A new online survey among 1,900 business leaders in marketing, media, and procurement by Avidan Strategies, reported in Forbes, reveals that their view of agencies’ performance is dim. Clients are being asked to deliver more with less and are seeking a “better, faster, cheaper” attitude from agencies.
Corporate America is questioning the return on their advertising investment, says the report, and agencies continue to struggle to prove their value. There is an impatience for efficiency and effectiveness, and there are higher expectations of accountability.
The proliferation of media choices has brought about a fragmented advertising marketplace as well, says the report. Many clients have upwards of 20 agencies and marketing service firms, creating rosters of “microspecialist” agencies. As specialization continues there is a need for coordination through integration.
Big agencies handle the majority of advertising dollars, but they don’t articulatea better value proposition to clients. And 73% of the study respondents believe that small and medium size agencies are more creative. The advertising holding companies fair even worse, with 85% feeling that they have not improved service to clients, and view them as inefficient and unable to overcome internal territorial disputes.
Agency tenure has been declining steadily as clients continue to consolidate, with 51% declaring that they have been reducing their roster in the past 3 years, and 44% say it is still too big and they plan to consolidate further. Asked what type of agencies they plan to cut back on next year, 69% mentioned digital agencies, and 48% creative agencies.
When asked what recent changes in marketing influenced them the most, 55% of clients pointed to growing demands for “accountability” as the main factor, with increased scrutiny of results by the CEO and the board. 71% point to it as the area that agencies need to improve most.
Most marketers would like their agencies to lead integration between all brand communication partners, but when asked about agencies’ ability to execute, 72% of marketers report that agencies are “inconsistent and need to improve”, and 24% say that, “agencies are falling short and not doing a good job.”
46% of marketers think that agencies are struggling in transitioning their business model to incorporate a more digital platform. Another 36% observe that agencies are making progress acquiring digital assets, but find it difficult integrating them.
When evaluating agencies, 90% of respondents point to the quality of the creative ideas and strategy as the most important attribute, while 74% say that understanding the clients business is essential, 56% point to integration and coordination, and 48% are looking for implementation and follow through from agencies.
77% of the respondents believe that clients should conduct a two-way assessment, in which the client evaluates the agency and the agency evaluates the client. 58%, believe that an agency evaluation should be held every 12 months, while 38% believe in semi-annual evaluations. When asked what is the best way to compensate agencies, 82% of clients point to a fee plus a performance based bonus.
82% of respondents see a need for better briefs, while 67% see an opportunity to align client/agency teams better. 47% of the respondents believe that training is necessary, while 41% say that clients need to do a better job of fighting silos at their end.
78% say agency review is triggered by business performance issues. 63% refer to changes in marketing leadership, 59% to dissatisfaction with the creative work, and 56% pointed to general relationships issues. Only 7% point to compensation/fee issues as instigating agency reviews.
Responding to who should be the hands-on manager of agency reviews, 37% opt for a function head in marketing, while 32% say the CMO, and 24% point to search consultants.
The report concludes that the findings suggest agencies need to reevaluate their value proposition to strengthen the partnership with clients.
For additional information, please visit Forbes.com here.
Not hiring a specialist is like trying to be your own lawyer or doctor. Communication sounds super easy but it's not.
Client frustration at the weak business skills of ad agencies should be taken seriously. Owning an agency where I'm CD, but coming from a business and sales background, I'm regularly shocked how little fundamental sense of "business" in general (much less client business) is held by most agency employees. This is, perhaps, part of the advantage clients are finding with specialty agencies - a better head for business.