Hedge funds are betting against the world's top advertisers, and WPP shares have dropped 10% this year. Agencies are now facing competition from hordes of independent microentrepreneurs, making it harder for them to stay afloat. To survive, they must reinvent their business model and embrace digital technology or risk becoming obsolete. But is this really the end of the road for ad agencies? According to a Forbes article titled The Future Of Agency Models, many agencies still have entire teams of people whose job is to approve or reject other people's work.
Having been in the industry for a while, I've noticed that more and more agencies are taking on one-off projects instead of long-term contracts. Upwork has become a popular platform for companies and agencies to find work, with over 14,000 agencies making money on the platform. At the Upwork Work Without Limits Executive Summit, Stephane Kasriel, Eric Gilpin, Bonnie Sherman and the rest of the Upwork team announced their new agency experience, which offers a more agile way for companies to work with creative and strategic talent. The pandemic has only accelerated existing trends that have been hitting traditional agencies hard, such as clients shifting away from long-term contracts, consultancies encroaching on their turf, and an increased demand for customer experience work.
Many marketing and communication experts who no longer want to be part of the traditional agency model are turning to distributed models because they offer more flexibility and control over their working hours. Smaller boutique agencies are also popping up to take on smaller and medium-sized accounts that larger agencies don't want. Even today, when I talk to marketing and communication students, I'm still excited about the potential of agency work. S4 Capital has also been on a buying spree, merging Taco Bell's culture agency Cashmere with Media.
I'm not the only one who has noticed this shift; I've seen it firsthand in my own agency (although admittedly I haven't been in business long). IBM is buying up boutique creative stores, while Google, YouTube and Vice are partnering with niche marketing agencies specializing in branded content and influencer marketing. Many of us in the marketing and communication fields grew up in agencies with beautiful offices, collaborative spaces, professional development sessions, happy hours and softball teams.