The agency model is now officially broken

My soapbox issue of late has been the state of traditional marketing/PR agencies in relation to social media project development. In my view, the billing model traditional agencies, being fundamentally campaign-based is diametrically opposed to the longer-term nature of successful social projects.

Add to this that over the course of the last few years (or perhaps decades?), larger agencies have lost their ability to truly convince their clients to take risks, which all social projects are mired in. Conversely, clients have forgotten that the reason they hire agencies is to push them, not just to do campaign implementation grunt work.

UPDATE: When I talk about “agencies”, I’m not talking about smaller, more focused shops, I’m talking about bigger and/or “all purpose” agencies. The agencies that have traditionally “owned” MarCom strategy for large businesses. Josh makes an incredible point in the comments about the size of an agency having an inherent impact on the quality of output.

Not to rehash the Wal-Mart woes of the social networks and blogs gone bad, but both of those cases showed this reality in action. Edelman, Wal-Mart’s PR agency overseeing those two projects, has a staff of smart people who truly understand this space. So why then would such a debacle happen? Twice? According to my top secret, friend of a friend sources, it was because Wal-Mart didn’t listen to or respect the agency’s advice. It was also because Edelman didn’t have the cajones to truly stand up to the client.

Wal-Mart takes another stab at blogging and seems to get it right. Checkout Blog (not developed by Edelman), according to this New York Times story was driven more by internal employees than agency partners. Fat lot of good the agency relationship did them.

After heeding the lessons of Wal-Mart’s earlier blogs and consulting with several well-known bloggers from sites like the Huffington Post, the buyers decided the site would succeed only if they wrote in their own voice, free from censorship and corporate review.

“Readers can tell if people are being genuine or monitored,” said Alex Cook, the merchandise manager for Wal-Mart’s entertainment division, who blogs about computers and electronics (and who wrote the lukewarm review of Windows Vista).

Why wasn’t Edelman setting up these discussions? If they offered, why didn’t Wal-Mart accept?

Sadly, Anil nails the typical nature of this issue:

Anil Dash, a blogger at Six Apart, which makes blogging software, said the evolution in Wal-Mart’s thinking about blogs was typical. “You start with this total lockdown, suits read everything, one post a month model,” he said. “Then you evolve. A year later, you get one that is more open. A year after that, they start to do something that is far more authentic.”

Mr. Dash said Wal-Mart’s decision to let buyers do the blogging reflected a growing recognition that “trying to control who can speak and what they can say does not work.”

Consider another in-house conceived corporate blog, Southwest Airlines. Big PR/marketing agency launch? Nope, the PR team inside Southwest and our local neighbors over at RD2 developed it. The Graco blog? Conceived internally between the ninja’s at Converson and the Graco team. Channel 9? Inside.

According to an AdWeek story, “Agencies don’t get it.”

Clients complained that their agencies — creative, media, public relations, design and others — typically treat social channels like blogs as traditional media. In other cases, their ideas are not backed up by practical skills in the area.

The article goes on to back up my ongoing soapbox: It’s the money, stupid! (Sorry dude, didn’t mean to call you stupid, I just get worked up)

“I think traditional ad agencies have very little contribution to make,” Bryan Simkins, a marketing specialist at FedEx, told TNS. “They are mostly driven by their compensation models which are made for closed media. Those models don’t apply in open media.”

Further, the article also covers something I talked about in a recent Utter posting, agencies understand it, at least far enough the sales process goes.

“You get the sense that agencies talk a good game,” he said. “They put up a good presentation about what social media is, but when you get to implementing campaigns, the day-to-day management skills are not meeting the marketers’ expectations.”

Is the current (larger) agency model officially obsolete? Do organizations still respect agencies enough to listen to their opinions?

Personally, I think this is simply a transition period for the agency model, but the question is what the transition will look like at the end. Will larger agencies be able to redefine the company/agency relationship to something more healthy and productive? Or will they simply become workhorses, responsible for nothing more than delivering precisely what the client demands?