Digital Ad Agencies Stymied by Rapid Growth, Management Challenges

Digital Ad Agencies Stymied by Rapid Growth, Management ChallengesAs digital advertising continues its rapid growth and surge to dominance in the advertising industry, digital ad agencies are struggling to keep up.

The biggest problem is that their new digital clients want things bigger and better. They’re looking for more creativity, more speed, more analytics and more innovation, all of which are at odds with a growth model still clinging to traditional management techniques.

Another problem is that clients are now leaving advertising agencies in droves, and creating their ads in-house. Not only that but, rather than the long-term relationships they used to have with ad agencies, clients are now looking for short-term projects instead.

Again however, the biggest problem is that these traditional agencies, and the classic growth model that they have used for decades, is definitely hindering their ability to innovate the way clients want them to.

Adding to the problem is that, as an agency grows and tries to keep up with these rapid changes, they typically appoint more and more managers to do it, increasing their costs significantly. In fact, by the time an agency has 100 employees, they usually have 1 manager for every 3 of them, increasing red tape and, in some cases, crippling their ability to innovate.

When you consider that digital advertising agencies are far removed from the classic business model, with their real talent concentrated in the middle and lower regions of the organization, it’s easy to see how traditional management can Interrupt the  creative flow.

This has, unfortunately, caused the typical digital advertising agency to spend 50% or more of their time dealing with interruptions, meetings and other activities that waste time. Even worse is that agency talent can become disenfranchised by having to work through management middlemen, people who usually lack their skills and understanding of the product or campaign.

As the team at AdAge recently pointed out, there are a number of steps that digital advertising agencies can take however, in order to open the flow of communication, creativity and innovation.  So it’s not all bad news, obviously, because digital advertising is growing by leaps and bounds. At this point in time though, many agencies are struggling simply because they’re not just learning how to produce a new product, but also putting a new business model in place to do it well.