One in four respondents to a new survey of mostly smaller agencies from Ad World Masters believes the agency market will be much more “product-oriented” post-pandemic, which means shifting away from creative partnerships to selling agency services as products.
Slightly more executives believe broad competencies will prove to be a competitive advantage in a post-pandemic world versus narrow specialization (35% vs. 24%).
However, one in three (34%) feel brands will continue to build in-house competencies for marketing in 2020-2021. Moreover, 28% of them think that brands will use more freelancers in 2020-2021 than they did before.
Over one third (36%) of creative companies’ leaders feel that in-house marketing of brands leads to reduced marketing budgets. “This is a problem for agencies,” according to the report.
“Agencies will have to adapt to an environment in which they collaborate with client’s different marketing divisions, freelancers and other agencies. Agencies do not have to assume a leadership role. Instead, an agency’s role is more often secondary and functions like a module, easy to replace when it does not meet the client’s desired criteria.”
The tech giants will continue to grow even more powerful. One in three (35%) think the biggest market players — Google, Facebook, Amazon, Microsoft and their ad systems — will gain in 2020-2021, versus only 10% who hold an opposite opinion.
Nearly twice as many executives agree with the statement “As a result of the pandemic many small agencies will gain, and a lot of larger agencies will suffer or even go bankrupt” than those who think the opposite.
Agencies considering reduction in workforce point primarily to the following areas: administration 25%, client service 17%, management 15% and art direction 14%. At the same time, 12% of agencies say they are planning to employ new staff and 17% say new hires are “very likely.”
Those jobs are primarily concentrated in social media employees (36%), web / app coders (30%), new business (28%), and client service (27%).
“We can’t say that all agencies can adapt to the new normal, some agencies specialized in event or experiential may have already gone bankrupt,” says Thomas Lavernhe, CEO, AdworldMasters. “But not every niche is doomed, and even the less promising niche will find some survivors during these times. History will tell the facts, but I am guessing this situation already acted as a catalyzer for the digital transformation of many industries.”
The survey was conducted in March.