Three drivers of change for agencies in public groups

Three separate forces are working in tandem to drive network agencies to integrate operations and services with other members of the larger, publicly-listed group of marketing companies to which they belong, says David Gallagher, Senior Partner and CEO EMEA, Ketchum.

Profile: international agency offering an integrated solution within a holding company

Insight: large agencies are using the advantage of networks and scale to drive efficiencies and tackle integrated opportunism

Clients and shareholders

One is a push for greater efficiency, which comes from clients and shareholders. Clients expect agency fees to reflect the value added to their own services, products or reputation, with little appetite for contributing to agency overhead and profit.

Shareholders have expectations for consistent, profitable growth of revenue, keenly interested in keeping operating costs to a minimum.

While clients and shareholders have always had these interests, the market now seems acutely sensitive to inefficiencies. This may be due to relatively slow or weak economic growth generally, a growing supply of lower-cost digitally-enabled service providers, and the potential of big data marketing services to reduce or eliminate unnecessary costs.

As a result, many agencies are already integrating back-office operations – HR, IT, finance, real estate, among others - while quickly mobilising to offer clients low-fat service propositions that reduce redundant management touch-points, automate reports and slash commissions or extend payment terms.

Expert knowledge: sector and skills

A second driver is specialisation. Generalist public relations services of the past have fragmented into highly specialised areas of knowledge (including industry, sector and market expertise) and skill (including project management, research and analysis, creative development, content creation, and community management, among many others).

No one agency can develop the specialist expertise required by today’s client quickly enough or at sufficient scale on their own, so they seek complementary partners to offer integrated service propositions.

Tackling integrated opportunities

And a third force is opportunity. Practitioners that look at communications challenges holistically and objectively recognise a market open to finely tuned solutions – those that include the best mix of earned, paid, shared and owned content.

The challenge is to offer a perspective beyond a native discipline or expertise that sees and applies the right combination and sequence of activities across channels. 

Groups like ours deliver this by offering learning and networking opportunities across the network to raise capabilities generally; through specially selected and trained accelerators to manage integrated assignments; and now, increasingly, by physically locating agencies together in campus-like spaces to make collaboration easy and efficient.

Even with these features, integrating operations and services isn’t easy. Client priorities vary widely and make a ‘standard’ approach difficult, and while there’s a lot of talk about moving beyond an hourly-based fee structure, few viable alternatives have emerged.

The biggest challenge may be the insecurities or arrogance of practitioners as we contemplate a market in which what we know or do, won’t always have the same value as it once did, at least in comparison to experts from other disciplines.