The secret of R/GA’s success lies in the 9-year revision cycle of its business model

  • Sendenkaigi
  • By Sendenkaigi
  • November 7, 2017

Ad agencies have long-established business models in place, but the wave of digitization and globalization is now forcing drastic changes. It’s becoming important for agencies regardless of their size, to build a robust business foundation that can survive changes in communications environments, breaking traditional industry habits built around the media-buying model and creating new sources of revenue.

Here we will talk about the future of Japanese agencies, focusing on initiatives led by foreign agencies aiming to transform existing businesses or create completely new businesses in support of business transformation.

There are many agencies that have managed to find a new source of revenue, having created completely new businesses and services. How can you find potential for new businesses? Are overseas services feasible in Japan? We asked all these questions on their approaches currently taking place.

R/GA started off in New York, USA and is regarded as a “next generation agency”, drawing global attention for inventing leading-edge business models to constantly adjust to changes in time and environment. In May this year, they launched the 19th global office in Tokyo. Their history is one of transformation - from a CG production company founded in 1977 R/GA turned into an “interactive agency” in 1995, and further evolved into an “agency for the digital age” in 2014.

What’s driving this continuous business transformation is their business policy - a 9-year business model revision cycle.

“R/GA has grown by foreseeing what will be needed and acting fast to deliver against those needs,” comments Yosuke Suzuki, Executive Strategy Director of R/GA Tokyo. “With leading technologies, experts in UX/UI, programming and coding and so on, we’re always ready for new business. But the intention is not to use those technologies to do something new. Consumer behavior constantly changes along with new technologies. The same applies to brand behavior to go with this change. There new technology organically comes in.”

Keeping this cycle - create a new business model to disrupt by themselves in order to create a newer business model, R/GA restructured itself to house 6 business areas in 2012. Sendenkaigi focused on 4 that are relatively new and relevant to the Japanese advertising industry.

Ventures

This business area aims to support startups through access to Financial Capital (funding), Creative Capital (creative support) and Client Relationships (introductions to potential customers).

Creative Capital in particular leverages R/GA’s advantages - support by R/GA’s experts in business/marketing strategy, designing and coding help fill in the gaps in the startups’ skills to further develop their products or services.

“There are many cases where products and services developed with Ventures become solutions for large enterprise clients. One of our advantages is being able to quickly create these solutions that bring benefits to many companies,” says Mr. Suzuki. The number of companies R/GA supports is expected to exceed 100 in 2017. Their New York HQ office created an entire floor dedicated for ventures so that startups have an easy access to support.

Consulting

R/GA’s consulting is characterized by going beyond just marketing itself to deliver 4 types of consulting; Business Transformation, Brand Consulting, Tech Consulting and Organizational Design.

In response to the Japanese consulting landscape starting to drive digital transformation, Mr. Suzuki said R/GA is expecting a higher demand for fundamental solutions to transform client's’ business, and is actively recruiting people with consulting background.

IP

R/GA internally develops various products and services for licensing, having a Prototype Studio located in the New York and Singapore offices as network hubs for experts in business strategy, design and programming.

“R/GA believes in Brand Interface (where every touch point needs to demonstrate the value that brands promise for consumers and society) and places focus on “whole Ideas” to build brands, based on which we are developing products and services for clients,” explains Mr. Suzuki.

“Observations of everyday life gives us ideas for what to develop. What is hindering us from leading stress-free comfortable life? R/GA finds solutions in the format of product and services in order to fill the gaps between what the reality and the ideal.”

Connected Spaces

R/GA started its architectural practice in 2013. A space design business is becoming common practice among Japanese ad agencies, aiming to provide customers with a better brand experience. However, what differentiates R/GA is their wide range of capabilities. With their proprietary technologies, for instance, R/GA can create offices and events that make it easier for people to work and make them want to work.

“Hiring the best employees and keeping them is one of the common challenges for corporate managers. Creating an attractive work environment that inspires employees will be a great solution to it,” said Mr. Suzuki. By leveraging their technologies, R/GA integrates people with spaces to create high-performing work environments.

There are already some companies in Japan as well as USA and Europe who have partially introduced these approaches.

“I think other companies have implemented those approaches for individual businesses or are introducing it into their internal teams. The difference with R/GA is that it’s the entire organization working together to transform clients’ businesses. The role of marketing is to create business opportunities, and this is why we have to continuously come up with new ideas to keep innovating. From my point of view, innovation doesn’t necessarily mean doing something different, it can be improving what already exists. A challenge-mindset and willingness to do something new will lead to new opportunities, resulting in progressive changes and uniqueness,” comments Mr. Suzuki.

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