The Agency Model is Broken
In this week's video, I talk about how the agency model is broken, which is sort of a funny topic for me to be talking about...since I own and run an agency! But honestly, I went into this venture with more than a little reluctance, having struggled with all of the things I talk about in the video: the tense client-agency relationships, the awful RFP process that burns out employees and ensures shot-in-the-dark "strategies", and the damaging lack of continuity caused by campaign-based thinking and warring agencies.
However, since I recorded this, I've had several conversations with ex- as well as current agency people (who wished to remain anonymous) who pointed out a few additional ways in which agency models are broken...and oh boy, they are biggies!
The major addendum has to do with media agencies. Now, this one doesn't really affect TSI as much as we aren't a media agency, but I had heard this happens through the grapevine. Large agencies get fantastic deals on media due to bulk buying. The catch? They need to spend a minimum in order to get those fantastic deals and, if they don't, they pay a penalty. The reason this is an issue is that this forces these agencies to recommend specific media buys in order to fulfil that minimum -- whether it benefits the client or not.
Uncool, but not 100% the fault of the agency. As an owner of an agency, I see firsthand how terrible the margins are on services (and clients aren't willing to pay higher fees...even while talent costs have risen). Marking up media buys is one of the ways in which an agency can improve margins.
At the end of the day, most people start agencies because they want to offer something different and most clients hire those agencies because they are excited to do something different. But there are some terrible habits that have been deeply entrenched over the years that hurt those efforts.
I'm hoping that making this video can open up a broader conversation that could potentially lead to change. And, btw, I'd love to hear from the client perspective as well. I've been on client-side, hiring agencies and freelancers, but I have a very different approach. ;)