The already-challenged advertising agency is in a tight spot. Mediapalooza. Pitch-a-palooza. The tidal wave of media agency reviews in 2020 must have been unnerving for agencies. Last fall it was reported that 950 brands had completed media reviews worth $10 billion in ad spend, with giants like Kraft Heinz, Allstate and more reevaluating digital media duties.
It seems brands are using the pandemic as a reason to cut ties with agencies and/or slash margins. Their motivations range: hunting for value from working media dollars; more data-driven solutions; and exploring options to “in-house” digital advertising.
To be sure, global ad spend is forecast to grow 5.8% in 2021, according to Dentsu. However, it comes with more complexity for the agency, creating a drag on operational efficiency in an increasingly demanding space, with brands leveraging power to drive down their margins.
Can you blame us?
Digital campaign operations are costly. They’re becoming more so because of a continuously fragmented process and patchwork of platforms needed to run a multi-channel digital ad business (including planning, creative, buying, monitoring, analyzing and reporting).
Furthermore, as the technical skills required for this work multiply, an agency’s time, headcount and investments skyrocket proportionately. Not to mention the costly agency inefficiencies that come from performing the manual functions necessary to run hundreds of digital ad campaigns. It’s a perfect storm driving up agency service overhead. And because a brand won’t want to pay for this with their working media budget – the agency eats it.
Unsustainable Digital Agency Models
The digital marketing ecosystem functions better when there are healthy brands and agencies. But it’s clear to me that agencies are reaching a breaking point in operations from a people, process and tools standpoint. They have to solve this.
From my perspective at a brand that has worked with agencies, here are ways agencies can reclaim footing and showcase value.
Client Experience -- Agencies that centralize access to data and offer transparency about their work can help speed their processes, facilitate seamless communication, minimize errors and misalignment, and prioritize client needs on campaigns. Giving digital media campaign data in real time to a client helps demonstrate the value of the agency’s strategy as it unfolds while providing visibility to all data related to the campaign. Making clients’ lives easier is a crucial and underrated differentiator. Decreasing time agencies spend managing manual tasks, and increasing focus on new opportunities for clients, helps underscore the high-value guidance agencies deliver.
Show Performance -- Agencies that provide clients with a view on how their campaign is performing in real time are poised to gain a competitive advantage. An enhanced view with real-time performance information across digital channels is perfectly suited for clients wanting quick results. It also enables agencies to demonstrate immediate return on ad spend (ROAS) and, over time, increased sales directly attributed to their efforts. The key is quickly and automatically pulling all of this together, consolidating and analyzing data from various disparate data sources – including DSP, search campaigns, social campaigns, direct buys and traditional buys, etc.
Transparency-- Brands require a greater level of transparency into how working media dollars are used. But simply seeing the numbers is not enough for them. Brands are scrutinizing the middlemen required to run digital campaigns, holding agencies accountable for the swollen costs that eat into working media dollars. When agencies bring all digital channels together into one place, the clients see the complete picture of what the campaign is costing them. It empowers the agency and client to have candid and thoughtful collaboration on what is needed to accomplish campaign goals, and which potential middlemen can be cut out or consolidated to return more dollars to working media.
Agencies that win client confidence are able to weather market pressures and operate with efficiency and effectiveness. To accomplish that, more agencies will need a way to automate their business operations so that staff are managing digital campaigns well – and at consolidated margins – while providing their clients a front row seat to the quality of their work. Giving clients a great customer experience, more views on performance and better transparency is how agencies can regain their competitive edge.