Why the Agency Model will Fail (Unless We Do Something)

Stuart, great call! I predict that this will be the path of a large slice of the entire economy. Captains of expertise (agencies, "news"papers, consultancies...) will add value by serving as nu00c3u00a9gotiants; they will crowdsource and qualify the quality of the proffered services, which their expertise equips them to do. I call this model "ProAm" and it's going to be pervasive: all of us have *expertise* in one or two areas, but we have interests and passion in many more areas. Why not unleash that by enabling people to offer their own mix of expertise, talent and passion? Media that survive will go this way big-time, too. I wrote about this and other imminent social business models here.

Stuart - Great article, and what an appropriate hulu clip to share. As Zooppa is also a creative crowdsourcing partner to brands and agencies, its good to see this kind of thinking going on.

You're right on to point out the scalability factor - I'll assert though that crowdsourcing would not only be an approach for taking on smaller projects, but also for adding value to large client projects as well.

Over the past year we've definitely seen a shift in how agencies perceive our model as a partner, and we have articles like this to thank.

I looked at Victors and Spoils (know the CP+B alums through Edward Boches) but didn't see them as the same type of commodity marketing that Hubspot and Google are pushing.

I think they are still trying to compete with larger agencies via the crowdsourcing model. I think the crowdsourcing model can only be applied for smaller businesses.

I will keep you posted!

It's an uphill battle for sure...

Trying to make change though.

I agree with many of your points. That said, I'm not sure that Google makes a majority of its revenue from small and medium sized businesses (there is a bit of an 80/20 rule going on in Google just the same as goes on in Commission Junction, etc..). Regardless Google et al is clearly focused on the 30M SMBs that still have not come on line yet and the revenue potential there.

Also - there are actually a number of agencies already focused on both crowdsourcing. Victors and Spoils would be one of the best known (http://victorsandspoils.com/) and there are a few other agencies i have talked to in the last 6 months that have started from scratch built around SMB and scalable crowdsourcing practices.

Of course, we believe at Trada (www.trada.com) that agency services fundamentally are shifting in how they are are done and how they are priced. A lot of our customers come through agency partners and that number is increasing almost as quickly as our direct customer base. So i guarantee you not everyone is sitting still.

Great Post, Stuart. I like how this changes the mindset of most agencies that in order to evolve, they need to (in their minds) de-volve. It's just like any other business when they lose sight of what's real...pretty much comes down to the 'too-big-for-their-own-britches' issue. There's lots of money to be made...that doesn't necessarily have to involve pitching the business of IBM or Coca Cola.

Narciso Tovar
Big Noise Communications
@Narciso17

This is one of the best articles you have written. You/Mullen should do exactly what you outlined and create your own crowdsourcing platform/scaffolding (seriously). I think the ironic part is that you guys should start doing this tomorrow, but you won't - instead you will write articles about it and talk about it while other more nimble agencies/startups will get after it (like crowdspring/ V&S). And, you will lose out on that business.

There is no reason you couldn't do this tomorrow - the platform would look like a mix between Kluster & Crowdspring. And, coming from Mullen, you could also leverage your employer brand to quickly gain a community. It would probably cost about $50,000 to get a rough prototype out there - which isn't that large of an investment.

If you really tried hard you could convince Mullen to do this and head it up. And, it will work.

Indeed. The thing is? ROI does exist for those smaller agencies. If they get that big name? They are then equated with big name work. It's a win/win for both parties.

What I'm trying to do is recreate that model in an off-the-shelf format/commodity.

Great post Stuart! Thanks To Ross for sharing the post on Twitter.

I honestly believe those that are fighting against this revolution of world business, are almost all simply scared witless they are about to lose all their leverage that was previously protected by huge barriers to entry (normally financial). If your article seeds the idea to embrace instead of resist the change in just one non-believer you will have succeeded! I hope you do :)

Good thoughts here Stuart. What boggles my mind is smaller agencies investing so much time and effort into pitching those big clients... They don't see that like you've outlined here 90% of the businesses out there aren't that big, and guess what? They're probably a lot easier to acquire. If you're a small digital shop why waste countless hours and resources chasing the big brands, when you could generate a lot of cash flow and gain momentum starting with smaller brands? Capiche?

That's why I recommend self-service crowdsourcing (with brief direction assistance).

Let the small businesses figure out what they want then come to us. Could do around a contest or fixed price. Not enough money? No work comes in. Set minimums etc.

This is where the partnering with a crowdSPRING would be beneficial.

Creative ideas still rule. It's just a matter of figuring out the right scale.

In 2001, I started a virtual ad agency. The idea was the grow a network of pros (detached from the agency model), and go after small-to-mid-sized business together. We never became a big shop, but did a lot of work with small and mid-sized business (even a Fortune 300). It was comfortable and I still believe in the model. And with the advent of widespread social networking via digital media - the network has benefitted. But the fact still remains - small businesses are harder to work with. They require a certain level of hand-holding in advertising/marketing that larger businesses (savvier to communications concepts/costs/processes), have less money and require more time to nurture and grow.

I still believe in working with small businesses, but I think Google might not be the best example of working directly to small businesses (from an agency perspective) because Google doesn't have to deal with the accountant - everything's automated. Let google have the really small guys - the best we can do as agencies in the google example is create communications that stick with their audience. it's no longer a media-buy world for agencies - but one where ideas and creative rules.

It seems so simple...yet it's filled with enough egos, politics and issues to make your head explode.

I think we'll get there. I just hope that Mullen can be first (we're certainly trying to be).

Stuart,

Much thanks for the kind words about crowdSPRING. As you know, prior to crowdSPRING, I practiced law and participated in many RFPs. The RFP process, especially as it's executed today, is often a bloated, wasteful, and poor way to buy services. In fact, my own frustrating experience with an RFP process for a website redesign was one of the catalysts for founding crowdSPRING.

I share your view that agencies must find ways to evolve - and experiment. In part, that need is driven by the realities of the marketplace and the changing needs/budgets of potential clients. While some agencies will find ways to scale to help smaller businesses, the organizational models of most agencies would make that approach prohibitive (as you know, there are ongoing efforts to redefine the organizational structure of an interactive agency).

I would push you a bit to expand how you think about scale (although I suspect you already think this way). It's entirely reasonable to think of scale as the expansion of services to smaller and smaller clients - as you're suggesting. This is indeed the way that Google has built an online advertising empire. Scale is much more - and you've talked about this already. Scaling an organization could involve redefining HOW that organization works. Embracing crowdsourcing - as a farm system or to supplement inhouse talent - would permit agencies to reduce expenses, control costs, diversify ideation, take advantage of viral and social networks - and otherwise to focus energies on what the agencies do best: strategy and execution.

We're seeing this already. Although crowdSPRING was built for small business (our clients come from over 75 countries), we've worked with nearly every major agency (and look forward to working with Mullen!) on a variety of projects - and often, directly with their clients. And that's ultimately the challenge and opportunity. Agencies that resist this change and refuse to evolve will find their clients sourcing more and more outside of the agency (as we've found with a number of Fortune 500 companies whose agencies didn't want to experiment with crowdsourcing).

It's a challenge because it's difficult to change a model that's worked for many years. Yet that model is clearly in need of change. It's also an opportunity because smart agencies that embrace the change and find ways to leverage crowdsourcing, rather than to fight it, will become more nimble, less bloated with expenses, more current, and more valuable to their clients and potential clients.

Evolve or die indeed.

Best,

Ross Kimbarovsky
co-Founder
http://www.crowdspring.com