Over the years, the agency model has started to change, and the focus on performance has come to the forefront in 2017. In a series of features reflecting on the past year and looking ahead to what we can expect in 2018, ExchangeWire invites over 100 thought leaders from across the industry to share their views. In the latest installment of the series, experts give their opinions on how the agency model will continue to evolve in 2018.
The agency model needs to change and reinforce their value to clients
"The velocity of industry change is staggering. Consider the following factors: AI-based media buying, consultancies absorbing creative shops, Facebook and Google becoming de-facto agencies, massive amounts of data, a plethora of ad/mar-tech tools, clients taking agency functions in-house, the demand for transparency. Because of this, the agency model needs to change across three critical dimensions: analysis, accountability and agility. Successful agencies will develop robust analytics to track, assess and optimise their recommendations/campaigns—which will result in full accountability. The days of not knowing which half of the ad budget isn’t working are long gone. With 2.5 quintillion bytes of data being produced every day globally, agencies must quickly assess, act and learn. The planning cycle has transformed into daily, hourly and real-time decisions. Ultimately, the art of the business is giving way to the science of performance. Agencies must consume and interpret data, think and act fast and tie results to investment all while reinforcing their value to clients who are continually assessing whether they can do it better themselves."
Roland Deal, President Americas, DWA Media
Data will be used by the best agencies to win
"Evolution is never a gradual process. Rather adaptions happen in fits and starts. Media agencies who have been evolving their tech and data specialisms over the past few years, are about to experience a healthy spurt of evolution with potentially some Darwinian winners and losers amongst us. Talk of the fourth industrial revolution is everywhere. The impact of Artificial Intelligence to support human teams make the best rational decisions is being explored by every future-facing agency. Data, which is no longer the by-product of innovation but is the innovation itself, will be used best by the agencies who win the most. And yet clients, who will depend on their agencies more than ever in the complex environment of communications, will require true insight that is so much more than facts and figures. Thoughtful, perceptive and wise advice from agencies will be needed in 2018 like never before."
Heather Dansie, Associate Research Director, Publicis Media
We will see huge disruption to the media agency model
“The current media agency model is broken and needs to evolve to survive. This is down to the number and variety of challenges agencies are facing. FMCG businesses, for example, have spent less money than ever before this year, which is expected to continue in 2018. Meanwhile, disruption around Brexit, and the trend for clients to request agencies to repitch and work on virtually zero margins, are adding to the pressure. In the year ahead this will likely lead to at least one major acquisition by a large global consultancy, meaning the ecosystem could well look very different this time next year. Share prices are depressed, so it is only logical that a company like Accenture, looking to move into the market, would buy these useful assets that have already built up the necessary technologies, for a fairly cheap price.“
Paul Maraviglia, General Manager, Europe, MaxPoint
Agencies will become more consultative
"As brands hire in-house programmatic expertise and the consulting giants enter the market, the role of the agency has come into question. But far from reaching their shelf life, as some commentators have speculated, media agencies will never lose their place in the ad food chain - thanks to their specialist skills and ability to reach economies of scale. In fact, in 2018 we will see many agencies move further up the chain. Digital advertising is rapidly growing in importance for brands’ entire C-Suite teams, and as increasing interest and expertise drives brands to demand more transparency, the relationship will evolve from service to partnership. Next year we will see agencies continue to build their consulting knowledge, and offer their expertise on a collaborative, holistic level at the top. By being more consultative themselves, they will then bypass any threats posed by the big consultancies."
Sacha Berlik, Managing Director EMEA, The Trade Desk
Agencies will need the skills and tools to take advantage of the ecosystem
"2018 is going to be the year that agencies focus on honing the skills necessary to elevate and breakthrough all of the noise across online and social channels. They need to be willing to experiment, adjust and adapt with different digital marketing tools and tactics. Social and video marketing, in-store and mobile offers, content marketing, experiential and ephemeral marketing formats are all going to change the game in 2018. It will be up to agencies to have a skilled team and tech partners in place to take full advantage of the current digital ecosystem and ensure success for their clients."
Wendell Lansford, Founder, Wyng
Agencies will need to be adaptive and not only tied to media spend
"Undoubtedly the operating models that advertisers have with their agencies will change in 2018. It will become a rare occurrence for an advertiser to use only one agency or holding company for every single aspect of their advertising. Many will in-house; data and analytics, brand strategy, technology contracts, programmatic activation etc., which means the role of an agency needs to be adaptive and their commercial models cannot only be tied to media spend, 1) because the market is becoming increasingly democratized, 2) because it provides massive conflict of interest and 3) you only have to look at how reduction in spend forecasts has impacted major holding companies performance this year to know those models are not sustainable. Looking forward, advertiser’s will want to mix and match their services across a range of competencies and they will look beyond their traditional partners for best in class capability – this will bring a rise to small and large scale consultants alike."
Wayne Blodwell, Founder & CEO, The Programmatic Advisory
Agencies must evolve their business model
"Increasingly agencies need more flexible engagement models that allow them to blend more seamlessly with their clients. Today’s environment has become a highly integrated rat’s nest online of media, social, and owned properties – but now that also entangles apps, in-store, customer service and so much more. Agencies can’t maximize impact and effectiveness working in only one silo. They need to understand, and frequently assist with, creating great user experiences across a brands entire surface area of customer engagement. Many may believe that media buying, and especially programmatic media, can continue to thrive in a vacuum without the others. However, the best results will involve real time reaction and adjustment to social, product releases, customer reaction. Purchased media must work in concert to accelerate positives gains in other business areas. It must leverage complex big data analytics and fast machine learning to quickly spot anomalies that offer, often short-lived, windows of opportunity. For an agency to do that, they must evolve their business model. They need more flexible staffing, often the ability to be embedded with the client’s teams, and must have the depth of leadership to orchestrate this complex concerto across all brand touch points with the feedback to react quickly from input from any area, much like a living organism’s nervous system reacts and responds."
Paul Lewis, Global CMO, Valtech