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The New Agency Model

November 21st, 2012

Creative Design AgencyHaving invested a substantial amount of time in making several key hires this year, I’ve been struck by what I can only term as tectonic plate-like shifts in the available workforce for agencies and design firms.

I would estimate that the number of freelance professionals and boutique creative firms has increased 5-10 times over the number in existence in 2005, and I’m assuming that a large first wave occurred when layoffs were implemented between 2007-2010. Tired of looking for permanent, full-time employment, many designers chose a new lifestyle or “workstyle,” preferring instead to build a network of prospective clients and take ad hoc projects from their apartments.

Clearly, globalization and new channels for marketing have been creating a revolution of sea shifts in the labor force in the past decade. Whole new professionals and disciplines have emerged that were not in existence even 5 years ago. But also, advances in technology — and I think, the prolonged downturn — has created many splinter or satellite firms working in specialized areas. By what percentage has independent, freelance professional designers, programmers and UX consultants increased?

There are an incredible number of small firms and independents that have saturated the market for prospective client organizations to consider. Agencies like Area 17 have sprung up and earned exceptional reputations for their creative as well as technical capabilities. We see it not only from a hiring or recruiting standpoint, but also from a competitive standpoint. On more than one occasion, IridiumGroup has been asked to bid on projects in competition against small independent studios and single designers. This is nearly always a proposition that is impossible to win, simply based on the disparity in the value models and operating budgets between our firm and small independents.

The new agency model is one of brokerage and sub-contractual relationships with these types of professionals. We see it with the large traditional agencies and image consulting firms contracting out to young boutiques in DUMBO and various parts of Brooklyn, small bands of creative teams comprised by 1, 2 or even just 4-5 professionals that pride themselves on doing high-concept work with little overhead, and which run their businesses almost as a vanity. It’s only my intuition, but much of the work that is winning awards appears to be high concept — even experimental and pro bono. Their overhead is so low that they can focus almost exclusively on the quality of the creative. Almost always, they have carved out a successful niche where they occupy a sliver of professional services and value.

So why wouldn’t every client manager lean toward one of these solutions? From the standpoint of the client, the only drawback to consider is bandwidth. These small studios and independents have often earned an unenviable track record for bottlenecking and failing to meet critical deadlines. Our team, working with between 10-15 professionals is large enough to avoid those types of disasters — while remaining small enough that we can focus on our clients’ needs, and less on running our own firm. I’ve always felt strongly that our size was optimal. When we grew beyond 15 full time employees, I sensed the need to start creating inefficiencies, additional tiers of management to oversee our own business operations. At 8-12, we’re lean and focused almost exclusively on our clients.

Reviewing resumes submitted recently for an available design position within our firm, I would estimate that 10-20 percent of the submissions were from candidates outside the U.S., seeking to assist us from Brazil, India, U.K., and Eastern Europe. That number has also continued to grow in recent years as advances in technology has enabled new services being delivered from remote locations.

In my attempt to better understand industry changes, I reached out to the Design Management Institute, Corporate Design Foundation, and AIGA try to acquire any available research. Evidently, there is very little empirical data to validate these assumptions one way or the other, however.

The emerging model for design firms is still a work in progress, but it seems clear that this continued fracturing of professionals and services will keep evolving. We’re presently in the process of strategic planning for 2013 and beyond. There’s no doubt that we will employ some form of hybrid business model. Having a core team on site that can serve as a steward of the client’s brand — paired with a robust network of available outsourced contributors — will be the desirable new modus operandi for our clients as well as our own business objectives.

For client teams and also for agencies, it truly is a brave new world.







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This entry was posted on Wednesday, November 21st, 2012 at 11:18 am and is filed under Advertising, Brand Identity, Business, Design, Technology, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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IridiumGroup Inc.

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