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“While it comes as no surprise that revenue at digital specialty agencies rocketed last year (up 26.8% in the U.S.), it's clear that digital services have become a way of life (or a way to avoid death) for agencies of all disciplines. In fact, U.S. ad agencies reported an average 10.2% of revenue from digital in 2007.” -- Published: May 05, 2008 CHICAGO (AdAge.com) - Revenue for U.S. agencies
Agencies of all disciplines are faced with an opportunity unlike any that they have encountered in their history: their clients demand interactive solutions! In order to fulfill the demand, agencies were relegated to two options:
• Hire an in-house team of developers
• Outsource to a local webshop
However, there are major faults with either choice. An in-house team of developers increases the agency’s burdened costs substantially. The agency’s opportunity to win projects suffers as they must consider their overhead costs. The cyclical nature of business lowers the ROI of their development team during lean times and/or forces the agency to turn away business (because of short staff) during peak times. Finally, their capabilities are limited to the technical skills of their coders.
A webshop seems to be a better option, especially for small to mid sized agencies. But again we find drawbacks with this choice. The webshop has no vested interest in the agency’s success, therefore projects are continually: late, over budget, and limited in functionality/capability. The agency is at the mercy of the webshop for changes. The reliability is fair at best. Worst yet, in the end, the webshop will compete against the agency for projects.
As a business owner, these options do not set up the agency for sustainable growth and long term success. So, what is the answer?
Thankfully, there is a better way—
The Interactive Contract Manufacturer
Contract manufacturing has historically been associated with industries such as aerospace, defense, electronics, etc. The contract manufacturer is the most efficient in its particular field in the building and delivering of goods and/or services for their customer. The best deliver an end-to-end solution, working in partnership with their clients to maximize business opportunities, efficiencies, and economies of scale.
The Interactive Contract Manufacturer follows this model, working in partnership with creative and communications agencies exclusively. This model is disrupting the entire interactive landscape. The below diagram depicts the roles and services a Professional ICM can offer:
Agencies become empowered to service their clients interactive needs like never before. The partnership instantly makes the agency a leader in the interactive market. This model allows agencies to experience profitable growth, an increase in revenue, and a reduction of stress in delivering interactive projects. The agency is able to win more projects because of an increased sales proposition to their clients, the reduction of timelines in delivering projects, flexible pricing, and pitch and proposal support.
The ICM is able to rapidly adapt to the needs of their agency partners, and keeps its agency partners on the cutting-edge of interactive solutions. Additionally, the ICM is vested in the success of its partners, and provides a higher degree of reliability and support. Finally, with no burdened costs, the agency is able to manage the up and down cycles in their interactive business much more efficiently.
As with other aforementioned industries (aerospace, defense, electronics, etc.), the maturing of the Internet Industry will bring about this shift towards higher efficiencies and economies of scale. Web-based products and services must be delivered on a greater scale to accommodate business and societal needs.
Coretomic is the first Interactive Contract Manufacturer in the world, and we predict that all agencies must move to this business model within the next 5 years or risk death.
Check out President/CEO David Castrucci explain how Coretomic works as the world's leading Interactive Contract Manufacturer! Video produced by Tampa Bay Media Talk.