Why the Agency Model Is Dying
Marc Pritchard, global brand-building officer at Procter and Gamble — one of the world’s largest marketers, spoke at the 4As Transformation show this past April on this very topic. He, like many other large agency clients, is growing tired of these practices steeped in legacy and tradition. They just aren’t cutting it for the modern marketer.
I’ve worked on both the client and agency sides of this industry, and know all too well the challenges facing larger agencies. Based on my previous experience, a more hybrid and fluid model is what I think the next era of advertising will look like. Here are a few reasons why I think the traditional agency model is becoming something of the past:
Things move much faster today and I think larger agencies are having a harder time keeping up. Layers of hierarchical structure and formal client-agency relationship operations may be creating a lag time between planning and execution. I believe the antiquated silo approach, especially between media and creative, causes delay and inefficiency. Large agencies can lack the foresight and resource to plan for the whole picture. By not considering the complete end-to-end integration of media and creative strategy from the beginning, unnecessary readjustment is bound to happen.
Can Lack Transparency
Large agency operations are complex and this confusion is not going unnoticed by the industry. The Association of National Advertisers (ANA) partnered with K2 Intelligence last year to conduct a study regarding widespread nontransparent business practices by U.S. agencies. The report found media markups upward of 30 to 90 percent. I think this, in addition to confusing organization of teams and complex billing structures, plays into the growing buildup of client distrust.
The good old days of creating one campaign and pushing it out to a handful of channels, print, TV, OOH, are over. According to a forecast by eMarketer, digital advertising in the U.S. is set to overtake traditional TV spending this year, at a projected 38.4 percent of total ad spend in 2017. In addition, digital advertising measurement tools allow marketers to know exactly what their ROI is from a campaign; something that was much harder to pinpoint with traditional advertising. Because of this, brands are evaluating with greater detail and insight how well their agencies are performing. I believe larger agencies are supported by traditional media campaigns, instead of smaller and multifaceted ones that may bring a smaller paycheck. With this push for greater ROI, agencies will have to decrease prices on services while offering new ones in order to maintain their client base.
Some Don’t Act as True Partners
I think the best agency-client relationships are built on trust and valued recommendation. Marketers are in favor of honest and open communication, looking to their agency partners for advisory support. They want to integrate their knowledge with their agency’s to get the most out of their investment. Larger agencies aren’t set up to function this way and lack an ability to adapt quickly to fit the needs of their client. Too often, brands are sold the wrong type of program, because that is what the agency can deliver or it was what the marketers thought they needed. This is a disservice and not trying to solve the business problem for the client and isn’t sustainable for a long-term relationship. Modern marketers are looking for a partnership, not just another vendor.
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