Why 2024 is the Year for Agency Transformation
by Brent Trimble, Kantata
In the fast-paced world of marketing and agency services, embracing change is non-negotiable. Transforming your agency's business processes might seem daunting due to the sheer effort and planning it requires, yet the risk of falling behind in an ever-evolving industry far outweighs the challenges. Now, more than ever, ensuring that you have the right people, processes, and technology to optimize your delivery is crucial. Don't let fear of transformation hinder your success.
I recently had the pleasure of interviewing the co-founder of The Business Model Company, Caroline Johnson, on Kantata’s podcast, “The Professional Services Pursuit.” We talked about why 2024 is the year to change your business’ belief system, move toward more efficient, transparent client engagements, and leverage repeatable products that provide maximum value.
By understanding the necessity of disruption and proactively responding, your agency can become an industry pioneer.
See Disruption as a Friend, Not a Foe
The future of the professional services industry is always being speculated on. The Wall Street Journal’s Meghan Graham kicked off the year speculating whether or not 2024, “would mark the end of the digital agency,” with her analysis pointing to a move to more evolution in the purely digital space. The pendulum between in-house and external creative shops swings in predictable cycles, with the World Federation of Advertisers noting a significant increase in brands adopting, building, and cultivating in-house teams continuing almost “unabated” in 2024 while a much-publicized Apple iPad ad captured the imagination and marketing creative zeitgeist for a moment, some wryly noting it was an in-house production. The discourse around the efficacy of independent agencies, global holding companies, and consulting mergers and acquisitions is perennial.
However, agencies continue to thrive in many cases. Considering this, why is 2024 any different? Holding company, independent, hybrid, and consultancy economic models exist to deploy talent at the right place, time, and (hopefully) profit to meet and exceed client expectations. As Caroline Johnson and other thought leaders have pointed out for some time: the economic model of pricing people and hours needs to change to meet the evolving needs of the market before it goes extinct.
The idea of change can often paralyze a business, especially when it comes to pricing models. During a time when significant transformations are reshaping the professional services sector, labor-based billable work by the hour is proving to be less and less practical. New technologies - particularly the adoption of AI - and other industry pressures are disrupting traditional pricing models and call for a revamped approach that is based on value, not hours.
This crucial period provides an opportunistic window for agencies to rethink and modify their operational strategies, especially in how they price their services. Any reluctance born out of fear of change or inaccurate predictions about client preferences might impede the integration of innovative technologies like AI when, in fact, a commitment to excellence and the exploration of cutting-edge production techniques will find favor with clients.
Agencies need to evolve to stay ahead of the challenges that can eat away at their increasingly narrow profit margins, and clients need to understand that the way things are done can’t stay the same forever.
Professional services businesses should make 2024 the year that they properly understand, commit to, align behind, and carefully execute transformation. To do this, they must recognize where market trends are causing changes in their business and proactively transition before it’s too late.
How To Change Your Mindset Around Change
According to Caroline, there is a misconception among agencies that change creates risk and fear of negative client and competitor perception. This belief stifles innovation, with firms mistakenly thinking they'll stand out negatively for adopting new business models. However, authenticity and trust can attract clients eager for fresh approaches.
Leaders should work to understand the belief system that informs their company’s decisions, identify wrong assumptions, and challenge them, resulting in cultural transformation that creates a more appropriate business model for working in this era.
Is your business model relevant to the current market conditions? Your processes need to be relevant to how your clients want to engage with your talent. During my discussion with Caroline, she revealed, “So many great businesses with a fantastic value proposition, great clients, great case studies are completely constrained, reduced, and pushed down the value chain because they are operating in the wrong business model.”
Adopting the Right Technology
According to Canam Research and Kantata’s 2024 State of Agency Operations Survey, client experience is the number one priority in 2024 for 50% of agencies. However, to be competitive in today’s market, you need to be able to optimize your business operations, client experiences, and employee satisfaction rates. Once you have changed your mindset around how to best optimize these three areas, you’ll need the right technology to help you fully make your vision a reality.
Software that helps put the right people in the right places at the right time actively addresses all three of these areas of needed optimization. Business operations run smoother, client experiences improve, employee satisfaction rises, and companies can create accurate pricing strategies with a full picture of their resources and forecasted demand. As the market around and mindsets within agencies transform, the technology that businesses use will need to be able to adapt in response.
Agencies that use software solutions that weren’t purpose-built for professional services, or operate their business using spreadsheets, simply don’t have the tools and flexibility needed to respond to the degree of marketplace disruption that we are currently seeing. Top agencies work to both adopt the right technology for their business needs and ensure they are used correctly, are integrated well with the rest of the company’s tech stack and provide the real-time data they need to be successful.
AI is at the forefront of every agency leader’s mind. With the ongoing industry shifts around pricing models and operating processes, now is the perfect time to ensure your tech stack can support the entire organization’s goals moving forward. Using purpose-built technology can provide an organization the means to accomplish more with fewer resources and further validate a value-based pricing model.
The fear of disruption and hesitation around change applies just as much to technology as it does to any other area of business. But refusing to fully adopt new technology and embrace change in how the business operates can have huge implications on your growth and profitability. Don’t let the fear of the new hold you back. This is the year of agency transformation and it's time to embrace it. As Ogilvy said “Encourage innovation. Change is our lifeblood, stagnation our death knell.”
Brent Trimble, Kantata