Friday, June 26, 2009

Agencies That Make Things Other Than Ads

What happens when ad agencies start to make more than ads? Like pizza and lip balm? The July/August issue of Fast Company features excepts from a panel organized by consulting group PSFK and moderated by Fast Company writer Danielle Sacks. Panel participants included representatives from BBH Labs, Fuseproject, Anomaly, and Trumpet, all of which have created consumer products ranging from healthy pizza to ready-to-eat vegetarian meals to lip balm.

So why would agencies want to develop consumer products? Ben Malbon from BBH Labs says “By creating our own brands, we wanted to make ourselves recession-proof – or at least more recession-proof than other agencies.”

Robbie Vitrano of Trumpet says, “It was sort of inevitable. What an agency does-which is essentially to determine a unique positioning and dvine a go-to-market strategy – is pretty valuable to investors and also to a startup company.”

“I think it makes you better,” says Anamoly’s Carl Johnson. And Malbon adds, “You get exposure to the full gory detail of how clients make and lose money.” BBH likes to have employees spend time at Zag (BBH’s offshoot for commercial products) so they can return to the agency and “be able to have a much smarter conversation with a client’s marketing director, or CFO.

Because most agencies have such a strong understanding of branding and product design, it makes sense that any products they develop could be branded from the ground up. In fact Johnson points out Anomaly hasn’t bought a single ad in sport of any of their products. “Why would we?” he asks. “You can do so much if you know what you’re doing with product placement, sponsorship, digital PR…It makes you much better at grinding out media without paying.”

Building brands, creating new products and making extra money all seem like worthy pursuits for an ad agency. But what about the fox and the hedgehog theory of business? Are these agencies diluting their core creative product by diverting resources into product development? BBH is at least insulating their agency side, having created Zag.

Seems to me it’s not necessarily the future of ad agencies. But definitely a viable option for entrepreneurial agency heads. It’s definitely something agency principals would have to invest in. Product development isn’t really a skill set most writers, art directors or planners come to the job with.

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