The following post is written by mobile strategist Tim Dunn. Tim and I have worked together in the past and often discuss whether agencies could (or should) make products. Tim follows up the great post by Jules Ehrhardt and is part of a series of articles on the subject. You can follow Tim on Twitter here: @timmcdunn

I’m intrigued to see another round of opinion pieces circulating along the lines of ‘Why Are Agencies Not Innovative’ and ‘Can Agencies Ever Make Products Successfully’, in particular, Jules Ehrhardt’s piece from early last week.

The reason I felt moved to reply this week in particular is not because I particularly disagree with much of what is written. For sure, many agencies pay lip-service to the notion of innovation, and declare they are becoming products-and-services businesses without really making any steps to take on that competence.

All this is true. But the question we should be asking really is not whether we as agencies are failing to fulfil this role, but whether it’s realistic for us to do so in the first place. Why should ad agencies with both history and skills in ‘comms’ need to expand out of what they do best? And even if agencies were to try and do this – is it even possible?

Why bother?

If there’s one over-riding thing that agencies have to do – it’s sell product. All of our clients, particularly those with really big budgets in FMCG, are obsessed with it – and so they should be.

It’s a common complaint from digital agency wonks that ‘<Insert name of client> is just playing everything safe to protect their job>’, but the fact is that client marketers are assessed regularly on sales numbers.

Why does this lead to ‘digital stagnation’ and ‘putting the budget back into TV’ rather than funding our latest social-geo-caching mash-up? One answer is to look at this hilarious dismemberment of interactive marketing here.

In summary – brands do not have the right to claim a relationship deep enough with consumers to persuade them to spend their valuable time downloading your app, responding to your posts etc. It’s arrogant and ridiculous of 99% of brands to think otherwise.

The fact is that TV (and by extension any other display format) works – sorry! Most products sell through raising awareness among as many people as possible, not by engaging a small number of people through some digital wizardry. Sure – you can take an innovation-led project and scale it (obligatory Nike+ reference) but only if your brand:

a) has a heritage and consumer connection that can realistically support the levels of engagement required

b) has a commitment and huge budgets needed for product development and support over time.

So what agencies should be doing is getting as much reach and awareness as possible for the brands who pay to sell their products. While there should be a little room for playing around the edges, that is not what’s going to sell more Shreddies or Volvos, which ultimately defines who keeps their job, who gets a raise, and whose CEO gets to go to the City with good news.

Murat argues here that the agency should be the heartland of great product development, and that the next Instagram/Klout etc should be coming from us, but I feel this is a little like arguing that we should also be building the TV shows where our adverts are shown, or writing the newspapers where we place our banner ads. These platforms are NOT brand vehicles, and brands CANNOT launch them, so it can’t be in the agency’s interest to sink resource into something so beyond their core discipline – few other businesses would try it.

The reality gap

While I completely understand why Jules, Murat and many others would like to see a transformation in digital agency land, my view is that it’s not just outside of agency remit, but also agency capability – at least in the short term.

There are a few key reasons for this:

• Product design and innovation requires people that agencies don’t have: a team of creative technologists, product managers, spare UX people, and of course development resource
• Agencies work on narrow margins – 10% if you’re lucky. This is really the only number that matters to a CEO who answers to shareholders or Group management, and additional cost is a no
• Agencies tend not to have mundane skill-sets such as 24/7 support and responsive operations departments

So it’s all bad news right?

It’s easy to assume that all’s doom and gloom in agency land for creative digital people.

Some go so far as to predict the demise of the traditional agency model. But it’s not “change-or-die” – so long as most brands shift product by generating mass awareness, the TV/online display media model, and the agency ecosystem it supports, will continue to exist (like it or not).

Does this mean that all creative/technology/product people should pull out of ad agencies? This depends on your interpretation of creative and innovation.

In ad agencies you generally are looking at utilising trends and tools, rather than building them. You are developing ‘ideas using tech’ rather than particularly diving into the tech itself. Agencies have to experiment and innovate with ideas, and this will remain the heartland of the creative process as we currently know it in adland. This is still creative, and still relies on tapping into insights and behaviours from consumers.

But it’s not for everyone.

So what’s the answer for us?

If (by us) you mean creative digital people with an interest in great products, slick UX, engaging and developing new tech ideas etc, then we have to stop relying on ad agencies as our creative outlet. We should all know by now that agencies can’t support high levels of tech innovation, Labs, consumer products etc. One of the main arguments from those who have grown to dislike this agency model is that it stifles and disappoints the creative and technical people who work in it. It’s hard to argue against this.

But there are plenty of opportunities for us to earn a daily wage AND make the most of our creativity. You can break these down as gollows:

Consultancies such as Berg, Ideo and Astro specialise in the kind of innovation we all want to do, and there are more of them than you think.

There are spectacular opportunities client side, even without going somewhere like Nike’s top secret Digital Sport unit. Many clients are taking elements of technology and digital brand extensions in-house, where there’s time to focus on delivering digital propositions strategically over time rather than the rushed and sporadic approach that working with an agency on a day rate produces. I have colleagues and clients as diverse as M&S, AutoTrader and the Government who are doing cool things from the inside.

There’s a continuous flow of start-up opportunities. One of my best developer friends recently left the agency he’d been at since a grad to take up tech lead building up a product from scratch, and is loving using his skills on something he can own.

Platform and media businesses offer the satisfaction of long-term program development of D2C services, with sensible revenue streams allowing time for wider thought and innovation.

And then of course, there’s JFDI – everyone should have at least one side project – it keeps you sane and sharp, and gives you freshness and perspective. While I’m not a developer (I wish!) I do this by training and teaching on the side.

So in summary, we should all stop moaning about agencies’ failure to fulfil our seeming desire for them to be all things to all people. There is creativity there, but if you don’t like it – leave, or at least upgrade your side projects and reset your expectations about your day job.

People who can change the world through technology are more in demand than ever before, and there are more than enough options out there for us.