an existing business model for digital agencies
May 13th, 2009 • posts i've written
Mike just wrote a post on a new business model for digital agencies that’s getting a ton of great feedback.
Here’s Mike’s basic idea:
I want to see a new digital agency model that sells a package of 100 small digital experiences, that can each be executed quickly and cheaply, instead of selling the 1 big digital experience.
When this agency pitches clients, you don’t pitch one big idea, you pitch the first 10 small ideas. You say these are the first 10 ideas we’re going to build, and there are 90 more where that came from. For $500,000, we will concept and execute 100 ideas over 10 weeks. These ideas will each be designed to spread your message, attract the attention of your desired audience, build relationships, and compel action, if applicable.
It’s a brave idea, but one I think would be impossible to scale. When you have 5 clients, you’re expected to dream up and build fifty fairly unique ideas per week. With the way design and development is often highly fractured in most agencies, the time it would take to communicate a vision (even for the slimmest experience) would halt this kind of rapid process. Also, the output here would create 100 floating corpses by the end of the 10 weeks; there’s no demand on continual refinement and evolution, something that is absolutely necessary for building interactions, engagement, and ultimately relationships. (I’ve learned this bit the hard way)
Even though I take issue with Mike’s plan, I agree with the spirit of the idea. Agencies should be creating more. The relationship between agency and brand should extract the full talent of the creative team for the price being paid – which almost never happens. Hungry agencies charge too little for brilliant execution and lazy agencies charge too much for mediocre drivel. Meanwhile, the talent of the best people is being wasted.
Here’s the good news: there is an existing business model for digital agencies that rocks – it’s the model of building your own brands and products. Companies like Coudal Partners in Chicago, and Anomaly here in NYC, are practiced at testing the mettle of their own ideas by actually launching them.
Layer Tennis, by Coudal, is a perfect example to dissect. Layer Tennis is basically two designers passing back and forth a Photoshop file in 15 minute intervals, trying to one up each other. That’s how it started anyway. It has since grown a bit in terms of media (now there’s animation, too), and it has certainly become a big draw for the design audience every Friday. Layer Tennis seemed like a good idea, so Jim and the crew just did it. Adobe took notice and brought some advertising/sponsorship dollars to the table. (Any of Anomaly’s projects are great case studies, too)
A lot of agencies seem to be adopting this practice, and I’m happy to see it. When the vision for something comes from within an agency, I trust the care and feeding of that idea to the originator for as long as possible. Layer Tennis could have been ruined if it had been handed off directly to Adobe from day one.
Thoughts? leave em below. Also, drop a line on any project you’re currently incubating.
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10 Responses (add your comment)
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Yeah. It seems you’re not really offering a rebuttal to Mike’s post… more of a redirection. Every agency is certainly looking toward the future of client relationships. CP+B has hired industrial designers to start looking at directly creating products themselves. Anomaly is launching make-up kits. The trend has started.
But there are still clients out there engaging agencies to do work. And those clients are used to getting ideas for free and paying for execution. It can’t be said enough… the trick of the immediate future is going to be reframing every conversation around ideas and letting execution take a appropriate role (whether large or small).
At any rate, this conversation is fascinating. I love that we’re still talking about it.
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I’m a big fan of the Coudal and Anomaly models, too. But, in order to be successful with that model, you need to be in the business of creating businesses.
This should definitely be considered by every agency out there.
I see my idea as an alternative for agencies who want to stay in the business of creative, just with a different product.
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Funny thing is, agencies used to do a lot of this.
Think back to the ’60s. Mary Wells Lawrence put her Wells, Rich, Greene agency on the map not by doing an ad, but by redesigning the uniforms that Braniff stewardesses wore (and they were called stewardesses back then) and painting the planes all sorts of psychedelic colors.
At some point though they got derailed into focusing exclusively on craft and clients began to view their value as the ability to choose the exact right shade of blue.
We need to get back to the days where clients want to pay for ideas and where the ideas are deemed more important than the executions that flow out of them.
Mike, Bed et al are offering a good blueprint for getting there.
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We are working that model, we call it constant communication, we are RIOT.
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Enjoying this debate as each comment here and at mike’s blog seem to be driving towards a better definition of mike’s original thought.
For me I think this has the greatest opportunity to work when it’s fitted into an agency model as a service offering. Basically taking mike’s process of developing and implementing “100 ideas” fast and offering it to clients when it is most appropriate.
I can see how “100 ideas” works in some situations based on client initiatives, but I struggle to see the ability for an agency model to be built on doing just this. I guess you could be super-specialized and be the go-to agency for this type of approach, but then who at the end of the day makes the initial recommendation to a client that gets them to you in the first place?
It’s a big leap for a business to do it this way, and as a result it requires a HIGH level of trust that a client must have in their partner is for it to work. That type of trust, IMO, isn’t given typically to first-time partners. It is built over the long-term. Which…. sorry, this string just got pretty long… is why I think the approach is better suited as one of many services, rather than the only service, you can provide a client…. I have already thought of 3 initiatives I’ve worked on in the past that this would have been great for!
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Constant communication.
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Lots of little.
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Iterative creation.
or
Whatever you wanna call it … It is what’s required.
What’s also required is a risk/reward compensation model: The idea of asking a client for $500K and going off to develop 100 ideas (or whatever) is a bit far-fetched. Getting the cash to develop them (however much it costs) and getting paid upside on the results of those that work is probably more realistic.
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Bud, the Medici family is dead.
Long live Richard Branson?
Red Bull does a tiny bit of that, but not much.
Seriously, I think it is wishful thinking.
agreed! i really liked mike’s post and agree that we need to move in that direction. the idea of scoping a project at the time of an RFP seems ridiculous, and only really makes sense for large microsites. being paid for ideas (not time) makes sense for everyone — clients, agencies and most of all users.
it will take a while, but i think we’re headed to a better place.