Agencies Vs. Start-ups: Who Defines the Future?

Agencies and tech start-ups live together tenuously. Start-ups disrupt the ad industry, creating technologies that allow brands to bypass agencies. Agencies fetishize start-ups, constantly running to keep pace with lithe, innovative newcomers.

Simple co-existence between the two isn’t enough at a time when evolution is constant and clients clamor for creative, technologically enhanced solutions. Agencies and startups need each other, so how can they get along?

At AKQA’s skylight-bright SoHo office, a full house of agency hacks, freelancers, and startup leaders gathered recently for a panel-led conversation on disparities and conversion between agencies and startups.

Moderator and AKQA Chief Creative Officer Rei Inamoto began the discussion by asking, “Should agencies act like start-ups?” He ended by asking each panelist to give a one-sentence piece of advice to brands, start-ups, or agencies.

Our lessons learned:

Agencies: Play to Your Strengths

Cindy Gallop, former chairman of BBH, recognized that, “Tech ventures hate us and they need us.” She cited David Karp, founder of Tumblr, who said advertisements made him sick to his stomach.

Earlier this month, the mixed-media blogging site rolled out a new native ad plan. Given his druthers, the young founder would have gone ad-less, but most business models inevitably encounter a need for ad revenue. While “startup envy” affects individual business people and agencies alike, agencies can thrive by playing to their expertise.

When asked what agencies might be missing, Google’s Managing Director of Agency Business Development Torrence Boone said, “First of all, agencies do amazing things. One of the first things I think the industry needs to do is be more positive about itself and the value it does add.”

He described the ad industry as “overly self-critical and navel gazing and always suffering from identity crises.” Startups need agencies in order to succeed. While startups are often more agile and perhaps “cooler,” agencies hold power in their access to and knowledge of brands.

“Every venture has the opportunity to be a great advertising platform with the help of the ad world,” Gallop said.

Startups: Fail Fast

In the start-up world, one failure can simply be the beginning of a larger project. Charlie O’Donnell, venture capitalist and partner at Brooklyn Bridge Ventures, said, “I don’t necessarily think failure’s a bad thing as a startup.”

In a room of four start-ups, three may fail, but the three best people from those disintegrated ventures will move forward and work for the one successful startup. The start-up funnel supports failed innovators, as long as they keep moving.

Startups have the advantage of agility; they can move quickly and iterate repeatedly.

O’Donnell used the now ubiquitous game site Omgpop as an example: “[They] failed at a whole bunch of things before they came up with Draw Something.”

This is where Google’s Boone encourages agencies to emulate startups. He argues for failing fast and pushing against risk aversion: “Because of the legacy of the way marketing and branding developed, there’s so much emphasis on going to market with this big, epic idea.”

Instead, Boone thinks agencies could succeed by generating smaller ideas, seeding those aggressively, and then monitoring them so they accrue into something big, similar to a startup process.

Brands: Be Open to Creative Processes

Eric Wheeler, CEO of social ad network 33Across, advised brands to “really understand the value proposition and the relationship that’s going to come with a long term agency partner.”

The best brand-defining work won’t be done in a week. Being open to layered, innovative work ultimately serves both brands and the agencies with which they collaborate.

Gallop’s sound bite to brands was, “Lose the fear.” She called fear “the single biggest barrier to doing something extraordinarily innovative and creative that delivers revenue.”

If brands can accept — and even encourage — an agency’s lengthier, more creative processes, they’ll see better results and more fulfilling business relationships.

 Everyone: Collaborate

“Start-up plus agency equals the future, in some form or another,” Gallop proclaimed.

Silicon Valley and Madison Avenue haven’t come together as much as they could, and should. If the flexibility and nimbleness of start-ups is able to meet the heft and expertise of agencies, future brands will have the pleasure of doing business with a power couple.

Images courtesy of Sergej Khakimullin/shutterstock