The Changing Face of the Agency Model

New demands and new ways of thinking have forced the traditional agencies to evolve in several profound ways.

First, many agencies are now beginning to consider consolidating with businesses that offer consulting capabilities, in an effort to offer more holistic perspective for their clientele and more well-rounded services. Sometimes these agencies are adding to their skills through in-house onboarding or training. More often, though, agencies are simply acquiring other adjacent businesses to create an “end-to-end” solution with not only traditional creative capabilities, but also consulting knowhow through both technical and industry-based knowledge. Agencies are in a race to become the “go-to guy” that can best meet their clients’ needs.

Second, data and the rise of multichannel media consumption have completely disrupted the way businesses deliver marketing messages. Emerging digital marketing challenges have also spurred a “ data analytics arms race,” where whoever has the most robust business intelligence solution is thought to have a competitive advantage.

Together, these two trends have completely transformed the nature of agencies and will continue to effect changes in years to come.

Consolidating Power

The best way to summarize what we’re seeing in the agency community today is a “march to the middle.” Companies that traditionally had a more systems integration approach are buying boutiques to acquire creative services, such as Accenture Interactive recently absorbing Chaotic Moon. In the process, these SI businesses are able to offer not just a consultative approach but also the emotional creative to get the audience engagement that their client brands require.

Similarly, traditional advertising agencies are purchasing SI capabilities and analytics companies to stay ahead of the trend. Both moves help offer more all-in-one packages for businesses to get strategies for the technological and tactical solutions they need, as well as the end creative product that is ultimately what their customers will be exposed to.

We’re already seeing the effects of these acquisitions: agencies with different scopes of expertise but largely similar marketing consulting capacities are presenting powerful brands with more options. Our recent The Future of Agencies report, done in partnership with Econsultancy, included a survey of top agencies in which 52 percent of respondents claimed that they were becoming “more specialized” to compete on an expertise level.

This phenomenon is the most likely reason that an unusually high number of brands and holding companies are putting their marketing contracts up for media review—they want to reassess their needs in light of the metamorphosis that both digital media and digital media agencies have undergone.

Long Live Data

Another crucial evolution, related to the first, is that data and digital channel access have jointly become the hot topics among industry executives. Foremost is the desire to link the two together to create a unique, personalized customer experience that can touch new prospects and speak to loyal customers with equal impact.

Going back to the earlier survey, when asked about “the most exciting opportunity” in 2015 and also the next five years, respondents’ top answer was “customer experience” for both timeframes. Reaching customer experience goals is partially driven by traditional creative, but a far heavier influence comes from the data insights customer interactions generate.

Data analysis is the next frontier for all businesses. Eighty-eight percent of surveyed companies indicated that they intend to increase investment in the technology in the next five years, and 84 percent intend to invest in data management platforms.

This desire to beef up data-driven strategic capabilities is also causing agencies and organizations across all industries to scramble for talent in the analytics and data science field. Lack of talent is in fact a real concern in the current marketplace, and is encouraging firms to invest in better training and talent acquisition to prepare for the future.

Creative roles are keeping their place, of course, but these spots are eagerly filled, perhaps because of their traditional nature. Still, expect technical knowledge and analytical prowess to keep altering the nature of marketing agencies as we push forward into the digital realm.