Used to be the best an agency could do is build a rep as a stellar service provider. But recently, they’ve become more entrepreneurial–building their own brands along with their client’s fortunes.

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Take agency BBH and its brand development unit Zag, launched in 2006. The company has developed a number of intellectual property projects, taking to market the Ila personal security alarm in the U.K. and Mrs. O, a book and site about the first lady’s style, out of New York. Its latest effort, Playground Sessions, developed out of Zag New York, may be its most ambitious. The product represents a major investment from BBH in product development, and provides a very specific take on how to build a brand from scratch. Playground Sessions is a new human/software combo approach to learning to play an instrument. Zag partnered with self-taught YouTube piano phenomenon David Sides and digital company Rain Interactive on the web-based learning system, which has been in private beta since June and which launches November 1 (sessions start with piano but a guitar-based track is planned). Playground Sessions allows users to learn piano by playing popular tracks, with Sides acting as a step-by-step video guide. Students can follow along with Sides on specific tracks, then, in practice mode, they can play songs while getting automated feedback, with green and red indicators of correct and incorrect notes. Another game-inspired feature allows students to track progress, get scores and badges, and compete against other students. A Bootcamp module designed by NYU music teacher Alex Ness provides further video instruction organized by skill level and according to learning categories like playing by ear, notation, and rhythm. The program costs $149, including the Bootcamp training program and three free songs. Additional songs are available from the music library for $6.

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Zag worked for two years with its two partners to bring the product to market. BBH and Zag own the largest equity stake; Sides and Rain Interactive are also stakeholders. Zag is in the process of raising $3 million in funding and Zag managing director Chris Vance says conversations with VCs have been encouraging. The product was first developed through Zag’s “brand lag” process, where the company identifies areas where consumer activity is outpacing brand activity. “We identified different territories of brand lag and one was around adult learning,” says Vance, who joined Zag in 2009. “The other was around digital music. YouTube is in many ways associated with music and it was clear that a lot of people were going to YouTube to learn how to play instruments.” The phenomenon of Guitar Hero was also a contributing factor shaping the idea for the new product. “We knew that with technology and scale there was the opportunity to converge gaming and learning,” says Vance. “Can we do Guitar Hero with a real musical instrument; can we do Rosetta Stone with instruments? The challenge was, can we reinvent how instruments are taught. We identified the brand lag, then it became a question of, can we build it?” Zag hasn’t invented a category here–there are a number of music learning systems online, including Apple’s GarageBand, which offers learn to play lessons.

But with Sides on board, Vance says Playground Sessions benefits from “an inspirational teacher that can connect with people emotionally” (and, given Sides’ 150 million+ YouTube views, a ready audience of music fans). Playground Sessions also provides a ready case study in how to approach building a product and brand from scratch. While there are as many ways to approach IP development as there are product ideas, here are 7 rules for developing a new brand, according to Zag. 1. Approach brand development as a standalone business, not as an agency hobby

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Zag is a wholly owned subsidiary of BBH and represents a significant investment from the agency. The unit has about 23 full-time staffers, roughly split between New York and London; BBH cofounder Nigel Bogle sits on the Zag board. But Vance emphasizes that Zag is a balance sheet business where returns are expected, not a lab for freewheeling experiments. “We are responsible for managing costs, creating brands and products that have real commercial potential,” says Vance. “It’s difficult to build a brand. They take time and investment. They (BBH) went into it with full knowledge, that as an agency they have tons to contribute but it does take execution and full-time dedication to make this work. They’ve invested consistently with eyes on the future.” 2. Bring on a hardcore brand builder who understands the value of creative Vance started out as an accountant at Arthur Anderson and did a stint at Goldman Sachs before returning to business school and working brand-side for Gillette and later P&G after the two companies merged. For the Zag role, BBH was looking for someone “with an entrepreneurial spirit, someone who knew how to bring brands to market but believed in creative process,” says Vance. “When I heard about it, I couldn’t believe this opportunity existed; I saw the value that agencies brought to developing brands.” 3. Harness the strengths of your agency host in identifying brand lags Though Vance emphasizes the autonomy of Zag, there are significant benefits, after all, to being affiliated with a full-service creative agency.

In an oversaturated marketplace there aren’t exactly tons of yawning consumer demand gaps, and finding them involves tapping into a good agency’s core strength–consumer insight. “We believe in the brand lag process; finding the unmet need,” says Vance. That process starts with heavy engagement with BBH to understand what’s happening in the market and the category.

“Identifying brand lags starts with getting into deep consumer insights,” says Vance. “And there’s no one better at that than great planners at agencies. Research departments on the client side are good but they don’t typically make the same connections that planning departments at agencies can.”

Once opportunities are identified, Zag then layers on heavy commercial assessment. “We put months into evaluating what starts off as, okay there’s some excitement here; it’s the commercial rigor to find out what types of product will work and what types of partnerships well have to pursue to bring a product to market,” says Vance.

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4. Don’t do all the heavy lifting. Find partners who can contribute expertise and connections Vance acknowledges Zag can’t do everything solo and says that all of the unit’s products involve some kind of joint venture.

Utah-based digital agency Rain had visited BBH on a roadshow; the shop happened to have significant capabilities in customizable software solutions with a core competency in musical notation. Zag also identified Sides who brought a huge fan base and social media opportunities, beyond being the ideal aspirational teacher. 5. Get in for the long haul. Think of VC funding as merely step one “We don’t win when we raise money; we win when we have a brand that people know and talk about,” says Vance. “Raising money is part of the process but if you want to go all the way you have to be truthful about what it takes in terms of allocation of resources.” Vance says it’s important to build a “culture of execution” and understand the entire brand building process. 6. View the investment in product development as an investment in your client relationships Whether or not your agency creates the next ridiculously overvalued tech product, in an era of expanding creative opportunities, honing the skill sets involved in product development can allow agencies to enrich and expand relationships with current clients. “As an ex-client person, I can say that the more my agency partner is able to understand where I’m coming from or what’s important to me or why a brief is the way it is, the better,” says Vance. The skills that come out of an end-to-end brand building allow agencies to provide a bigger picture creative service for brands they work with; Vance says BBH clients see Zag as an innovation unit.

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7. Eat your own dog food If you catch Vance at a piano bar, you’ll be able to test his own passion for and belief in the product. He’s now a bona fide player; he learned to play via Daughtry’s “Home.”