The strategies that worked in the past will need to be revisited to check their relevance in the new environment. Some of the areas where fresh views are needed are:
The choice of segments to be served in the emerging future is the first aspect to be revisited in order to reposition an advertising agency in the new competitive environment.
- It is now clear that no organization can be ‘all things to all people’.
- The need to divide existing and prospective clients into a number of homogeneous segments and then select the few where the agency wishes to focus in the coming years will be a key task since it will help the agency to have clarity, consistency and commitment in development of strategy, allocation of resources and identification of critical skills.
- The choice of segments to be targeted must take into account such aspects as scale of future operations, new opportunity areas (e.g. relative emphasis on non-traditional media and choice of segments such as retailing, dot.com, health care, insurance etc.) and underlying capabilities to serve such areas, competitors’ existing and future offerings, agency’s present strengths and vulnerabilities and its agenda for building specific capabilities in the future.
- There will increasingly be a sharp distinction between ‘pure’ players in select areas and full-fledged communication practitioners.
- Scale – A critical issue to be addressed is how big the size of an agency should be.
- Size will undoubtedly matter if new capabilities are to be built, more value-added services are to be provided and cost to the client is to be reduced.
- It is also a fact that the industry is getting concentrated, and unless an agency figures in the top ten, it is unlikely to make reasonable money.
One key issue that needs to be revisited is what kind of future capabilities an agency should build so that it can have competitive advantages to offer value that is better than its other direct competitors as well as niche players.
- The list of capabilities has to be developed keeping in view the need for micro-segmentation, requirement of faster delivery, emergence of e-business, new technological possibilities in IT and telecom, and development of non-traditional media such as Internet, ATM, WAP devices, interactive TV etc.
- Applicability of newly developed capabilities across different geographical markets around the world
- Breadths of sectors to be covered (e.g. retailing, distribution, promotions, merchandising, sampling etc.)
The decisions taken to reposition the agency in four specific areas of segmentation, scope, scale and capabilities will determine the value proposition that the agency intends to offer to its clients.
- Providing research and intellectual inputs to clients in three key areas, viz understanding changes in consumer behavior, developing business insights (including making available frameworks for formulating strategic options) and crystallizing the brand vision.
- Development of a range of options, so far as choice of media — both online and offline — is concerned, given the content of the message and the profile of target consumer or customer group.
- Speed in delivering error-free, quality output and responsiveness as well as the flexibility to change the package of offering at short notice will help agencies reduce customers’ anxieties to get an advantage over competition.
- Subjecting the agency’s remuneration structure, on a proactive basis, to certain accountability format.
- Building a track record of measurable success in all aspects of the agency’s operation and services — creative, media planning, media buying, production and account servicing.
- Expertise and professionalism of the agency’s staff, at both the front and back office, reduce customers’ anxieties to a great extent and are thus sources of value.
- A well-developed, well-communicated, and well-delivered value proposition that I s meaningful and relevant to the target client groups will help the agency ‘position’ itself clearly and uniquely in the minds of the clients vis-à-vis competition.
As with any other organization, an agency will need to define a few critical parameters against which it will measure its short- and long-term performance, given the industry’s standards and clients’ expectations. Such parameters should be chosen to reflect the importance of both client satisfaction and internal efficiency.
Against the backdrop of the increasing propensity of clients to shift from a commission or fee-based remuneration structure to a system based on ‘payment by result’, it is obvious that an agency will need to incorporate in its list of key success factors such parameters as
- the advertiser’s business performance (e.g. sales, volume etc.),
- the performance of advertising (e.g. level of awareness created, enhancement of brand image etc.) and
- performance of the agency vis-à-vis clients’ expectations and service standards set in delivering the service (e.g. task competencies, service delivery-quality, timeliness and professionalism).
These three areas, in addition to other items that measure internal efficiency, must be fine-tuned, quantified and benchmarked to make sure that both clients and employees of the agency understand and evaluate the kind of value the agency proposes to deliver and how the agency ensures high-quality execution of the same.