What agencies can learn from startups

The speed at which the consumer is changing is now placing enormous pressure on agencies, whether traditional or digital, to become more nimble than ever. More often slow and rigid by nature, marketing agencies that rely on traditional methods are doing a disservice to their clients by not adapting to more lean, lithe, and agile business and marketing philosophies. At my agency, we’ve spent the best part of the last five years working on re-inventing ourselves. We believe what we've learned could be valuable for all kinds of organisations.   

Rapid prototyping for campaigns

Startups today are driven by the Lean Startup approach, and more now are also adopting the Google Sprint methodology to very quickly prototype and hypothesise solutions. The ‘Lean’ principles allows startups to build something pretty quickly, measure its effectiveness, learn through feedback from real customers, and then make improved iterations. This step is then followed over and over again, to the point you reach a well-developed product. Inherently, this process reduces risk and allows the business to find out what works and what doesn’t work before making too many ‘unfounded’ conclusions on product, campaign, or design.

The flip side of this approach is investing large amounts of money into a campaign, supported by advertisements, digital media and more. Campaigns are often won and lost in a boardroom, typically on a singular idea, sample data, and/or insights to suggest it’s going to ‘stick’. The reality is, very few campaigns stick. The agency is built on expensive retainer fees to pay for department heads, production, design, strategy and more—the very idea of rapid, or fast ‘validation’ becomes increasingly difficult with so many heads to feed. More often, the goal is to create a great idea, get the client excited, and move on to pay the bills.

With startups, it’s almost the opposite of that. Cash is strapped or tied to specific milestones and you’re often working on a smaller team where everyone has multiple roles in order to support the company in its early stages. The “MVP” is the most common early task any startup addresses. It stands for ‘minimum viable product’ and considers what can be built first to validate thinking. Before investing or hiring more, a startup defines what it is ultimately trying to prove before going ‘all-in’.

We’ve tested many ideas using social media as a guide to hear feedback from customers. Before it catches on fire, it allows for a team to immediately question, propose, or test its follower base on ‘low level’ campaign ideas. Just recently our creative team for our tourism clients proposed an idea which would have Chinese tourists design mockups of the US map with their own version and be entered in a draw to win a major prize. Before rolling it out in its entirety, we very quickly tested the followers and concluded the complexity in it was too overwhelming. We canned the campaign.

Clients use product experimentation far more widely than do agencies. A good example of this is the current test McDonald’s is running by serving all-day breakfast in several San Diego locations. It’s an attempt to bring back more customers to the stores whilst not cannibalising the core business. The idea would be that if the test proves successful, the brand would see an increase in store traffic and sales that would allow it to explore how it could work in other markets. In conjunction with this, McDonald’s is also testing table service, shakin’ fries and nuggets, and a build-your-own-burger concept. Using this method McDonald’s is able to minimise risk in case of strategic failures while generating buzz for what could be awesome new options.

Finding the right people

Startups tend to have a uniform method when it comes to the hiring process. Their approach is centred around the belief that people are the “engine room” of the startup. The nature of the startup environment requires lean teams that are highly accountable and can deliver on multiple tasks. In turn, this attracts highly motivated, engaged risk takers who are at a point in their careers where they really want to achieve something unique and impactful. Doesn’t that sound like the type of person you would want to see at an agency?

This starkly contrasts against the common agency approach. Agencies are notorious for hiring people who have accrued years of experience in traditional agencies, with veteran-like status. Recruiters don’t help either, by inflating salaries and flirting opportunities elsewhere, which keeps the turnover cycle moving. Roles are often pigeonholed into parochial tasks, leaving the planners, buyers, creatives, and techies each with their own domain. Each, I agree, have there own specialty. However, they’re not conducive to fast-moving innovation groups. The term ‘Agency types’ often refers to this very ideology, that they are more rigid, arrogant, and unwilling to adjust to a new world.

There has been a trend with many of the larger agencies now hiring ‘chief innovation heads’ who drive technical, strategic, or innovation growth across the group—but more often than not they run into the same roadblocks—the people that they hire aren’t the right type of people. We’ve also seen this challenge in our business. However, being much smaller we’ve been able to manage and develop a culture that begins with this approach of finding the right type of talent. Our people, while still a work in progress, have significantly made headway in technical, creative, and business savvy, and we’re now seeing the impact across our own incubated startups.  No one sums this up any better than Google with its desire to attract ‘smart creatives’.

Save money, don’t spend

Simply said, startups are designed to save money, not spend. Because everything must be measured and tracked, startups tend to spend every dollar carefully as their revenue streams can be at times limited and uncertain. Relying on performance-based analytics allows startups to stretch their dollar and in theory, create maximum value per dollar spent.

In this regard, the way in which traditional agencies mismanage their dollars becomes very evident. Big marketing budgets perpetuate the paradigm that dollars spent equate to a campaign’s success, and this ultimately limits creativity. Whereas it was once the norm to throw copious amounts of cash at the biggest name you could find, in today’s digital landscape a well-timed tweet or an Instagram post from a virtual nobody has the capacity to go viral and create more brand value than a lengthy and expensive marketing campaign. A startup begins with, ‘We have no money, how do we create something meaningful that will inspire loads of people into wanting to talk about us?’

Our approach to spending has been to spend where it will have the most impact, which for us means spending on our people. We do company lunches each Friday, bagels in the mornings, and too many happy hours. However, our spend on media is low. We don’t advise spending to buy customers, rather spending to earn customers through creative thinking driven by the people who do it best—our people. Our motivation is to keep our people happy and challenged in an environment that encourages debate.

All about scale

It’s all about scale when it comes to startups. Investors are driven by it, begging the question, 'How do we create a product that very quickly can service millions of customers?' Scale is often at the heart of most technology or product strategy questions, and it’s a consideration that never fades as the business develops.

Agencies, on the other hand, are heavily dependent on resources and people. What is your bandwidth? How much time do you have to give? These are questions often posed to agencies. Because these aspects are fixed resources, agencies rarely ask themselves how they can create more scale. It’s a people's business, and it’s likely to stay that way. 

Two years ago we asked ourselves how we could create a business that can service 100 social-media clients. We realised this was never going to happen through the ‘high touch’ social service we wanted to deliver. This was the cornerstone to KAWO, our social-media-management tool designed to give foreign brands the edge in China’s social-media landscape. We went from thinking of 100 customers to 10,000 and very quickly assembled a team to make that a reality. KAWO now powers all our social media, and is also used by agencies, brands, and global personalities every day. 

Have a ‘Why’

Startups always start with this question: Why are we doing this? it’s the starting point and the end point for all talent hiring, and it’s the guiding light. Money is not plentiful, so the question posed to each new team is: Why should I work with you? Tackling this question is easier said than done. People must buy into the product, the founders, and the motivation behind what they’re doing; that’s a startup's competitive edge.

As agencies become larger, the challenge of maintaining a clear purpose becomes more difficult as parts gradually become more diffuse. The CEO loses touch with her people, financial obligations creep in, and the long established brand philosophy begins to fade. The challenge of how to re-engage our people and attract the best talent will remain. On the flip side, the startups don’t often have the money to begin with, so the ‘why’ becomes the centrepiece. 

In our early years, we often sold the ‘why’ as ‘us vs them’. We were the anti-agency and we wanted to do whatever it took to beat ‘them’. Times have changed now, so whilst we’re still not ‘them’ we have more agency processes in our business and larger clients, which begin to shift how we’re labelled. However, it’s still about the ‘why’. It may change over time, but the sense of a moral compass still drives all our business decisions and new hires. People are hired for the ‘why’, not for the ‘how much’.

In conclusion…

No one said it would be easy, as all of this is easier said than done. It takes time, commitment and a rallying of people behind what you’re trying to do. But the reality is eventually the startups are going to tackle agencies, as they did with businesses like 99designs and others. This trend toward a shared economy, and exploiting people's material or mindful assets will eventually make the traditional agency model redundant. So in some sense, it’s up to the agencies to make their offering really compelling and indestructible in this new digital age.