
41% of agencies bill by the hour, but only 24% of marketers prefer this model. As AI reshapes marketing, traditional agency structures are cracking. So what comes next? This week, Elena and Rob tackle the evolving agency landscape. They explore why...
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Rob DeMars
We're in a time when things move fast, but I just think we're going to really start to erase that word agency, because I just don't think agency is the right description for the services being offered anymore.
Elena Jasper
Marketing Architects hello and welcome to the Marketing Architects, a research first podcast dedicated to answering your toughest marketing questions. I'm Elena Jasper. I run the marketing team here at Marketing Architects and and I'm joined by my co host Rob DeMars, the chief product architect of misfits and machines.
Rob DeMars
Hello. Hello.
Elena Jasper
We're back with our thoughts on some recent marketing news. Always trying to root our opinions and data research and what drives business results. Today we're talking about the agency model. We'll cover types of agency models, how to choose an agency when your brand should in house, how AI will change agencies, and the future of the agency model. We hope this episode will be helpful for any marketer, really, because most of us end up hiring and working with agencies at some point in our careers, and important agency hires could really make or break your year. But first, let's start as we always do, with some research. I have two resources from work that I'd like to chat about and the first is called if AI Saves Agency Time, does Charging by the hour Still Make Sense? So in this article, Work asked marketers which compensation model their agency uses to charge for strategy work, and then they compared that to what model marketers think their agency should use. 41% of agencies bill by hours of labor, but only 24% of marketers prefer that Marketers actually wanted a project based fee instead, but 18% would prefer a performance based fee. But only 2% of agencies offer that type of performance model. Work writes that traditional hourly billing is the backbone of many agencies, but as AI speeds up processes like creative revisions or strategy work, it's clear that this model might have some cracks. So that's our first resource. The second is actually also from Work, but it's a podcast and it's called why Agency Business Models Are Herding Effectiveness. They interview Carolyn Johnson from the Business Model Company who believes that traditional agency models like billing by the hour are no longer cutting it. She believes these models often prioritize effort over outcomes, leaving creativity undervalued and agencies misaligned with client needs. Carolyn makes the case for a shift. Agencies need to embrace models focused on results and outcomes, not just inputs like time and effort. All right, so before we talk more about that, I wanted to briefly touch on the different kinds of agency models because I mentioned a few there, but there are a lot of other options if you're a CMO looking to work with an agency. So a traditional full service agency would typically bill by the hour or maybe they charge a retainer for end to end services. There are specialist agencies, they focus on areas like maybe social media or performance marketing or in our case tv, often charging project based or monthly fees. Now an in house team would provide you with more control but obviously come with some fixed overhead costs. You could work with a freelancer collective, they'd offer more flexibility with hourly or project based pricing. You could work with a consultancy like Deloitte. They usually bill for strategic services at premium rates. And now increasingly a platform model might be an option, sometimes charging a subscription fee. There are pay for performance models, but they're rare and they would tie compensation directly to chosen KPIs. There are also project based agencies which charge flat fees for specific deliverables offering predictability and focus for more one off needs.
Rob DeMars
I think the only other one I can think of is the all the above agency which is kind of a hybrid approach where the model combines different agency types. Like imagine if you're an in house agency and then perhaps you're tapping into some specialist agencies or consultancies that can really set you up for having deep expertise because you're an in house agency. But you're also getting the specialization of other services and other brains looking at your business as well. So one thing I was also going to add to your comment about is I just, I love this, this quote as everyone's trying to debate whether or not getting paid by the hour makes sense anymore. Roy Williams, the wizard of ads, I heard him say once that a copywriter that charges by the hour is like a gunslinger that charges by the bullet. And I think that, you know, as we think about outcome based advertising and I mean he said that 20 years ago and it's just there was such precision in what he said then and I think it's going to be more relevant today than it ever was.
Elena Jasper
I love that. That's a great way to think about it. And you're right, that's exactly what they were saying. Are agencies too focused on the effort they're putting into your work versus the result that you're getting from them. But I agree with you, I think we're going to more and more see a mix and I think most big brands probably have a mix of agency partners and a mix of models probably combined with some sort of in house team. One other thing that I thought of is I don't know if this is actually really a type of agency, but agencies are typically independent or part of a larger holding company. And you'd be surprised how many agencies are part of a giant holding company. Like, it's increasingly rare. I think we're one of the biggest independent agencies in the United States. It's not easy to find an agency that still operates independently because a lot of them will get scooped up by bigger holding companies. And that can be helpful because then you're in a network of different agencies and brands. It can not be helpful because oftentimes you hear about independent agencies being scooped up by a holding company and they kind of lose their ethos. They start to adopt big company corporate ways. So it just depends on what you're looking for.
Rob DeMars
Yeah, I always laugh when you hear about those RFPs where two of the three contenders are actually owned by the same holding company.
Elena Jasper
Yeah, that's got to be. That's got to be weird for them a little bit. But I think it depends on the agency. Like, they could be just completely separate from one another, too.
Rob DeMars
So for sure, for sure.
Elena Jasper
You never really know. All right, well, we are going to talk about the future of the agency model and how AI is going to change things. But first, I wanted to kind of start at the beginning and talk about choosing an agency partner, because depending on the channel you're interested in or the project you have, this could be the biggest decision that you make every year is who you decide to hire and work with. And we can share a little bit of our own data here because we recently ran a survey to a couple hundred marketers and we asked them what causes you to say no to working with an agency? And the number one result was too expensive, followed by low quality creative, then poor client reviews, and finally a poor presentation or pitch. So, Rob, how do you think a brand should decide what kind of agency they want to work with first? And then how could they go about sourcing them and selecting them?
Rob DeMars
Gosh, it's a million dollar question there. You know, when you think about if you're reviewing different agencies, it's really easy to get caught up in kind of a classic advertising dilemma that we have, which is, are you focused on features or benefits? Right. That's kind of the classic advertising discussion when you're thinking about marketing a product, does it have a V8 engine or does the car drive fast? And benefits are always where the money's at. Right. And as marketers, you can get really caught up in looking at agencies over all the features and going you know, oh, would they offer this and they offer that? But what at the end of the day is going to trigger transformative growth for your product or service? I mean, that's really needs to be your focus. And so trying to challenge yourself not to get caught up in shiny objects and go, what is truly meaningful at the end of the day, to deliver an outsized result for what you're looking for your campaign. So that's a really fat answer that doesn't say much. But I think where I'm trying to go with that is it's probably less about a checklist of features and more really focus on growth. And how is the agency that you're going to hire truly connect with growth for your product or service?
Elena Jasper
Yeah, I love that recommendation. And it reminds me of something that I've been really passionate about recently just at work, which is defining the problem. Because I think so often we jump to solution mode, and it happens a lot of time in marketing and sales. You're like, well, we should advertise on Reddit. Like, we should do this and this. You jump to tactics. And I could see how when you're choosing an agency, a lot of marketers might be jumping to that. Like, all right, well, I definitely need an agency to manage my social spend. It's like, all right, well, what are the core challenges your brand is facing? Like, you said, like, how are we going to drive growth for the company? And then make sure you're really aligned on that. Because there are a lot of different types of agencies, different channels. And you're right, it's not always about the features of the agency. It's what are they able to provide for your brand? Absolutely. And I think that especially with, like, channels, like TV channels that can do multiple things for your business, it's important to, like, be really aligned before you work with an agency on what exactly does our brand need? Because you might end up choosing an agency or a channel that you hadn't thought of before. So I agree with you. I think that's really the first step is not just like, features and benefits, but what exactly do we need to solve for then? I think that obviously everyone has their own ways of being doing research, but I was spending a little bit of time looking into this, and we've asked questions like this before, like, how do you find an agency? Because we're an agency, so we're curious, how do you look for them and research them? And like, just Google is always the top one. Like, people, if you want to be thorough, you probably Spend some time just, like, looking at what can I find? And doing your homework. Agency. Right, Doing your homework. But your network is obviously a big thing for people, too. I think that inspires trust when they get some sort of a referral into an agency. And then I think if you're doing your due diligence, you're probably talking to multiple agencies. Sometimes, depending on the channel or the project, you might put together a sort of pitch process to hear from each of them. You know, make sure you ask the tough questions. Try not to have it drag out for a year, because your business might look totally different by the time you get through the pitch process, which has sometimes, I think, happened in our experience. And then I was looking up kind of what some marketing leaders might say about the agency search process. And one line I found was fit, not just fluff, which I think is great, because you might have kind of like, oh, man, I want to work with this big kind of Madison Avenue shop or agency, and I like the idea of partnering with them. And obviously it matters, like, if you know, like, and trust the agency. But also really looking at, is this a good fit for my brand?
Rob DeMars
Totally. And I don't know if it's still a thing or not, but back in the day, there definitely were consultants that you could hire that would manage that process and would say, we're going to kind of narrow the field down for you and find the right fit. I don't know if that's still a thing or not, but it used to be. Yeah.
Elena Jasper
Yeah. And I think especially, like, we work with a lot of consultants because TV is so complex. Like, there's so many different ways to buy it, so many different types of agencies to work with that it can really help to work with someone who's an expert on the topic. I wish Ange was here because I could drop a few names of people you should talk to, but I don't know. And she'd be able to tell me if I could do that or not, so I won't. But there are people out there who their whole. Like, their whole day is just consumed by who are the best agencies for this channel, this category that can be kind of a hack to get.
Rob DeMars
They're the matchmaker.
Elena Jasper
Yeah. And then they've also. Then they have more experience because typically they have a roster of agencies they've worked with. They can kind of see who's a good fit for this brand, that brand, and then.
Rob DeMars
Right.
Elena Jasper
It's like, yeah, it is like a matchmaker. You just said that. I just Stole that from you, like in real time. I was like, oh, it's a great thought. Let's talk about in housing because I feel like every single year that comes up as a bigger and bigger topic. We've even come across brands that are trying to in house or currently in housing, something as complex and expensive as tv. So clearly like no channel is off the table here. When do you think in housing might be a good idea?
Rob DeMars
It's a great question. You know, we live in Minneapolis and there's some, you know, major brands that are headquartered here. So you kind of get an inside peek into how they run. And one of them dear to Minnesotans heart is Best Buy. Right? Massive company. And it's just a classic tennis match between in house, out of house, in house, out of house and over the years, and no fault to either strategy, each one has its benefits. Obviously if you're in house, you've got deep expertise, less time needing to turn stuff around in terms of educating people on what the product is and when you're bringing in outside folks. And so you know, you have definitely an inside baseball perspective. At the same time it's really expensive to offer all those services within your own company. And so there's definitely cost advantages and then there's also the advantages of an outside perspective coming in and looking at your problem and maybe taking solutions they've found for but different industries and applying them to your business. So definitely advantages to both sides. You know, I wish I could tell you one is a home run over the other, but boy you sure see major companies that have even continued to debate that even today going back and forth.
Elena Jasper
So you're saying Best Buy. I didn't know that they've flip flopped between in house and external.
Rob DeMars
Absolutely. I mean for years they did all of their stuff in house. I mean every aspect of their business all the way from the, what do they call them, fsis, all the way to the top tier TV brand commercials that they would do and then they switched switched it to other agencies to do the major brand work and then kept a lot of the more block and tackle work in house and then they'll switch again. So I don't even know where they're at these days.
Elena Jasper
Yeah, I would guess. I know this is annoying, but as in most things in marketing, a mix is probably the right answer for most brands because then the things you're strong at internally you could keep internally. But then I don't know how you can make the case for no outside perspective from agencies like say what you Will, about, about agencies. And I know there's a lot of benefits to keeping things in house, but it just doesn't make a lot of sense to me that you would never outsource something when it's like, all right, there's no way that we could be best in class and best in the world at every channel. Internally. Those people are usually at agencies.
Rob DeMars
Yeah. And I think sometimes it's hard to attract talent to go and work on one product for their whole career. Right. They like the variety that an agency can offer. So can you truly staff an in house agency that's going to be top tier talent?
Elena Jasper
Yeah, that's a great point. And I know we're going to talk about AI and its impact on agencies in a second, but I was thinking in my head like, all right, well, AI, I can actually see going either way with this because on the one hand, I think the easy answer is AI. Everything's going to in house, it's going to be easier to do. But the downside would be everything's changing so quickly with AI, it's going to continue to change. So you can build, say you build an in house TV team. How are you going to keep up with all this new AI like stuff then? Are you going to have to let people go like, does it become a personnel issue versus your agency dealing with that? Like, we're the ones right now as an agency that have to deal with AI disrupting tv. Can you imagine, like if you were dealing with that for every single channel on an in house team, like, how would you even keep up with it?
Rob DeMars
Let someone else deal with the disruption.
Elena Jasper
All right, well, let's move on. So when we ran that survey, we asked questions about brands choosing an agency partner and I was really surprised by one thing. I thought that synergy or the connection with the agency you choose would be important. And when I spent some time researching this topic, that came up a lot like, make sure you like the team and you've got good rapport. But that actually ranked towards the bottom. When we asked marketers, like, what matters to you? So Rob, why do you think that is? Like, do you still think that a connection with an agency, do you think it matters more than maybe you'd answer in a survey, is it still important?
Rob DeMars
I don't know. I think you have to look at the hierarchy of needs. If a CMO goes to the board with a failed marketing campaign and they're like, boy, but we have great rapport with our agency, do you think they're going to care you know, and I think that's probably why the answers are coming through that way. Because of course you want to enjoy the people that you work with. You want to have them feel like they understand you and you understand them. That just makes your day to day life happy. But at the end of the day, it doesn't keep you in the CMO seat.
Elena Jasper
No, I agree. I was thinking something similar. Another question we ask marketers is like, what's your top marketing priority? And time and time again, revenue growth is number one. Like, that has to be what marketers are most accountable for. And if you don't have that, like, synergy isn't really going to help you. But I can see how people might underestimate how important it is to them in the selection process. You might say, like, no, I'm way more focused on their capabilities, the outcomes. But like you said, we're human beings and you don't want to work with people that you don't like. So there's got to be some sort of. And as an agency, we feel the same way when we're talking to brands. Like, you want to work with a team that you're going to enjoy and get along with. So I'm thinking maybe it is more important than we'd like to admit, which makes surveys tough because the people. Actually.
Rob DeMars
I agree. I mean, I think these CMOs that are taking these surveys are probably, while they're looking over the choices that they can check go. If I don't put revenue right now, I feel like somebody's going to know, so I'm going to have to. This is some kind of weird test.
Elena Jasper
I know. Again, that's why it is nice to use kind of some more of these AI models for asking and answering questions. Because it's funny, when I researched this topic, like I said, that came up a lot more like using things like ChatGPT and Claude versus our actual survey to marketers. So maybe it is like a little more important than they'd want to admit. Well, let's get to the most fun part or not fun part of this conversation, which is how is AI going to change things for agencies? So what do we think? What impact is AI already having and going to have on the sort of traditional agency model?
Rob DeMars
I'll repeat an answer I had on a previous podcast about just the awkward nature of what this year is going to be like for agencies as we're all trying to figure out what our voice is. How do we work in this new world? I mean, billable hours is a Joke now when you, I mean again, just to kind of parrot what was said earlier. So it's just going to get weird. But I don't want to sound like a doomsdayer when I say this because I actually say it with optimism. But I don't think agencies, the word agency is going to exist. In three years we are going to be platforms.
Elena Jasper
Holy smokes. Three years, that's quick.
Rob DeMars
We're in a time when things move fast. But I just think we're going to really start to erase that word agency because I just don't think agencies the right description for the services being offered anymore. I think we're going to be much more of a plug in scenario where you offer a suite of intelligent services. But the idea of an agency I just think is going to be an old term. And maybe this is semantics, but I do think a pretty big reframing of how services are rendered is coming and it's coming a lot faster. Three years being, you know, a bit too. And again, I don't mean doomsdayerish, I just mean it's. This is a big change. And it's not just advertising. It's all kinds of industries where you're going to be rethinking the law firm. Is that really going to be a law firm anymore? Are financial advisors going to be exist in the way that they exist today? Again, none of those industries are going to go away. But this idea of these agency relationships I do think is definitely going to be reframed.
Elena Jasper
That's. No, that's interesting. At three years it seems fast, but you're right. So much can change in just a year. A lot of agency services are probably going to even this year going to change a lot. Yeah, I think it's an interesting conversation and it's probably going to depend on kind of the agency and the services. I think because you can see some things are just so ripe for AI disruption, you're just thinking, how could that continue? One interesting thing I heard today, I was listening to the big technology podcast and they were talking about BuzzFeed and how the for you page has just totally disrupted BuzzFeed's business model because that used to be the place you'd go to scroll through meaningless stuff and like be delighted and find new things. But now you have BuzzFeed basically on your Instagram Reels or TikTok. It's like constantly serving you new content. And it feels like there are some agencies that I think are going to fall unfortunately more in the buzzfeed Camp, it's like, all right, I just can't see how this whole thing is not just gone because of this.
Rob DeMars
Right.
Elena Jasper
But then the others that remain. Like, I do think there's going to be a lot of opportunity for agencies that can sort of lean in and disrupt themselves before the disruption gets to them. I think that, like, specialized services are probably going to thrive just because we're seeing with some of these new AI tools, the use cases matter and data matters a lot. So if you're an agency that has a lot of history with a certain channel or a specialty, you could use that to your advantage for brands. Again, that's the whole reason you hire an agency. You want something best in class. It's like you could go to a model and get something generic, or you could hire a best in class agency. And then this question always comes up and I find it to be a really hard one. But people always bring it up like, all right, you got to think about what human driven experiences will AI not replicate? And I always find that hard because AI continues to do human things really, really well. But that's probably going to become a topic for agencies. And I think part of that probably is the outside perspective is going to still be important and like, where are humans going to still play a big role?
Rob DeMars
Yeah. And what's it going to look like and sound like? I think we're all still trying to figure out. I just read a article from the Harvard Business Review this morning, actually talking about studies that they're doing that consumers don't actually want AI experiences that are trying to be too human. Like, they actually just wanted to deliver services again, that platform type feel. So I think we, we immediately go to AI is just going to mimic what we're doing today and then. And you know, and it's going to do that really quickly. And it's like, no, it's going to be something else. It's not going to just be Robot Madman guy now that shows up at your door and tells you brilliant campaign ideas. It's just, it's going to be different. The experience is going to be a different. The offering is going to be different.
Elena Jasper
That reminds me of. Have you heard? I think it was over the weekend or a week ago, there was some controversy about people started to find the AI profiles that Meta has created.
Rob DeMars
Did you know about that? No, I didn't.
Elena Jasper
Meta created like a little team of AI Instagram profiles as some sort of a test to see can these get greater engagement. And people started to find them and it actually Said in like the description I'm an like a meta AI agent. And then it became a hunt for these sort of AI profiles and people were kind of rebelling against it. But makes me think about like meta is incorporating AI in a lot of ways. And you're right, like people they are not really liking, at least when it's transparent that, hey, this is an AI profile, people are not. They're kind of rebelling against that at the moment.
Rob DeMars
Right. And it's early too. And will that trend continue as people get more, you know, more and more used to AI as an interface? We'll see.
Elena Jasper
But yeah, I think it's similar to the AI creative discussion. It's will people get used to it or will they not be able to tell?
Rob DeMars
Yeah. I gotta tell you, I liked the AI Santa Claus. That was on my ChatGPT app voice mode. That was pretty good Santa. So I didn't miss the guy dressed in the mall who was half drunk, wearing a white beard.
Elena Jasper
Yeah. I think we can agree that the AI Santa is probably, probably an improvement over the mall Santa. Okay, well, just for fun, I wanted to make some predictions. I know we just talked about this a little bit, but let's fast forward five, ten years from now. What do you think the agency of the future could look like?
Rob DeMars
I'm gonna punt a bit on this answer. I wish I totally knew what the agency of the future is gonna look like in five to 10 years. I'm focused on what does it look like in the next two to three years. I mean, just, there's so much dynamic change when you look at even new terms now that are coming into our vernacular for marketing, where it's no longer about search marketing. I think it was Shelly Palmer that said it's gonna really be about finding. Well, what does that mean? How are we optimizing for find search engine optimizations now becoming search everywhere optimization? So I just, I'm excited at what advertising is going to look like in five to 10 years. But like everyone else, I'm still trying to understand what it's going to look like in two years and how do we contribute to that. I think it's one of the most exciting times to be in marketing and advertising because it's like the table's been reset and everything is so pliable and, and small agencies can now be mighty. One person can be mighty now in this industry. I mean, how cool is that? It's not for just these massive ownership groups that just keep swallowing each other up. It's kind of this Wonderful new era that we all get to play in.
Elena Jasper
Yeah, I like that thought. It's almost like how we've disrupted like the traditional content distribution model. Where before like your content would be created by these big production companies, you would need millions and millions of dollars to create content. Now you have individuals who, you have some people who all they watch is TikTok content. All they do is watch individual creators. And now you're right, a lot of these, I know we struggle with this. As an independent agency, you're always battling against these big holding companies. Some of that. It's going to break down a bit. There's going to be more opportunities for more people.
Rob DeMars
What do you think?
Elena Jasper
Okay, so I actually took a swing at this. I went ahead and talked to AI because I thought if anybody knows, it's AI.
Rob DeMars
There you go.
Elena Jasper
There were some kind of fun ideas I wanted to share. So one prediction was will we have more? They called them POD agencies inside brands. So I thought that was fun. Just as AI gets better and it can do more, are you going to see these? Maybe brands absorb agencies like absorb small teams or they build small teams that are super specialized. And will you be able to have more specialized small teams because AI is making the processes easier. Another prediction was that we're going to see more hyper specialized consultants and agencies. I think bodes well for us. Like I was saying, if you can be a true expert on one topic as opposed to an agency that is full service and dabbling in a lot of different things, those hyper specialized companies with a lot of data, they're going to do well. And then it called something an always on intelligence hub, which I thought was really cool. Like, okay, in the future, instead of for certain channels or certain use cases, instead of tapping into like a human agency team, you might be looking at either agency offerings or separate platforms that do similar work to an agency, but they're just completely automated. So you could see how maybe before you'd hire an agency team and work with them on your Instagram ads. You know they're Instagram experts, right? Right now could you just plug in to a platform or a hub that would do all the work for you, provide intelligence. I thought that was fun. And then it works all the time. So you're not waiting for agency meetings or for them to update things. And I think all this stuff, all these ideas, I agree with you. Like they're slowly gonna start happening. Like this isn't gonna happen overnight, but I think in the coming months, years, you're gonna start to see Agencies themselves developing more of these options for brands. So you could be negative and think, oh, it's a terrible time to be a marketer. Or you could say this is about to be a super fun time because if I'm the CMO of a fairly large, even medium sized brand, I'm going to have a lot of options now for new things I could try and people I could work.
Rob DeMars
Absolutely. It's funny too when you think about, I'm more introducing discussion around the vernacular of what does agency mean? But at the same time, what is this considered the year of already? The agent, you know, for the agentic AI. So it's like the AI is even classifying itself as an agent. Right. And that's what we are, we're agents. And so I don't know. Cut that one out.
Elena Jasper
No, I don't know. That's kind of cool. I don't know. I liked it. All right, well, let's end with something a little bit more fun. If you could hire, if you could hire a best in class agency to handle something personal like a single event in your life, past or future, what would it be?
Rob DeMars
Okay, so my wife and I, we really like airplanes and we don't like road trips necessarily. We don't take really long road trips, but we're going to take one. We're going to take a cross country road to a road trip. And I'm kind of nervous about it because I'm like, how do you do that and not want to kill yourself? Like how do you plan it in a way where it's fun and you make fun stops and you know the right places? So if I could just hire a guru to help plan it out. So it's a memorable and fun experience because you hear about people having the time of their lives on road trips. But I tend to like to get on an airplane and then be where I'm supposed to be. So I would love that.
Elena Jasper
Yeah, I'm the same way as you. And some people I think love that. The process of sitting down and manually mapping out everywhere you could go and the time it would take and where you're going to stay. I'm not that person. I would also rather just be at my destination. That's a great one. This is obvious, but I got married almost a year ago now. And a wedding, you could hire an agency to do a wedding.
Rob DeMars
Absolutely.
Elena Jasper
That'd be nice because trying to plan a wedding on your own, it's just like headaches. And it'd be nice if you could tell certain Family members like, hey, contact my agency to have your questions answered.
Rob DeMars
Absolutely. Well. And benefiting. That's a great example of just benefiting from outside experience and someone who's doing it all the time and they've seen what works and what doesn't work and. Yeah, no, absolutely.
Elena Jasper
And then my other idea, which I've actually had this idea just as a business, like, I would like to start this business is bachelorette parties. So I'm sure you've been on bachelor parties, but bachelorette parties are the most stressful thing you could imagine. So someone has to plan. It's usually the maid of honor. So it just falls on their shoulders. To plan this whole trip, you have to coordinate with a bunch of women that you don't know. Everyone has different schedules. You got to start with, okay, when can you go? That takes a month. Where do you want to go? That takes another month. What are we going to do? That takes a lot of time. And then the worst part, how do you divide expenses? That is always just a horrible, horrible process. If you could just hire a bachelorette agency company, they could handle all of it, handle all the communication. I think that must be a business already, but somebody should put that on tv.
Rob DeMars
It's a good one.
Elena Jasper
That's it for this episode of the Marketing Architects. We'd like to thank Taylor De Los Reyes for producing the show. You can connect with us on LinkedIn and if you like the podcast, please leave us a review. Now go forth and build great marketing.
Rob DeMars
I don't know. I don't agree with my answer that I wrote before. So now I'm struggling with even answering this one.
Elena Jasper
Well, that's okay.
Rob DeMars
Don't put this on the won't.
Elena Jasper
I won't. Taylor won't. Probably Marketing Architects.
Podcast Summary: The Marketing Architects – "The Truth About Agency Models"
Release Date: January 21, 2025
Introduction
In this episode of The Marketing Architects, hosts Elena Jasper and Rob DeMars delve into the evolving landscape of agency models in marketing. They explore various types of agency structures, the decision-making process behind choosing an agency or bringing services in-house, the transformative impact of Artificial Intelligence (AI) on agencies, and predictions for the future of agency paradigms.
1. Rethinking Traditional Agency Models
Timestamp: [00:00] - [05:34]
Elena and Rob kick off the discussion by questioning the relevance of the traditional "agency" label in today's fast-paced marketing environment. Rob DeMars expresses skepticism about the term's applicability, suggesting that the services offered by agencies have evolved beyond what the term traditionally encapsulates.
Key Points:
Traditional Billing Models: Elena references a Work article highlighting that 41% of agencies still bill by the hour, whereas only 24% of marketers prefer this model. There's a growing desire for project-based or performance-based fees, but these alternatives are scarcely offered (only 2% offer performance-based models).
Impact of AI: As AI accelerates processes like creative revisions and strategic planning, the traditional hourly billing model shows signs of strain.
Shift Towards Outcome-Focused Models: Carolyn Johnson from the Business Model Company advocates for agencies to prioritize results and outcomes over inputs like time and effort.
Notable Quote:
Rob DeMars [03:28]: "A copywriter that charges by the hour is like a gunslinger that charges by the bullet."
2. Exploring Types of Agency Models
Timestamp: [05:34] - [15:04]
Elena outlines the various agency models available to Chief Marketing Officers (CMOs), emphasizing the importance of aligning the agency's structure with the brand's specific needs.
Types of Agency Models Discussed:
Traditional Full-Service Agencies: Often bill by the hour or retainer, offering end-to-end services.
Specialist Agencies: Focus on specific areas such as social media, performance marketing, or television, typically charging project-based or monthly fees.
In-House Teams: Provide greater control but come with fixed overhead costs.
Freelancer Collectives: Offer flexibility with hourly or project-based pricing.
Consultancies (e.g., Deloitte): Provide strategic services at premium rates.
Platform Models: Charge subscription fees, with some offering pay-for-performance based on chosen KPIs.
Project-Based Agencies: Charge flat fees for specific deliverables, ideal for one-off projects.
Hybrid Approaches: Rob introduces the concept of "all the above" agencies, which combine various models to leverage both in-house expertise and specialized external services.
Notable Quote:
Rob DeMars [04:28]: "This is about outcome-based advertising... it's going to be more relevant today than it ever was."
3. Choosing the Right Agency Partner
Timestamp: [15:04] - [17:07]
Elena and Rob discuss the critical factors brands should consider when selecting an agency partner. They emphasize that the decision often hinges on aligning the agency's capabilities with the brand's growth objectives rather than merely evaluating a checklist of features.
Survey Insights:
Key Recommendations:
Focus on Benefits Over Features: Prioritize how the agency can drive transformative growth rather than the specific services they offer.
Define Core Challenges: Clearly articulate the brand's primary challenges to ensure the agency's solutions are aligned with desired outcomes.
Research and Due Diligence: Utilize Google searches, referrals, and possibly engage consultants to identify and evaluate potential agencies.
Consider Fit: While synergy and rapport are important for day-to-day operations, the primary focus should remain on the agency's ability to deliver results.
Notable Quote:
Elena Jasper [07:54]: "What are the core challenges your brand is facing? Like, how are we going to drive growth for the company?"
4. In-Housing vs. Outsourcing: The Best Fit for Your Brand
Timestamp: [17:07] - [23:05]
The hosts debate the merits of in-housing versus outsourcing marketing functions to agencies, using Best Buy as a case study to illustrate the fluidity between the two approaches.
Advantages of In-Housing:
Advantages of Outsourcing:
Challenges:
Impact of AI: Elena posits that AI could sway brands towards in-housing by simplifying processes, but maintaining cutting-edge AI capabilities might still necessitate external expertise.
Notable Quotes:
Rob DeMars [13:06]: "If you're in house, you've got deep expertise, less time needing to turn stuff around... But it's really expensive to offer all those services within your own company."
Elena Jasper [14:06]: "I don't know how you can make the case for no outside perspective from agencies... you would never outsource something when it's like, all right, there's no way that we could be best in class and best in the world at every channel."
5. The Role of Synergy and Relationship in Agency Selection
Timestamp: [23:05] - [17:07]
Interestingly, the survey conducted by the hosts revealed that synergy—the connection and rapport with the agency—ranked lower in importance compared to factors like cost and quality. This led to a discussion on why revenue growth often takes precedence over relational factors in the selection process.
Insights:
Hierarchy of Needs: Outcome and revenue growth take priority, as they directly impact the marketer's standing within their organization.
Human Element: While important for day-to-day interactions, synergy alone cannot compensate for underperformance in delivering results.
Notable Quote:
Rob DeMars [15:37]: "If a CMO goes to the board with a failed marketing campaign and they're like, 'But we have great rapport with our agency,' do you think they're going to care?"
6. AI's Disruptive Impact on the Agency Model
Timestamp: [17:07] - [22:08]
AI is reshaping the traditional agency landscape, prompting predictions about the future structure and functionality of agencies.
Key Predictions:
Decline of the Term "Agency": Rob envisions that within three years, the term "agency" might become obsolete, replaced by platforms offering a suite of intelligent services.
Transformation to Platforms: Agencies may evolve into plug-and-play platforms that integrate various automated services, moving away from the traditional agency-client relationship.
Specialization and Hyper-Specialization: Agencies focusing on niche areas with deep expertise are likely to thrive, leveraging AI to enhance their offerings.
Always-On Intelligence Hubs: Future agencies might operate as continuous intelligence centers, providing real-time insights and automated services without the need for traditional meetings and updates.
Case Studies:
BuzzFeed's Decline: Elena references BuzzFeed's disruption by social media algorithms, illustrating how agencies not adapting to technological shifts may falter.
Meta's AI Profiles: An experiment by Meta involving AI-driven Instagram profiles faced backlash, highlighting consumer resistance to overt AI interactions.
Notable Quotes:
Rob DeMars [18:16]: "We're going to really start to erase that word agency because I just don't think agencies the right description for the services being offered anymore."
Elena Jasper [22:08]: "But the others that remain... specialized services are probably going to thrive just because we're seeing with some of these new AI tools, the use cases matter and data matters a lot."
7. Future of Agencies: Five to Ten-Year Outlook
Timestamp: [23:05] - [27:42]
When prompted to predict the agency landscape in five to ten years, Rob and Elena speculate on several transformative trends without committing to definitive outcomes.
Key Predictions:
Empowerment of Small and Specialized Agencies: Smaller agencies can leverage AI to offer specialized services, making them competitive against larger holding companies.
Rise of POD (Product-Oriented Data) Agencies: Agencies may become highly specialized pods within brands, focusing on specific tasks enhanced by AI.
Always-On Intelligence Hubs: Transition from human-managed agency interactions to automated, intelligent platforms that handle ongoing marketing needs seamlessly.
Elena’s AI Insights: Using AI-generated ideas, Elena predicts:
POD Agencies Inside Brands: Specialized teams within companies powered by AI.
Hyper-Specialized Consultants: Experts focusing on niche areas will become more prominent.
Always-On Intelligence Hubs: Automated platforms offering continuous marketing intelligence and execution.
Notable Quote:
Rob DeMars [24:44]: "It's one of the most exciting times to be in marketing and advertising because it's like the table's been reset and everything is so pliable and small agencies can now be mighty."
8. Fun Predictions and Personal Insights
Timestamp: [27:42] - [30:34]
The episode concludes with a lighter segment where Elena and Rob share personal scenarios where hiring an agency could be beneficial outside the professional realm.
Personal Scenarios Discussed:
Planning Memorable Road Trips: Rob expresses a desire for an agency to meticulously plan a cross-country road trip to ensure it’s enjoyable and stress-free.
Wedding Planning: Elena suggests utilizing agency expertise to handle wedding logistics, reducing the burden on family members and ensuring a seamless event.
Bachelorette Party Planning: Elena envisions a specialized agency to organize stress-free bachelorette parties, managing all logistics and communications.
Notable Quote:
Elena Jasper [30:21]: "If you could just hire an agency to do your wedding, it’d be nice because trying to plan a wedding on your own is just like headaches."
Conclusion
Elena and Rob wrap up the episode by emphasizing the dynamic nature of the marketing landscape and the pivotal role agencies play in navigating this evolution. They encourage listeners to embrace the changes brought about by AI and specialization, positioning their agency as a forward-thinking partner ready to adapt to the future of marketing.
Final Thoughts:
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Produced by Taylor De Los Reyes.
Go forth and build great marketing!