The traditional ad agency model is fading. Overstretched by the pace of technological change and sluggish to respond in any meaningful way, agency conglomerates have begun to invalidate their own model. And they cannot acquire their way out of this conundrum. Instead, they must attempt to duplicate the specialized, lean model of the independent agencies they have swallowed up.

In 2016 and beyond, winning agencies will need to organize like military Special Operations teams—small, nimble groups that operate under a single banner—and integrate brand strategy, demand generation, and marketing technology into one cohesive unit.

Until ad conglomerates adopt this model, independent agencies will have a strategic advantage, especially in digital marketing.

The Dying Old Model

The agency of record model, preferred by conglomerates, is based on a false promise: "we can do it all."

Advertisers, such as Bradley Jakeman, president of PepsiCo's global beverage group, have called the bluff. No longer able to rely on a single agency, PepsiCo now uses a combination of agencies and new media content shops.

At the Association of National Advertisers' Masters of Marketing conference in Orlando, Jakeman told the crowd that "the agency model is not going to bend, it's going to break.

"Agencies will continue to see more and more projects leaving them…They will get a smaller and smaller share of the pie," he added.

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image of Matt Goddard

Matt Goddard is CEO of R2integrated, a full-service digital marketing and technology agency.

LinkedIn: Matt Goddard