The DAO Marketing Agency - Not As Crazy As You Think

Moving From Traditional Models To DAO’s

How do we move from where the agency industry is today to a world where agencies are powered by DAO’s? A DAO model could be an evolution of partner-led operating models and the rise of professional freelancers.

First, we look to established partner models where decisions are made across a large group of owners. An example would be McKinsey’s business model, where different groups align to client engagements. McKinsey’s model represents a large organization with external and internal business functions operating consistently to clearly understood expectations and an agreed-upon form of governance.

Secondly, one can look at the economic opportunity for independent and entrepreneurial marketing freelancers. There are many high-growth business building on this trend, including freelance marketplaces such as Upwork and focused freelance communities such as We Are Rosie, The Mom Project, and Croud These businesses provide a glimpse of the supply of talent available and the demand for access to this talent by marketers.

The McKinsey, partner-led model leans on salaried employees. The freelance models depend on hourly compensation for the most part. A DAO would change the thinking from salary and hourly wage to active ownership via the DAO’s defined digital currency. Moving from hourly and salaried compensation to cryptocurrency may seem like a radical jump. It is a big jump when you are talking about somebody’s livelihood. That being said, digital currency is here to stay. It may be messy for a while, but Web3 will at some point feel as normal as social media and cashless payment is today.  

What Could Be The Same

Communities can align around a lot of different characteristics of a DAO. You will see features that are consistent with how marketing service firms get off the ground today, such as:

• Focus: What types of clients or verticals should the DAO service? What size of marketing spend should it target? What types of services should the DAO offer.

• Where: Should the DAO be focused on a specific geographic market or markets or should it be global?

• Business Goals: Where should the DAO focus on the spectrum between growth and profits versus social impact?

What Could Be Different

Now here is where things get exciting. There will also be characteristics that are unique to a DAO that could change the delivery of services and the business outcomes for clients and talent, such as:

• Community acquisition - How does the DAO acquire new members, and what is the qualification process for new members? Do they buy into the DAO? Do they qualify based on previous work and experience?

• Community incentives - How are community members incentivized? Will actions such as customer ratings determine their economic opportunity? With there be an expectation of exclusivity, or will community members be allowed to work across other DAOs?

• Definition of consensus - What enables the DAO to take action? How isolated can decision-making be?

• Investment in new projects - How does the DAO fund new projects, products or services? Will DAO members need to drive new projects they recommend?

• Operating structure - Will the DAO be completely automated through smart contracts with no central leadership? Will the DAO authorize a smaller operating committee to drive larger or smaller decisions with or without feedback from the community?

• Software vs. human interaction - Will clients interact with the DAO entirely through software, or will DAO community members or full-time employees service clients?

• Currency and treasury - How will the treasury be managed? How will clients compensate the DAO? Will the currency be volatile with a higher risk and reward, or will it be a stablecoin?

When you bring all of these variables together, how the DAO is governed will dramatically impact what it delivers and how it delivers. Entrepreneurial minds will experiment with all types of combinations until sustainable models emerge. As marketing services is a creative-led business, this option-laden method to create a business and create ownership should manifest into a new realm of creative output.

Counterpoints

I often hear several counterpoints in my discussions to the DAO agency concept. One is the void of a visionary founder greatly responsible for an agency’s success. I don’t think that void will occur. I believe a DAO model could provide visionary founders with more options on how they will differentiate, deliver services and build a team.

Another counterpoint is general skepticism about DAOs in general. According to Blockworks CEO, Jason Yanowitz, “DAOs are becoming the new institutions. There are DAOs with more than $10 billion in their treasury [and] media companies have not recognized this.”

Lastly, there is the question of the supply of community members. I see DAOs as simply a mechanism for independent freelancers to access work and business ownership. Virtual working has seen normalization, a record company of LLCs has been created, and the freelancer economy is booming. It is projected that more than half of workers will be freelancers by 2027. Most importantly, the emerging workforce is more likely to freelance than any other generation, with 50% of GenZ and 44% of Millennials have done freelance work in the previous 12 months.

While freelancers create their flexibility, they typically don’t have skin in the game of a growing business. By utilizing a DAO framework, freelancers can create not only the ability to have ownership, but also have a requisite voice and assurance that the business adheres to its founding principles and values. A DAO can motivate this behavior by incentivizing participation and community rewards. 

A Work Already In Progress

In summary, DAO agencies are already happening. There will be more because the model aligns well to entrepreneurship, a surging freelance workforce, ongoing maturity of Web3 applications and digital currency, and marketers seeking new ways to differentiate themselves by hiring differentiated marketing service providers.  

#WatchThisSpace