The shifting economics of premium in marketing

The visible face of marketing might have transformed, but the three layers of value businesses seek are still the same.

Where will the growth come from?

Why does the brand matter?

How does it show up everywhere?

This is inherently mirrored in the core capabilities agencies and consultancies were built on— consulting, strategy, and execution. An incredible ecosystem promising access to information, insights, creativity, execution prowess, and credibility, available at a premium, and businesses paid.

Today this equation is crumbling. Agencies and consultancies are struggling, despite encroaching into each other’s territory. The commissions have shrunk and fees are being contested by businesses who are now questioning the value on offer.

The problem with premium is it always chases scarcity.

When information was scarce, access was valuable, when insights were rare strategy commanded premium, when creativity was differentiated originality drove advantage.

Premium never disappears. It moves to the next hardest capability to replicate.

The reality is, technology has injected abundance and replicability into what once differentiated these firms.  Strategy is increasingly templatized and framework heavy, originality is diluted and replicable, and production is commoditized. And this has left both the marketers and their partners a bit unsettled. The industry is witnessing an unprecedented spree of restructuring and reinventing for the new age. The roles are changing, the ways of working are changing, yet nothing is clear. What is clear is that the marketing premium has shifted. Where it will land is the next big question.

We know the consumer journey has collapsed, time to market has shrunk, and the urgency with which new age companies chase results is relentless. What’s more, with pressures on marketing budgets rising, every penny is scrutinized. No wonder then, businesses are demanding the same accountability even from their partners. The existing partner-side models however are not fit to deliver accountability. The value chain is fragmented. Someone recommends, someone creates, someone executes, and none is accountable for the overall business impact.

The shift seems to be happening towards conviction-based recommendations and skin in the game:

From recommend to recommend what you are willing to stand by.

From execute to execute with answerability for outcomes.

Here are some real-world implications already beginning to build momentum. Businesses are increasingly willing to pay for partners who can tie their reputation to results. Consequently, partners with sharper strategy and work designed for outcomes are likely to gain ground.

In an abundant marketing economy, the core advantages agencies and consultancies once enjoyed are thinning. The firms that will command disproportionate marketing premium going forward are those willing to anchor decisions and share risks.

Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of exchange4media.com.