Part 1: Has Assisted Attribution Killed the Current Agency Org Chart?
Posted on January 30, 2014
This is the first in a five-part series highlighting what I believe are five fatal flaws with the traditional full-service agency organization chart and how agency leaders can resolve them. Some agencies are getting this right and if you are, I’d like to hear from you.
Traditional Agency Business Model
In consulting with both digital and full-service agencies since 2008, I’ve observed a disconnect that has puzzled me. Namely, the lack of alignment between agency organizational structure and the reality of how customer journeys work. To reconcile this, I’ve had to reflect on the evolution of the advertising agency for clues.
If we go back 50 years, there were only a few dominant advertising mediums (print, TV, radio) along with direct mail. Event marketing was just being truly understood and the Internet wasn’t even in science fiction movies yet as the world’s computers were operating on vacuum tubes. For the advertising agencies in the 1960’s and 1970’s, life was comparatively easy as there were not a lot of levers to pull when your client asked you to help them increase sales. You could change the ad creative and/or change the ad impressions (frequency, reach). The prevailing paradigm was that to drive sales you exposed the buyer to advertising. As a result, a single cause/effect relationship emerged whereby if your sales volume increased it must have been due to the increased advertising (the more sophisticated agencies deployed various direct response mechanisms to track the response rates and the conversion to sales).
The resulting ad agency organization structure was to divide into four departments: creative, production, media and account (client) service. Someone had to concept the ad, then produce it, then buy the media to reach the target audience(s) and lastly manage the client communications on a daily basis. The agency business model was based on treating each of these four process steps as individual profit centers. So during these decades agencies operated under a model of separate functions, separate profit centers, and a paradigm that a individual marketing tactic (advertising, direct mail, events) influenced a buyer’s decision to contact a brand’s sales channel. In modern times, we reference this as “last click attribution.”
With the emergence of the Internet in the 1990’s, advertising agencies tried applying their (now 40 year old) organization model to digital mediums. The prevailing business model (separate profit centers) and organization structure (separate creative and production teams) remained largely unchanged — save for the digital programmers who were now part of the production team to help build websites, email templates, landing pages and online banner ads. So the agency paradigm of last-click attribution remained and the lack of conversion tracking was rationalized by invoking John Wannamaker’s now infamous statement about half of his advertising budget being wasted, but he doesn’t know which half.
However, by the mid-2000’s the digital landscape had a decade to mature and marketers were noticing something: buyers were not interacting with just a single advertising or digital touch point — they were interacting with multiple messages and brand touch points before committing to purchase. Tracking these multiple touch points became the new “holy grail” as marketers now realized they needed to become intentional about documenting the touch points along the buyer’s decision journey and give credit to those interactions that led up to the last click. This spawned the concept of assisted-attribution. In 2012, Google decided to help marketers bypass the cookies, homegrown Java script and other methods being employed to track buyer behavior (Eloqua calls it “digital body language”) by introducing a feature within Google Analytics called multi-channel funnels (MCF). The idea was to create an assisted attribution tool (limited to a 30-day cookie window) to help marketers understand the sequence of the buyer journey so that they could better align their marketing.
The implication for marketer leaders was profound — instead of isolating their functional marketing staff into silos (content, email, events, PPC, etc.) they needed to find a way to work together as a team. This meant integrating the organization chart and workflows to drive collaboration as insights discovered along the buyer’s decision journey should be shared across team members. Additionally, the marketing team must operate from a “single source of truth” in terms of their understanding of the customer journey, buyer personas, and the assisted attribution paths that lead to conversions. Once a common understanding is mapped, then individual marketers can execute their specific tasks.
Required Agency Paradigm Shift
The problem is, many of the full-service agencies were spawned from advertising agencies so they failed to make the same paradigm shift. Their business model (organization, compensation, billing, hiring, workflows) is still rooted in the idea of building creative briefs for design and production teams that operate in organizational silos. Although Account Service teams reach across the silos, they serve more as project managers as their day is filled with answering client emails and managing project deliverables as opposed to analyzing assisted attribution data and generating conversion insights. The result is not only a lack of cross-functional insight sharing but a disconnect with clients. So are some agencies operating a last-click attribution model in an assisted-attribution world? I think so. Maybe it’s time to revisit the full-service agency org chart.
For some, the prospect of re-imagining their agency for the new era will be exciting and challenge them to adapt in a way that will position them for success with CMOs for years to come. For others, change will be scary and the lack of adaptation will lead to their downfall. In my own backyard, I see a tale of two cities (San Antonio, Austin). Agencies in San Antonio are trying to hang onto the old model while agencies in Austin are trying to re-invent themselves. Undoubtedly, much of this is shaped by culture and the appetite for risk and innovation.
In part 2, I’ll examine the need for shared learning across functions and why traditional organization structures can fall short.