By Mark Kersteen - June 10th, 2015
We spot trends. We can’t help it. We talk to marketers, we follow the industry, and we see them coming. The changing relationship between brand marketers and external agencies has been on our radar for a while. Recently, we’ve seen some interesting developments.
We’re even starting to get an idea of what that brand-agency relationship is going to look like in a few years’ time...
The Way Things are Now
The most recent huge indicator was this year’s Cannes Lions Festival. As the Wall Street Journal reported, tech companies crowded the Riviera. This is due to the rising demand for leading digital technologies on top of excellent creative work.
Both are critical to brand success—but increasingly, there’s no point in having excellent ads if you can’t put them on the screens of buyers, or if you won’t know how to make them more effective for next time.
The emphasis on tech is hardly a surprise, and there are plenty of good reasons for it. Foremost: it brings in money. A McKinsey study of over 400 companies found that an integrated analytics approach freed up fifteen to twenty percent of marketing budgets, adding up to a total of $200 billion.
There’s also the novelty angle. Everyone in this industry wants to have or be the next hot thing. Marketing technology is exploding right now. It’s new, it’s cool, it’s going to change everything. No one can keep their hands off. We think there’s an additional reason behind this change.
From our extensive conversations with over sixty big-brand, FMCG marketers, we’ve identified a strong trend towards creative, content, analytics and social media going in-house. These brands have to adapt their marketing more quickly than they ever had to in the past. The slower, more expensive approach of getting all of your creative work or other services through external agencies is no longer viable.
The Brand-Agency Relationship of Tomorrow
As brands take on more of the work that was traditionally agency-side, agencies need to retain their relationships with brands and remain valuable. So far, this seems to be manifesting in agencies taking on the burden of sorting out the most complicated, nitty-gritty tech side of things.
For example, from our research we’ve found that most of the programmatic marketing responsibilities—an intimidating web of media buying and fraud-checking—is currently being handled by agencies.
The continued march of digital sends agency responsibilities in-house, but also drives the exploration and promotion of new technologies by agencies so that they can stay ahead of the brand side.
We imagine the future of the brand-agency relationship is going to look like this: more agencies will act as tech explorers and specialists, getting to grips with the tricky or niche platforms marketers won’t have the luxury to master. Brand marketers will take on more and more in-house.
Right now brand marketers are doing a lot more with data in-house than they did a few years ago, and programmatic advertising is moving that way as well. According to our research, 15.4 percent of marketers are doing programmatic on their own through a direct service provider, but 46.2 percent are planning to evaluate a direct relationship. Before that, remember when companies thought they had to have a social media agency to do social media?
Agencies aren’t going to go defunct. There are certainly creative functions that agencies will hold on to for a long time. We can’t imagine Ford shooting and producing their own commercials in-house within the next year. But then again, why not? All it takes is the right staff, it doesn’t matter whose roof they’re under. Same with tech, there’s always a need for specialists, and you can’t hire a niche expert full time if they only need to work two months out of the year.
That said, agencies are going to have to constantly work to stay ahead of marketers, or they will lose their value and their business. Or, they’re going to find a new angle on the market that we can’t even imagine yet.
November 2015, The Marriott Brooklyn Bridge
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