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How Five Industry Executives Overhauled Their Business Models To Unlock Opportunities

This article is more than 5 years old.

By: Melissa Lentz

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It has become increasingly difficult to avoid the apocalyptic tales of an industry gasping for its last breath, as more and more conferences, industry coverage and client meetings are laced with fear and resignation.

Of course, the business of servicing brands has forever changed and with it, the conventional ways of running a successful agency. With downward pressure on fees, the seemingly unsustainable rate of innovation and new competitive threats – the marketing services industry has entered a new chapter.

And yet for every ‘winter is coming’ narrative, there is a company defying this plot via a formidable dose of resilience and ingenuity. The insight: they deploy the instruments of organizational design and operations to create opportunity.

I recently sat down with a handful of these businesses – some relatively new and some legendary – to learn how they are continuing to evolve their businesses amidst the current industry madness.

Manufacture Specialized Insight at a Global Scale

The threat of management consultancies is palpable. They’re acquiring agency talent and winning agency business. But perhaps most importantly, they’re investing in insight around innovation that casts them as the C-suite’s strategic guide.

Roger Park serves as the EY Americas Financial Services Innovation and Strategy Lead and is a Principal at Ernst & Young LLP (EY). While his group doesn’t directly compete with agencies, he acknowledges that innovation presents both an emerging threat and opportunity for service businesses. “The ability to drive innovation projects for clients will lead to the restacking and rebalancing of players in the space. It’s an opportunity to move up or move down,” he explains.

To prepare for what Park describes as the ‘Hyper Innovation Era’, his firm established EY wavespace™, a global network of growth and innovation centers. Each center focuses on a specific growth area and technical expertise. The network operationalizes a divide and conquer strategy for global innovation expertise. For instance, the Dubai location focuses on Smart Cities, Madrid is exploring Artificial Intelligence, and Tel Aviv owns Cyber Security. As Park shares, “Wavespaces let us build global businesses faster across the network. Each office can import and export the right expertise to match a global client’s needs.”

Adopt a Product Mindset

Code & Theory made its mark operating at the intersection of product design and brand marketing. Brands aspired to be content publishers, and Code & Theory understood that digital capabilities and technical systems would be required to make that ambition a reality.

For years, the company separated its product and brand teams, believing the two offerings couldn’t fit organizationally under the same roof. In 2017, the agency’s President Mike Treff realized that Code would need to dissolve the siloes in order to grow and deliver true change for their clients. “We saw marketing services being commoditized very quickly and very easily. Isolated digital campaign moments were becoming a small runway business. We needed to move data, behavioral analysis and system design into our marketing solutions to better serve our clients.”

The new approach has generated additional business opportunities as Treff shares that “Code is now invited into RFP’s alongside traditional management consultancies to help brands think about their business strategy and organization design".

Turn the Client Relationship Inside Out

Oliver is a new breed of service model that builds bespoke agencies inside the walls of its clients. Leaning into the growing trend of brands developing in-house agencies, Oliver provides a hybrid solution that delivers on marketers’ mounting content and speed-to-market needs.

As Oliver’s US President Peter Kuhn explains, “We’re big believers in the impact that proximity of minds delivers. Eighty percent of our staff co-locates with their dedicated client. But unlike in-house agencies, we offer our talent opportunities to rotate across brands and hone their craft via our global creative network".

As a result of their operating model, Oliver touts a stronger bond around client culture, sharpened appreciation of business priorities and accelerated delivery to market. “We’re not seeking to replace traditional agencies,” Kuhn explains, “We just want to be the best possible collaborator given the current state of the industry".

Set Aside the Org Chart to Inspire Growth

Communications marketing firm Edelman is known for its global scale, fervent independence, and early instincts around building a digital capability to complement its public relations roots. Their New York President, Jennifer Cohan, explains that the current industry challenges have only spurred more intrigue internally around the potential of future firm services. “We are ambitious,” she shares, “We want to compete across a variety of categories that support our clients".

Critical to a firm with Edelman’s size and ambition is navigating organizational complexity. Cohan acknowledges, “We know we’re a highly matrixed organization. We also know we need to be quick to learn if we want to continue to innovate and lead".

In order to bridge the demands of scale and agility, the firm has proactively encouraged community anchored around skill-sets that foster cross-pollination and inspiration. As Cohan shares, “We’re always considering how our structure, systems, and culture connect and how that relationship will change as we evolve".

Translate an Operating Model Into a Stand-out Positioning

Few things raise an agency owner’s cortisol levels like the lack of visibility into the client pipeline. And yet Hawke Media, a five-year-old digital marketing agency out of Santa Monica, has double-downed on the theory that a short-term focus can translate into some pretty impressive long-term gains.

Positioned as an e-commerce brand’s outsourced CMO, Hawke Media emphasizes its services are month-to-month and a-la-carte by design. Vice President of Operations Kate Aurell explains, ‘Because we’re not focused on long-term contracts, we’re incentivized to focus on the work and deliver measurable value. We know there is a need for transparency now more than ever. We are tying our success to the impact we make for our clients". According to Aurell, the unconventional operating model is paying off. The agency has doubled its revenue every year for the last three years.

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Melissa Lentz is the founder of M. Hatter Consulting, created to help communication companies harness the madness of change and chart a roadmap for growth in a digital-first world.