Agency-as-a-service portrays new business strategy model
For a peek at the future of holding company Publicis Groupe's VivaKi unit, one need only look to its launch of CRM agency CRM365. Not only did it launch without a single client, but managing director Alec Bokman pointed out that CRM365 isn't even really an agency, but rather a software-as-a-service company.
That's precisely the point, said Razorfish CEO Bob Lord, who took over responsibility for several of VivaKi's digital agencies last month.
“When you think about CRM365, instead of a client buying something and having to load up a big install base and, say, make a $2 million investment on a CRM system, they can purchase CRM365 for a low monthly fee,” Lord said.
Welcome to the new VivaKi.
Luca Paderni, VP and principal analyst at research firm Forrester, said aggressive moves by Adobe and IBM in the data analytics market has pushed agency holding companies to develop services such as CRM365. He said companies like Publicis are also pressured by a rise of data manag-ement platforms that can “zoom into a customized group of consumers” and could potentially usher in a new media-buying and -planning model should all media become addressable.
“If you think about these two models — the bigger analytics push and this new way to buy advertising online — these require big investments in technology, and they can be extremely compelling commercially as platforms,” Paderni said. “As with any technology platform, once you recover your development costs and your maintenance costs, any additional subscription [revenue from companies using the technology] goes down to the bottom line.”
That subscription revenue would help to realize Lord's focus on easing agencies' dependence on billable hours, a trend that other agencies may follow. For example, Rob White, partner and CEO of digital agency Zeus Jones, said the pivot away from hourly rates is “where clients are headed” because it's a “more efficient way of spending their money. “There's no relationship between the hours spent [working for a client] and the value [delivered to that client],” White said.
None of the relevant VivaKi agency clients contacted by Direct Marketing News agreed to comment for this article.
Publicis isn't the only agency holding company to recently re-up its software-as-a-service offering. In June, WPP combined several of its firms to form audience buying company Xaxis, whose data management platform collates consumers' online and offline data to create audience profiles for WPP clients.
This isn't a zero-sum game, Lord noted; CRM365 offers marketing services in addition to its software-as-a-service product. Rather than fear the dual-revenue play, VivaKi account executives are about to become very familiar with it. Lord says Razorfish will be launching a platform similar to CRM365's that clients will be able to use for content distribution.