Big Agencies Need To Approach Talent Differently

The Drum asked us what we thought about big agencies' relationship to talent. We know Covid has accelerated the global growth of the freelance market. And that the really good talent that isn’t already ‘independent’ is thinking about it. They can charge a premium, work from wherever they want to and control their own diary. The lure of ‘culture’ doesn’t cut it anymore.

That talent and their ideas are why we got into this business. It’s time to look after them properly before they leave altogether.

First published by The Drum 02.02.21
https://www.thedrum.com/opinion/2021/02/02/big-agencies-need-approach-talent-differently

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[Source: The Drum February 2021]

So, the relentless ’Frankenstein kludge’ that is happening in network-land (most recent of which being GreyaKQA) has spawned a number of reactions – the general thrust seems to be that networks are in trouble and indies are on the rise.

The issue is, that sentiment feels as future-facing as an argument about the virtues of VHS v Betamax in an age of streaming.

Show me an ‘indie’ that will actually elect to halt its growth as it turns into the very thing it rails against and reaches the size of a network shop. Today’s ‘indies’ are just tomorrow’s network nodes – it's just the scale is different. More fundamentally, the debate we should be having is the business model, not the size. Big problem or small problem – it’s still a problem.

The fundamental structures and processes of all traditional agencies were designed for a simpler, gentler era. Yeah, they’ve repainted the bus a few times, but it’s still the same bus. Input-based pricing and specifically hourly rates are at the sharp end of the issue, but the malaise is much broader.

Frankly, as the founder of a startup, I’d have been laughed out of every venture capitalist’s office in town if I presented an old school ‘ad agency’ model for funding. “So, in this manufacturing process you want us to invest in, how long does it take to make the product you intend to sell? You don’t know?“

It would be a bit of a tumbleweed moment in the Dragon’s Den.

How is the hourly rate the best unit of ‘measurement’ if you can’t measure how long it takes to have a great idea? Surely payment for ideas is better than payment for hours? To compound the issue, agencies also haemorrhage value by giving away all the IP for every idea they have without question or negotiation. You wouldn’t get Accenture doing that.

I’ve had the pleasure of working with many wonderful, talented people in ‘agencies’, many of them trying with all their might to change the system from the inside. To make it better. But the institutional muscle memory, the corporate immune system, means that you can only go so far. Maybe that’s why ‘the indies’ look better. In a smaller shop you can rearrange the deckchairs more easily, and make it look a bit tidier – but it doesn’t change the fact that the business model is holed below the waterline and you’re sinking.

The network agencies are just the canary in the cage. They’re more obvious right now, but it’s a sector-wide issue. Have we learned nothing from history? Let’s look at other vertically integrated, mass production industries that have had to re-engineer after a shift in consumer behaviour. Hollywood in the 60s, Silicon Valley in the 80s. More recently, automotive manufacturing, steel, textiles and even agriculture have moved towards the specialization and project-by-project collaboration essential for modern, successful ‘knowledge value’ industries.

In Hollywood, within the space of 10 years, the game has changed. Seven dominant studios became hundreds of thousands of freelancers. The studios used to produce and distribute films largely made in-house by a standing army of artists, writers, editors, lighting technicians, and props makers, all ruled by ‘larger-than-life’ ego-driven, studio bosses. Sound familiar?

Shifts in media consumption and distribution (TV, basically) led to a different customer need, that demanded a restructure and refocus. Sound familiar?

The distribution shift meant that the in-house talent couldn't cope, and to service that need, the number of entertainment-related independent companies in southern California more than tripled. Most of those companies were fewer than 10 people. All were staffed by freelance talent. They offered a huge range of services required to deliver the content required. It’s still how it is. There are massive parallels with our business. The writing has been on the wall for decades.

It’s not about repainting the bus. It’s not ‘one front door’, or ‘horizontality’, or ‘global team whoever’. It needs more than that. Change will happen around you regardless, but if you want to get out ahead of the rebalancing, you need to get some margin relief signed off by your paymasters and look at restructuring the fundamental way you do business.

Look at how teams like Klarna and Spotify operate. Look at the process and structure run by the big tech giants and apply it in an innovative way to creative services. That doesn’t mean using buzzwords like ‘agile’ in the wrong context, but it does mean embracing the growing pool of outstanding freelance talent around the world. This creative and strategic elite has the skill set and the working practices you need. High-performance teams have an optimal shape and size. And it’s small. Not big. The trick is to engineer that ‘optimal’ structure to be replicable time and time again and therefore become eminently scalable. Big-small, you might say.

Technology and client demand have made it profligate to build a miniature replica of your global HQ in every country that your monolithic network operates in. That’s how the Roman Empire rolled. And look how that worked out for them.

First published by The Drum 02.02.21
https://www.thedrum.com/opinion/2021/02/02/big-agencies-need-approach-talent-differently