — and they are always the smartest guys in the room. I have news for you. There’s only a couple of smartest guys in the room. If you can hire them — whether you’re a brand or an agency — you should.

So, is there a disintermediation problem?
At the end of the day, brands will always have challenges that require objectivity, strategic thinking, creativity, experience, expertise — and, yes, service — to solve. Agencies that are willing to adapt will see shifts in their business but will not have a problem adapting. Those unwilling to change simply won’t exist.

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