system two

system two
start-up thinking in the enterprise

Monday, 9 May 2011

Reflections on the agency model

The world is changing for agencies. Revenues from traditional offline products and services are declining. Digital per se is not the answer. Much of what would be considered traditional digital work (website development, search, SEO etc) is now a highly commoditised offering wafer thin margins.

From the client perspective, the world is fragmenting. Meaning brands are finding it increasingly difficult to engage and retain customers.

A successful agency model would reconcile these 2 positions. Finding products and services that offer sufficiently high barriers to entry that margins won’t be eroded in the medium term, whilst offering brands a solution to their differentiation and customer engagement issues.

In a world where the “work” is a commodity, but understanding what that work is, is increasingly hard. An agency must then logically sell understanding.

That understanding is, at its core, the understanding of customer.

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