The impact of the pandemic on consumer behaviour and the economy is rapidly accelerating the digital transformation of advertisers and agencies. As advertiser priorities are shifting more towards strategic, technical, and creative areas, agencies need to evolve to be able to address them effectively.

While we have seen significant inroads and helped agencies make bold moves towards change, we’ve witnessed some agencies stick to established business models and structures. In all the uncertainty, one thing is clear: change is imperative.

After reviewing research on this subject, as well as consulting with industry leaders, we developed a whitepaper to speculate on how changes on the horizon in terms of consumer behavior, sector-wise seismic shifts, and economic disruptions will drive agency transformation.

COVID-19 has accelerated digital adoption

The pandemic has created an increased demand for digital adoption. The need to shift businesses online as quickly and seamlessly as possible became essential for survival. In some ways, agencies are ideally positioned to be the guide and consultant to the advertiser as they accelerate their way through this journey. However, in many cases, agencies were not ready to meet the evolving demands of advertisers.

One of the key drivers that will determine how well agencies are able to transform will be how quickly advertisers shift their expectations of their agencies. The issue is that because advertisers have a history of working with agencies, it’s difficult for them to now shift their perception of the role of agencies in their business. There is a need for advertisers to work with agencies as business partners to accelerate the reinvigoration of media agencies and the transformation of the industry.

How agencies need to change their operations

This whitepaper identifies six key areas in which agencies need to fundamentally alter how they operate to keep up with these changes in the industry.

1. Create an agile structure

Leaner and flatter structures will allow agencies to be more nimble and agile. This, of course, requires greater empowerment of the talent and decentralization of decision-making.

2. Hire data-driven talent

The talent profiles within agencies need to shift from more traditional marketing backgrounds to industry-specific, analytical, and data-centric profiles. The skills to guide a client through this effectively include problem-solving, analytics, data analysis, strategic thinking, and in-depth knowledge of technology and data.

3. Promote varied work culture

Remote work, even in a hybrid form, is here to stay. Organizations need to lift the stigma attached to working from home and nurture self-starters who feel trusted and safe to work away from the office.

4. Embrace technology and automation

With less staff and a requirement from advertisers for quicker insights, agencies will need a robust technology infrastructure to make data accessible to remote workers and local staff.

5. Reshift priorities in business models

The value expected from agencies by their advertisers will gear towards helping generate profit and tackling business challenges. There are a few key areas where agencies can either build expertise or enhance existing capabilities, including ecommerce, performance marketing, user experience, technology-driven creative, content management, training, data visualisation, and omnichannel measurement.

6. Reframe pricing structures

Once an agency has clarity on their market positioning and services they offer, determining how to price and structure deals around them will be critical to their profitability. Flexibility and transparency will be guiding principles, but the main focus will be on assessing the value they are delivering and charging for this. Partners and vendors will also need to rethink their incentive models with agencies and consider funding resources, sharing data and expertise instead of cash rebates.

Evolving to meet needs

COVID-19 has had a negative impact on the economy and the agency business in particular. However, we can choose to focus on the opportunities it has introduced and the acceleration towards a model that was already desirable from a long term perspective. There is a great deal of value that agencies can bring to an advertiser’s business, but advertisers will need to shift their focus from cost-efficiency towards overall profitability.

This post was initially published on Think with Google MENA portal.