CMOs Increasingly Reject Agency-Of-Record Model

CMOs are turning away from the traditional agency-of-record model in search of innovation and personalized service, according to a study.

Companies are also finding new ways to locate and vet agencies, the study from the CMO Club in thought leadership with Globality revealed. 

The CMO Club surveyed 106 CMOs from a range of primarily global business-to-consumer and business-to-business brands to examine the current state of shifting agency partnerships. The research also included in-depth interviews with the CMOs of Georgia-Pacific, Kelly Services, Keds, Diageo, Bayer and HP.

Reports of the “death” of the old AOR model have been exaggerated, but not greatly, says Yuval Atsmon, SVP of Advisory Services at Globality.



“Adding a new agency is not always easy,” Atsmon says in a release. “There’s a demand from CMOs for easier ways to source and vet new agencies. The good news is new technologies such as artificial intelligence matching exist that can connect CMOs with the agencies that are right for them.”

Nearly half (46%) of CMOs surveyed still use an AOR model. But only 14% say they are very satisfied with their current model, while 30% say they are dissatisfied. The most common reasons CMOs are dissatisfied with the AOR model is a lack of innovation (55%) and narrow capabilities (35%).

Over half (58%) use small and mid-size agencies frequently. Respondents say they would use a smaller agency primarily because they offer a better-personalized service and more specialist knowledge. And 8% reported they do not use small and mid-size agencies frequently but they would like to.

The main reason CMOs currently use or would potentially use small or mid-size agencies is for a better-personalized service, selected by 44% of respondents. Forty percent said more specialized knowledge, 38% said increased value, 38% said more creativity, and 24% said local market knowledge.

The market is ripe for disruption, with CMOs diversifying their stream of providers. A quarter (25%) supplement their AOR with independent agencies and 24% use multiple independent agencies, eschewing the AOR altogether. A further 27% use a single holding company and select multiple agencies from that company.

One of the biggest challenges in changing agencies, selected by 33% of respondents, is the time it takes to find and vet them.

1 comment about "CMOs Increasingly Reject Agency-Of-Record Model".
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  1. Ed Papazian from Media Dynamics Inc, April 24, 2018 at 9:12 a.m.

    This kind of report is very difficult to interpret. What kinds of "CMO's" responded to this study? How many were involved in DR as opposed to branding---or both? How many were what could be called big ad spenders as opposed to mom and pop marketers? What percent of the top 200 advertisers on national TV, have agency-of-record" agency assignments for individual brands covering account handling, creative and media? How many top 200 TV advertiser brands don't have AOR's? How has this changed over the past five years? etc. I realize that such detailed information is probably not available but without it I don't see how we can accept that a major upheaval in how advertisers interact with agencies is in progress. It's merely speculation.

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