We all recognise that consumers are savvier than ever. And those that aren’t – well, they’ve probably got savvy friends influencing them more than ever. Some marketers seem to think this means we’ve got to get more clever with our advertising, more diverse in the communication channels we use (hey, let’s have a Facebook page!) and more strict in the use of metrics to assess where we’re getting the best response from.

None of these things are a problem in themselves. But equally, nor are they the solution. The ‘Product P’ element of the marketing mix is becoming more and more crucial now in the age of connected media.

In fact, the Andy Sernovitz quote that ‘Advertising is the price you pay for being boring/unremarkable’ seems to be getting a bit of airtime in marketing conversations lately. I definitely don’t agree with it entirely (case in point: Apple’s iPad received ludicrous amounts of free press and yet they still spent millions advertising it), but there’s definitely at least an element of truth in there.

Perhaps, though, Sernovitz’s comment should be de-sensationalised to the point of the bleeding obvious: if your product or service is great, it’s going to make the rest of your marketing easier/more effective. The old adage that ‘an average product with good marketing will usually beat a good product with average marketing’ is beginning to change, being given a big boot along by social media.

Now, most companies like to call themselves ‘innovative’ or ‘creative’, but, for a whole range of reasons, this is more a statement of intent than an observation of fact. When they want real out-of-the-box thinking, they usually turn to a creative agency. But what stage in the process is this? Usually at the ‘we have a great idea or product we’ve developed – can you come up with ways to help us sell it?’ stage.

In the new world, that’s asking the wrong question. The question that companies will increasingly ask is ‘Can you help us come up with a product or service that’s so good, it’s going to be easy for us to sell?’ Most agencies will, if they’re being honest, have to answer that it’s beyond their capabilities.

Why? Because most agencies were developed in response to the sales model, not the marketing one. Fortunately for them, the new marketing model included room for the sales function rather than replacing it, so agencies were able to continue doing what they did best: selling. Companies continued coming to agencies with their new products, and agencies continued to develop creative ways to communicate with the market in order to sell the products that they were given.

By contrast, the agency of the future will no longer be about just selling. Their role will begin much earlier in the process, with a focus on creative solutions to consumer needs (i.e. product and service development), not advertising briefs. This means the top agencies will no longer be communications-centric. After all this time, the agency landscape will finally evolve to meet the marketing model with a more holistic offering. Much focus will be given to evaluating consumer needs and developing the ‘Product P’ in response to those needs.

I’m not suggesting that companies will outsource all their product innovation to agencies – just that agencies that want to be truly successful need to have product development as part of their offering.

In theory, that’s not too a big leap to make for existing players when you consider that two of their biggest strengths – creative thinking and the ability to provide an external perspective – will still apply. ‘Sure,’ they’ll say, ‘we can come up with product ideas too.’ But in practice, most agencies are ill-equipped to move from a communications focus to a product focus. There is a vast difference between manufacturing emotion and manufacturing a product.

Which means the successful agency of the future will employ industrial designers as well as graphic designers. (It may even mean merging firms from these two disciplines.) The successful client of the future, on the other hand, will recognise the merit in Sernovitz’s quote and therefore have metrics in place to measure exactly what that cost is in dollar terms. They will ask questions like: ‘If I invest another dollar in product development, by what factor will that reduce my need to invest in advertising the product (because my customers are doing that for me for free)?’

As social media continues to evolve and empower word-of-mouth, I’ve no doubt that this type of thinking will be the way of the future.

Of course, the next part is: ‘What is the return from using an agency versus our in-house resources?’ A significant amount of the funding currently allocated to advertising is likely to be diverted into consumer research and product development. If an agency can’t partner with their client in these areas, they’ll be left fighting for a much smaller piece of the budget pie.

At the same time though, I’m willing to concede that we’re likely to see the current advertising agency model around for a little while yet. Why? Because advertising agencies have become very good at selling – including selling their own services. They’ll be able to convince certain clients that what they’re offering is exactly what the client needs… in true sales fashion.

Meanwhile, marketing agencies will be popping up asking what the market needs (such as product-driven marketing), then delivering solutions tailored to suit… in true marketing fashion.

Eventually, the agencies built on an advertising/selling model will die by their own swords. The marketing ones, on the other hand, will – by their very existence in response to market needs – have proven themselves worthy successors.

The agency is dead. Long live the agency!