OPINION: Marketers, invest in growth, not legacy agency structures

Back to news27th October 2020

Written by Simon Ryan, CEO RyanCap

Marketers have a simple decision to make. Do they want media investment that drives results, or one that pays for holding groups to restructure, says RyanCap CEO Simon Ryan.

The advertising and media industry is navigating a significant structural shift. Much has been spoken about the catalyst for this change, not so much about the outcomes. But the overarching outcome will be two different agency environments. The first, those that have been purpose-built in anticipation of this shift. The second, existing global network models trying to reinvent themselves. These are the two choices that brands now face as new and different marketing service business models become the dominant players.

In this choice of two, the legacy agency model is severely challenged. Based on a construct more influenced by traditional media and fees, they are still trying to fit their square peg into a round digital hole.

The purpose-built model is precisely what it says: built to exceed and excel in this multimedia environment where brands are harnessing digital transformation to drive sales and business growth. Post-Covid, that shift has accelerated exponentially and brands in Australia are now spending the lion’s share of their media budgets within digital channels.

The digital ad economy is now a $10 billion-plus market in Australia, and over $200 billion globally and growing. Digital is no longer generating 20% or 30% of client spend and returns, it’s now yielding nearly 60%, and marketing dollars have necessarily moved fast to recognise this reality.

So the right answer becomes obvious - if the bulk of media spend is digital, clients need talent and capability within their agency that matches that direction. Their agency choice must be at the forefront of development and enhancement instead of playing reinvention and catch up. But to try and maintain relevance, that is exactly what global parent companies must do. It means ditching legacy revenue, legacy thinking, and legacy infrastructures that 30 years ago were fit for purpose. Each of these legacies carries with it significant cost, and the only way out of that old-world mess is massive restructuring, pulling the smartest business heads away from client business.

New model

Heavy cutbacks and even bigger hits to the balance sheet are necessary for long-term viability, decisions that stakeholders are unwilling to make in the short-term. The legacy agency model applies downward pressure to deliver aggressive growth targets. In some cases, this has created leaders who are resistant to change, resulting in slow business transformation and self-interest rather than a focus on clients and their results.

This ongoing financial and cultural demise within global holding groups has created an opportunity for new era agency/consultancy business models. Digital transformation and customer-centric marketing require agile thinking and specialist digital skill sets - and the ability to demonstrate outcomes and return on investment in business terms.

A pivotal part of brand success is delivering both awareness and conversion, which assumes the ability to measure adequately, and to use this measurement to guide future investment. This is how it should work but right now, that is often not the case. Agencies purpose-built for this outcome can quantify media spend as a fully accountable ROI metric.

In these tumultuous global times, the driving forces of economic and business change are driven by two main factors; globalisation and convergence, these are significant influences for brands and advertising economies. Knowing this, organic and new revenue growth for clients should be the focus, and creating better outcomes for clients is what we do as client partners.

Succeed faster

Our approach at RyanCap is through a unitary capability structure of the market’s best minds under one roof, to help clients succeed faster and more competently in their digital transformation and beyond. We are a diverse team of digital, data and tech consultants, brand experts, and senior media practitioners working together seamlessly to deliver client results. We don’t belong in silos, and we don’t report overseas. People, clients, relationships and results are all that matter.

During significant challenge and change, understanding consumers through data and leveraging digital channels to reflect this is paramount. Ensuring our clients are investing their marketing dollars accordingly and taking a flexible approach to strategy and channel investment, underpins the difference in the RyanCap approach.

So back to the two choices. Clients deserve a better response from their agency partners, which means there is really only one right answer and one crucial choice to make: Do you want an investment that works, or one that doesn’t?