New agency revenue streams

I sat in on a 4A's webinar this morning on "How Agencies Can Create New Revenue Streams" moderated by Tim Williams from ICG Consulting. As we grow our business here at Traction, it's interesting to hear how other agencies are evolving their businesses. It's also exciting to learn that Traction is pushing the envelope in all of the areas that the 4A's cites as ways the most innovative agencies in the world are reshaping the agency model.

The basic premise is that a new role for agencies in creating value for marketers that has nothing to do with a "message." 

Here are the areas outlined in the webinar and some of the things we're doing at Traction that align with each.

Agencies as product developers

A handful of agencies across the country have started to develop a variety of products—from liquor brands to software. One agency in Europe even developed their own mobile phone. 

What's interesting is that agencies are not primarily doing this as a revenue driver, but to gain on the ground experience so that they can create products for clients. This gives them the credibility and dimension of knowledge they need to offer this service to clients. 

This is definitely something we've done at Traction. Last year, we created a whole new juice brand from the ground up called Nomsi made from a popular Filipino fruit called the calamansi. You can read some of the "Lessons From a First-Time CMO" that I published in Entrepreneur, but the big takeaway—we learned a lot! 

We've also numerous software products internally for years now such as Fulcrum, which is a framework we use to modularize and automate the production of HTML emails across devices, languages and customer segments, and exTraction, which is our customer extranet tool we use to manage file sharing with our clients. 

Not to mention the AMAZING Crap-o-Matic Gift Generator

These experiences have helped as we've moved into developing products for our clients in recent years. Some of those products we're unable to share publicly due to NDAs, others like Kelly-Moore Paints myColorStudio palette design tool have become powerful platforms for delivering utility and value to clients—that really have nothing to do with a "message." 

Kelly Moore Color Picker App

Agencies as intellectual property owners

Other agencies are breaking away from the work-for-hire model and developing their own IP. Some are doing it for specific brands, some for categories and then licensing it to brands, and some to make money without any brand involvement. The New York agency Anomaly claims that only 25% of its revenue comes from advertising.

At Traction, we've recently developed a mobile game called MOB simply because a great idea—an idea so great that we invested a ton of time to build it with confidence that we'd figure out how to monetize it later. 

We call MOB the anti-antisocial game because it gets people to put down their phones and be social again. Game play is simple—people join the game, pick a penalty (like do 20 pushups or pay the bar tab) and shut down their phone. The first person who unlocks their phone loses. 

We're currently talking to two major brands interested in some sort of licensing deal with the IP we've developed.

Plus Digiday says that MOB is an "app that just might make your friends less, well, douchey." So there's that.

Agencies as studios

Tim made a great point that the branded content business is very different from the advertising business. Whereas advertising is the result of a generally sequential and rigorous process, developing branded content requires a more agile approach to create a greater volume of episodic stuff—be that images, written content or video. 

We also followed a do-it-for-ourselves-first approach to iron out the kinks on a video content development studio. Since it's the holiday season, check out these blasts from the pasts when we celebrated Grouchmas at Traction a couple of years ago. 

Agencies as experience designers

If you read my story in Ad Age this week on the collision course between UX and Storytelling, you know I feel strongly that this is a dire need for marketers. Traction is a unique agency in that we've been straddling the fence between UX and advertising for almost 15 years now. 

Tim made the interesting point that most products are actually services today. That agencies can help understand, design and optimize the interactions a customer has with a brand across all points of contact and communication is what Tim meant by this. 

A recent Gartner study showed that 89% of marketers polled anticipate that they will differentiate their brands on the basis of customer experience. Eighty. Nine. Percent. 

Those interactions are at the core of we mean at Traction when we say that "everything is interactive."

Adam Kleinberg CEO
Adam is the CEO of Traction, an interactive agency broadly recognized as one of the top small agencies in the US. Kleinberg plays a hands-on role for all agency accounts and keeps his team at the leading edge of emerging digital channels. He is also a regular contributor to Ad Age, Forbes, Mashable, Digiday and iMediaConnection.