The 4A's flagship conference kicks off today in Los Angeles. Prior to the conference, a business intelligence firm specializing in global advertising asked marketers if they still believe that the role of the lead agency is a key factor in their business strategy, with 77% of respondents saying that lead agencies maintain a pivotal role.
The outfit asked marketing professionals and decision makers what their preferences were in order to better understand agency search methods, uncover key agency selection criteria, share client relationship preferences and highlight emerging agency trends.
The questionnaire also explored the trends of clients moving business in-house and agency reviews, finding that 50% of respondents had already moved some pieces of business in-house, and another 30% have plans to do so. The top reasons for moving pieces of agency business in-house are that it's more cost-effective, agencies are too slow or too traditional, or that the clients need to own all data from their marketing initiatives.
58% of marketers polled planned to review their agency within the next year. When asked to rank the top five reasons respondents would review their current agency relationship, the top three were: displeasure with performance (72% of respondents), new emerging technology developments in advertising (67%), and the need to expand capabilities (65%).
Despite the popular belief that agency-review decisions are set in motion by finance or procurement, only 8% of respondents indicate that chief financial officers make this decision. In the questionnaire, 35% of respondents indicate it is the chief marketing officer's decision to review the incumbent agency, and 28% say it is the decision of the chief executive officer. When it comes to the final selection of a new agency, 31% of respondents answered that the CEO makes the final decision, while 36% indicate it is made by the CMO.
"Last year, we did a white paper with the ANA that found that project work is on the rise, but this most recent survey clearly highlights the value marketers see from continuing to have a lead agency, despite the uptick in project work," said Nancy Hill, president and CEO of the 4A's, who is stepping down this year. "When it comes to clients putting their agencies up for review, so many of the top reasons for this are fully within agencies' control — it's imperative that agencies are up to speed on new technology and that they're delivering the work they promised; those are the basics."
In terms of upcoming trends impacting the advertising agency business, respondents cited the following as those that will have the most impact over the next five years.
Automation will result in less face-to-face client-agency interaction with more emphasis placed on transparency. Further, we will see different pay structures that focus on paying for performance. Advertising technology will become an increasingly important criteria for agency selection
"Reviews come down to performance and confidence. The CMO and CEO either want more than they're getting from the agency, or they want new expertise they're not seeing," said Randy Cohen, president of Advertiser Perceptions. "Advertisers made it clear that advertising will be a performance business in the years to come, and results will be built into the contract and fabric of agency relationships."