Why Brands Are Asking Agencies — ‘Do We Really Need All These People?’

I was fortunate to have a great talk the other day with Kevin McNair, Britvic’s marketing director, in which he asserted the need for marketers to have the financial prowess of a CFO and the insight and business acumen to act like a CEO, as reflected in the headline for our interview.

One of the fascinating insights for the future was his assertion that the agency model is bound to change. He didn’t quite go as far as to suggest it was broken, but his belief is that it is under serious strain. It will only take a few nimble, agile start-up agencies to tap into the current mood of brands wanting to work with partners on their terms and not their agencies,’ and a mini revolution is likely to be played out.

The main points that McNair raises will be very familiar to brand marketers — namely, do I need all you people? The days of brands paying huge retainers to large agencies to keep a large team devoted to their account are going to go, or at least be seriously challenged, he suggests. Procurement, while contentious to many, has raised this issue — and he is convinced that it’s an important one. In particular, procurement teams are becoming skilled at noticing when a team has too many high earners, challenging both the numbers available to the brand and the overall fee structure.

So rather than being centered around huge retainers for large teams, McNair suggests that brand marketers will be leading a drive toward smaller, leaner teams that will feature members who are brought in on a project-by-project basis, perhaps as a freelancer or execs in a firm that work is outsourced to. The point is that agencies will need to be flexible.

For the Britvic marketing director, the new approach will see brands paying up front for a piece of detailed strategic work so all are clear where each brand is headed. Then, budgets will be allocated to brands and split between what needs to be done in public view —  packaging, promotions, marketing and advertising — compared to what can be spent behind the scenes on what consumers don’t see, such as marketing team members.

For some agencies, this will be fine, he predicts — while for others there will need to be a will to embrace a new form of working, based around lightweight teams utilising freelancers and outsourced talent. This would presumably be exacerbated for brands that choose to work on a zero budget basis.

So there you have it. As the big FMCGs have been calling for great transparency in their relationships with agencies, one of the major outcomes will be a change to the agency model. The huge retainers funding large teams that we see today will be challenged. In their place we should expect to see small, nimble agencies prospering through an ability to work around how the brand wants to engage with them and bring in talent when it’s needed, rather than have a whole bunch of people on the payroll, funded through retainers.

by Sean Hargrave, Staff Writer
Courtesy mediapost