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Brain Buster

The Agency of 2012 (uh, how about 2015?)

Note: I first published this post in September of 2009. I’m reminded of a Bill Gates quote: “We overestimate the impact of new technologies over the next 2 years, and underestimate its impact in 10 years”. I went back to this post for another writing project I’m working on and decided to update it and clean it up. I’m still interested in any comments and feedback so I’ve decided to update the publish date to give it another shot at life:

The moderator for the session I wrote about yesterday pulled together some interesting comments from the session last night (even some of mine!). Some very good stuff from the person that stepped up to ask where the PR panelists were, including strong points on PRWeb for SEO.

There are some interesting academic arguments and defenses from PR specialists but I think people are losing sight of the fact that these are literally entrepreneurs working part time in their basements or other below C class office space, and Mike was dead on saying “I haven’t  seen a PR shop that would get out of bed for less than $4K/month”. Guys clipping coupons for a case of Ramen Pride between coding are not possible clients.

After a night’s sleep it came to me that while the writers/bloggers were saying you can get by without PR people, you have marketing gurus saying you don’t need the writers/bloggers. You’re the expert in the space, you can create your own content. Why work around some other pub’s schedule, or spend time bringing a journalist up to speed on your specific niche when you can publish your own stuff and own the content, track it, and do with it as you please?

Stepping beyond the academic arguments that could be debated ad nauseam, Mike asked the big questions:

Is the “junior staff leverage” model really dead, and if so, what business model will support the next generation of great marketing services firms? The truth is I don’t know. But it seems to me that’s the conversation worth having among the “PR” digerati… not the semantic argument about what PR is or isn’t, but how, in the end, the people delivering it will build a sustainable and productive business.

Before I get into my answers, it’s a good idea to expand the definition of PR beyond influencing writers. Some good stuff already written on that from last night.

…PR is about developing a broad communications program that includes:

  • Building a long-term strategy that establish lasting relationships with your core audiences;
  • Creating content and managing conversations that engage those audiences directly; and
  • Reaching industry influencers (media relations gets lumped in here).

Tactically this means that the communicator or agency you hire should have skill sets that include: writing ability; audio and video skills; creative thinking and the ability to connect with influencers.

That got me thinking about what the business model would look like. By 2012, most marketing, PR, and ad agency positions that revolve around tactics will be reinvented – a huge opportunity here. This is what I think it might look like (keep in mind that me writing this is a lot like all of the jackasses that start restaurants that go out of business because they think that eating out most of their lives is actual foodservice experience):

I have brought you back an Agency FROM THE FUTURE

An Agency FROM THE FUTURE!

I don’t see a scenario where the existing junior staff model can work. It has in the past because of communications friction (trying to call all relevant reporters about hot stories from all your clients every day, hard work but low skill level).

The big idea is the Embedded Agent. Someone who can go into an account a day a week or more to shoot video, record audio and create other relevant content. Ideally they would be paired with a subject matter expert (SME) at the client who will ultimately speak on behalf of the client. Think about building your own Robert Scobles (when he was still at Microsoft) or Scott Montys. This forces a schedule of content production that can be used in a number of scenarios and at the same time will serve as SEO activity.

The agent’s team should also include a Preditor (Producer/Editor) who assembles the raw footage from the Agent. Preditors have access to the best tools and a support network of their peers – no client would be able to reproduce the the effectiveness of the Agent/Preditor team so this is a huge value add. This team would need an admin to handle scheduling as the Agent will be moving around a lot (let’s say with a 3 client load), and the Preditor needs long stretches of uninterrupted time for work – somebody needs to field calls and emergencies.

Beyond the teams are infrastructure that the client has access to that cannot be reproduced without huge expense by the client – the remainder of the value add. Audio/Video production and Photography, specialists in a variety of disciplines including CRM, Lead Generation, whatever the agency can leverage that clients need.

Influencer is the last category, executives that have access to people with markets. You can get on the Today show? Clients will pay for that. Having a strong database here would allow this system to scale to multiple people instead of a the single performer limitation.

Ok, enough with the BS, let’s see if I can backsolve this to a profitable business…

Teams (with benefits, taxes, etc.) Fully loaded agent – $200k, Preditors $120k, Admin $50k = $370k per team/3 clients=$123k, charge $150k to cover fixed expenses etc.= $12,500 per month for the client. The client is getting more than 1/3 of an agent and Preditor (at bare minimum $9k per month). So for 30k per year they get all the value and don’t have the impossible task of finding 1/3 of an agent and Preditor. All the specialist stuff can be sold ala carte for big margin.

Any opinions out there? Is this real or candyland?

7 replies on “The Agency of 2012 (uh, how about 2015?)”

Oh man, you had to end this in math, just to mess with me.

Nice work, John– I think the content creation idea is spot on– agencies (I work at SHIFT, as you know, and we certainly have approached this question for a number of clients) are increasingly being asked to perform this function. If they think it’s “bot part of PR” they will die.

I’m not sure about the whole diagram as drawn- smaller agencies may not have (or need) the dedicated specialist departments, and larger agencies might need to extend your 2012 deadline (sheesh, it’s almost 2010? Where did my life go?) to account for how larger companies move slowly.

I think you’re on to something John, but I think it’s a little bit of candyland when you say this will happen by 2012. I’m not seeing it.

I think there are some companies who understand where marketing is headed re: content marketing. But those companies are still in the minority.

The reality is that there’s a ton of great, smart startups who don’t have an internal Robert Scoble waiting to be discovered. That’s just not realistic.

You paint this scenario of an Embedded Agent who drops in a day or two a week, ready to shoot great footage that can be used for content marketing. I don’t think that’s realistic. Most companies by virtue of working as a team and building a product, tend to think along the same lines, “Our product is the best thing since sliced bread. We can just talk about how great our product is, and how everyone should be using it.”

Is that the kind of marketing/PR message that is going to work in social media? I don’t think so.

I think A LOT of work still has to go into talking, discussing, and CONVINCING people internally of the content that will be shot those 1 or 2 days a week that you mention. Ultimately someone (a PR/marketing person – or call them whatever you want to) has to guide that conversation, explain that self-promotion doesn’t really work, and advocate for a company to work on content that addresses industry wide problems, issues, and trends – not endless talk about the company’s own products.

So, I see PR/marketing eventually headed in the direction that you do, but I don’t think it’s going to get there as fast as you might.

And, as I’ve outlined, despite what we all know about social media, there remains mountains and mountains of education to do internally. This really requires a DNA change from traditional marketing, and it’s not going to change overnight.

Regardless, I’m excited and interested to see where PR is headed. Personally, I’m not clinging to a certain definition of my role as a PR person. If my job is 50% SEO, 30% social media outreach, and 20% message development, that’s fine by me.

Jeff

By no means am I saying the industry will look like this by 2012, I’m thinking that if one person starts a company today with this structure in mind, they may have something that works in 4 years.

Also, I don’t think there’s any space here for startups as clients (at least not the bootstrapping kind), I’m thinking more about $20M+ in revenue clients (and of course that would also mean $20M+ in venture for the people that burn that way).

I don’t see the embedded agent dropping in, they are going to be working a full day a week there, showing the clients why this is a good idea. I think it’s pretty easy to prove in a month that you can move the needle by doing this stuff, but the agent has to be more of an employee of the company than somebody who parachutes in.

With more thought I’m thinking that this is still the weakest point, not because they won’t be able to convince the client, but that it requires both political skill, technical knowledge and a desire to travel. I’m thinking even at $200k/agent these would be tough jobs to fill.

See, I don’t see PR and Marketing getting their on their own, I think many are burdened with an inability to innovate an it will take new firms to really get good at this approach (and then they’ll be acquired by the big guys who want to avoid obsolescence.

I’ve also been thinking about this model as starting from scratch with no clients, so the first two years would be evangelization. Maybe there is a different way with an existing agency that has strong relations already built with their clients…

Thanks for the feedback, plenty more to think about…

We’ve been calling ourselves embedded reporters for the last year. We do this in a small way on a monthly basis via retainer, but see the power of weekly. We’re an inbound marketing firm in Louisville, KY. We’re small potatoes but I think this trend will continue for both small and large businesses.

I agree it still needs to be 70-30 sharing relevant content versus self promotion.

I love your model. Well thought out.

Interesting model… but the question becomes will clients pay for those Preditors and Embedded agents? And will they pay 5-9% more every year? (I’m assuming your team will expect raises and your fixed costs like healthcare will escalate).

I still think the heart of profitable agencies is to continue to earn multiples of salary… and the only way you can earn large multiples is to hire young, inexpensive talent and get 85% or more billable hours out of them every day and multiples at least 2.5 to 3x’s salary. Otherwise, you end up barely breaking even after factoring office space, agency marketing expenses, etc.

In your model, that might be a person (currently not listed) that I’d call a Seeder. It’s fine to make great content, but for it to really work for you it has to get seen. That means someone has to post everything up to the intrawebs, including cross linking to it from relevant platforms, blogs, content aggregation sites (Bx.Businessweek.com for instance) etc. That’s a lot of low talent work, but a necessary evil.

Might come back to add more later, but these are my initial thoughts… good stuff.
@TomMartin

Thanks for the comments, sorry it’s taken me a while, things have been a bit out of control here.

Bryce – Interesting you chose 70/30, not sure what that is now or should be. Not sure if it matters either, the content just needs to be wanted.

Tom – Will the clients pay? That’s the biggest question of all. I think the 5-9% increase would be buried in churn, much as it is in the current model. Earning multiples is key, but one upside is that by keeping a lot in the field perhaps office space expenses go towards profitability. Totally agree with you on the seeder, I’m just not sure if they would be a specialist or on an account team – I wonder how Holland-Mark deals with this? I wouldn’t say it’s all low talent, there’s some expertise in integrating the stuff to set up a “post once – show up everywhere” system.

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