Can the traditional agency last?

More and more websites are not just supporting businesses; they are the business. Is the traditional agency model dead or is it just time for an evolution?

Agency Model 1.0

Company A phones up Agency A and wants a website. The website needs to support the business and showcase all the great services and products that Company A has.

This is the model I worked with until about two years ago. It made business sense for companies to buy in design and coding services to produce something that supported their business. A major effort was involved in producing the site but either through a Content Management System or a maintenance contract the site did not need the same attention as it did in its creation.

This model still works well for some clients but increasingly clients come along who do not fit this.

Agency Model 2.0

Company B phones up Agency A and wants a website. The website is a social networking site with the ability to purchase products that are suggested based on the activities of users on the site. Company B does nothing else and the website is the only source of income. Company B has plans for further features once revenue comes in.

This is the model that I can see causing problems with the traditional way of working. The website is the business.

An online business, like an offline business needs constant investment and innovation to stay ahead of competitors. Company B are essentially in possession of an idea, albeit not a new one. They are asking Agency A to implement that idea. Effectively Agency A are creating and running Company B’s business for them.

If the business fails who should take the blame? If the business takes off should Agency A take a share of the profits? Pricing models and contracts from Agency Model 1.0 would seem to be seriously outdated. As more and more business moves online this would seem to be an increasing issue to think about.

The old analogy

When people ask how much a website costs I always compare it to how much a house costs. A small shed is not very expensive and you can even build it yourself. But a large mansion will require a big team. It will need to be designed, constructed and maintained. Agency Model 2.0 is like someone having an idea for a hotel and paying you to build and run it. It is a full time job and in almost no time at all you will know more about the business than the company paying you to do it. This is a completely new scenario for an agency.

Time for evolution

Clearly Agencies are not going to refuse this kind of work. No doubt Entrepreneurs will have some excellent ideas that will be designed and implemented by Agencies. But some will have bad ideas that will fail. How both scenarios will work in terms of pricing, contracts and even insurance is something I think will be very significant over the next few years.

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