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Are you at risk of being a one-hit wonder? The importance of diversification for creative agencies

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The media landscape is rapidly diversifying, predominantly as a result of new technologies emerging that are having a significant impact on the creative industry. This is not only having an impact internally as businesses seek to update their offerings, but clients’ demands on creative agencies are also changing.

A range of multimedia channels and platforms should now be fully embedded within the creative process. Consumers are continuing to move away from the desktops and are now reliant on smartphones and tablets. Content channels are also expanding both online and offline, including social and video. Multi-channel services should now be one of the core focuses of the creative media industry as it provides an opportunity to generate the entirety of one client’s content across an expanding landscape. Ultimately, businesses are looking for a one-stop shop solution and are no longer solely expecting agencies to deliver on their strategic aims.

Some of the world’s most notable brands have previously shamed creative agencies for a lack of diversification in what they have to offer and those that are dependent on one skill set, such as pure marketing or SEO, are putting themselves at risk of being a ‘one-hit wonder’. The rise of social media in the last few years has seen the appetite for SEO boom, with companies utilising this tactic to expand their marketing programme, however, it is used as part of a wider strategy. Agencies need to reflect their client’s requirements and offer a full range of creative services so they are able to generate an effective media, marketing and/or advertising strategy.

For agencies that are expanding, reputation and future growth must be the key motivations. Taking a long-term view is crucial to keep pace with competitors, and understanding what clients want should be the key focus. This may well change as clients see others in the market diversify, so decision-makers would do well to continually ask themselves if they are delivering to the best of their (collective) ability, not just when push comes to shove.

So how can an agency diversify without spending thousands and totally rebranding Incorporating a channel management layer is worth considering. Adding this extra service line is possible across various creative disciplines, and enables agencies to provide a complete campaign as opposed to focusing on individual parts. From a business planning standpoint, this additional layer is not complicated to generate and is unlikely to mean expensive recruitment strategies. It can work together with the existing account management, media, technology and planning departments to create a more efficient team with better oversight, allowing some to manage and others do what they excel at – being creative and selling the client’s story.

The additional spend on technological advancement that comes with diversification can put pressure on an agency’s finances. Software development, whether it be internally or through external consultants, and recruitment fees for individuals with sought-after skill sets will all incur additional costs. Careful consideration needs to be taken regarding where the additional funding will be generated from. The additional costs will need to be included as part of the overall budgeting process of the agency, so it is important that these issues are addressed early. Cash is king in every business, so it is particularly important that the agency has sufficient cash resources to deal with the additional costs involved with diversification.

Getting the timing right for expansion is a challenge that many of our clients face. Market diversification has challenged the traditional creative model and is forcing the industry to adapt, putting pressure internally on agencies. There is no doubt a need to re-design older business models to reflect these dynamic changes but this must be considered alongside the existing skill sets and resource within the business. Campaigns are now heavily focusing on the international arena rather than just the UK, which can have additional cost implications as agencies equip themselves to seek out the best talent, globally.

There is, unfortunately, no ‘right time’ but the decision to expand to a multi-channel offering should be made once careful analysis has been undertaken of the current offering, clients, resource, profit margins and business structure.

The creative industry has changed dramatically in recent years and companies are increasingly focusing their efforts on communications. The demands and expectations that agencies face have rapidly evolved and it is imperative that the market continues to adapt, providing “cutting edge” content and strategy. Diversification has played a key role in changing clients’ expectations and the landscape will continue to grow. Creative agencies need to be nimble and be at the forefront of technological advancements to ensure their reputation is maintained and growth strategy continues.

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By Laura Mott, Partner at haysmacintyre

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