The agency landscape has long been fragmented, both in the services each agency claims to provide and their sizes and structures. Over the last few decades the networks, especially ‘the Big Four’ have grown in the number of brands they hold within their stables, with WPP having, prior to last year, been the leader in the terms of size. For client-side marketers, the landscape became incredibly complex to understand exactly which agency was owned by which network, if owned at all, and what they each actually did.
Recognizing the challenge that this landscape now poses marketers, marketing procurement expert Tina Fegent and The Drum Consulting’s Steve Antoniewicz mapped the space, pinpointing 20 different models of client-agency engagement, from full-service collectives to in-house agencies to more bespoke freelancer-based collectives. To view the full infographic fill in the form at the bottom of the article.
Antoniewicz believes that, despite recent network agency mergers, this complexity will only deepen as the vast majority of brands, still using agencies in traditional ways have to change. “Despite all the talk of transformation, very few brands have actually managed to transform themselves, so their own legacy structures and models mean that they continue to have quite traditional agency relationships”
He continues: “The disruption of their own categories and the inevitable internal pressures are having a trickle-down effect on the way clients access agency services and that’s driving the evolution of the relationship. The FMCG and retail categories are the perfect examples of how new solutions had to be found, P&G and Unilever have been through that exercise already."
And the complexity is not simply down to the sheer volume of businesses and models operating in the space.
Gregor Young, head of digital brand at BT, admits that the telecoms company has witnessed many agencies attempting to "stretch" themselves in order to win as much new business as possible, which creates uncertainty over where their actual strengths lie.
"They have a lot of unclear boundaries of what they do and what their specialisms are, and while you may have large agencies that are known as being generalists, or they’re certainly a generalist agency package because contained within them are many different types of specialists.
"Sometimes you will choose to go to a Wunderman, or a Karmarama or something like that, because they have so many different varying capabilities – that’s kind of a well-known established thing, but then there’s also niche agencies, so you know a content agency, a digital design agency, this agency or that agency, and it’s the latter that I feel definitely hugely broadened themselves out. They’re all trying to offer everything now, and it seems that the digital imperative has driven that."
Antoniewicz highlights that the 80% of brands who still buy marketing services ‘traditionally’ will have change thrust upon them: “The vast proportion of brands still have a lot of legacy structures in their business and ways of working with agencies that are actually pretty traditional. I think it will [shift], clients are waking up and going 'why is this not working?’ Our markets are changing.
“You just need to look at retail, for example, they have been ripping up their own models, [saying] ‘We cannot keep investing in agencies in the way that we have done, with the big holding companies’, and P&G and Unilever have been through that exercise already.”
The IPA’s marketing director Janet Hull, who co-authored a report into the future of media and agencies, believes that the rapid uptake of tech among consumers is shifting the power dynamics among the audience, brand, and agency.
“The future consumers’ use of the empowering technologies and responses to the choices available will determine how far they will want to be in control of their interactions with brands, while the brand owners’ decisions [will be] about where to focus their efforts between a back-to-basics emphasis on the quality of products and services and the need to create strong emotional ties to bind consumers close.”
Consequently, Fegent says that the rapid rise in complexity has been driven by clients pushing for new options and agencies responding in kind: “Clients [are] taking control; especially when you read what Marc Pritchard's been doing, they've felt that their agency model, in whatever form, wasn't working for them.
“There are so many different routes to market now, and obviously digital and technology has a huge role to play, you have to respond quickly, be it to a Twitter storm or whatever, and some clumpy old agency model didn't always reflect that, because we have moved away from the 30 second ad to different components. One size doesn't fit all,” adds Fegent.
That has been exacerbated by those rapid changes in consumer habits that lead to a need for more specialized agencies. Tony Walford, a partner at Green Square, which provides insight into the marketing communications sector, highlights the growing sophistication of clients in modern times, especially in their use of data to understand customers. “Thus, offerings have had to become more granular and specialist,” he states.
“The term ‘digital’, [as stated outright by WPP chief executive Mark Read during his end of year strategy day] is no longer a term to describe the work produced by an agency – it’s endemic to every campaign – so marketers will now look across various online options within their playbook; web, app and eCommerce platform services, SEO, PPC, content, programmatic, social, CRM, CEM, data analytics from specialists. Clearly, there are some ‘major league’ full-service agencies that can deliver across the piece, but specialists are still often sought for specific elements,” offers Walford.
From the client side, confusion over the unnecessarily broad definition of ‘digital’ has led to a change of relationship between brands and client. BT's Young believes that clients should take more responsibility for understanding their business needs, especially in the digital realm where there is a need to "categorize" work, and partners in order to benefit from their core expertise.
"We’ve created a roster specifically for digital design and builds, we’ve got one for social media strategy and content creation, we’ve got marketing content within digital and social; these definitions are quite clear," reveals Young. "But we still struggle, because new things come along and new things emerge; so for example, data systems integration, data personalization, content personalization are new areas we haven’t really defined that yet, so there’s always a period of letting it run and seeing how the cards fall, and then once it becomes sophisticated and a high enough volume, you go ‘ok, we understand this category now; here’s a clear definition.'"
Consequently, while brands with in-house agencies like that of Specsavers or Sky have a clear understanding of the aims and channels of a campaign, brands who need to look elsewhere for creative services face a tough decision.
In a sea of agencies of all sizes and formats, each with their own specialties, clients need to be certain that their needs and briefs can be met. That’s especially difficult when, as Fegent puts it, ‘every man and his band’ can be an agency. Combined with the ever-increasing number of channels audience segments and that complexity can frustrate an already information-heavy agency-client relationship: “I don't think they're confused; I think there's too much choice. There's an oversupply.”
Global clients have historically been swayed by the size and buying power of the agency networks, but then have found them wanting in departments that have to mean moving some services in-house, more recently there has been a desire for programmatic trading to become internalized for example due to transparency concerns.
Alternatively, the ‘hub and spoke’ model employed by TAG and Hogarth allows for an on-site agency that has access to off-site resources but is in constant communication with the client: Young believes that it is largely up to the client to keep the agency relationship clear: “It's up to the client to take responsibility for refining and understanding what their digital categories are and that they're not allowing that blurring of the lines or vague interpretation.”
Antoniewicz and Fegent have also highlighted the growing influence of independent production agencies like Media Monks and what they term as the ‘publisher direct’ model for example Vice or The Foundry from Time Inc.
The agency model map notes that technology platforms are also staking a claim. The Liberty Guild and Tongal both offer a tech-led approach to buying creative services and there are already developments in AI which also offer clients new ways to access creative.
"Tech is less of a driver than a ubiquitous omnipresent facilitator," comments Janet Hull, when asked of the role technology will play in the evolution of the agency landscape. "Our collective predictions are that, by 2025 at the latest, the interface between marketers and consumers will be ubiquitous, mobile, multimedia and multi-sensory, personalized, intelligent and predictive." She continues to explain that the reasons for believing this stem from the expectancy of mobile or voice first interactions, the dominance of audio-visual communications driving brand engagement, the introduction of mixed reality and 5G's imminent appearance.
"Big data will evolve to become an integral part of all marketing and communications approaches, delivering real-time predictive tools for every interface," she continues, adding that AI will also drive a better understanding between brand and consumer "on every level," which will also be aided by the continued adoption of wearable technology and demand from consumers looking for more relevant and personalized experiences.
Other models highlighted by the landscape map - Publisher Direct agencies and independent production agencies like MediaMonks - are seeking more direct relationships with clients. The agency model map notes that tech platforms occupy their own unique space in the agency mix, citing examples including The Liberty Guild and Tongal offering clients access to freelancer creatives, allowing smaller agencies access and reach beyond that which they enjoyed even a few years ago.
It all speaks to a disrupted space, there are tanks on the lawns of the big four agencies and they are now being forced to adapt and quickly.
For clients, it certainly means there’s a plethora of choice, albeit maybe too much, and it's easy to see why many are in need of assistance when it comes to making decisions as to which partners will help move their brand and business onto the next level. That is why this new map of 20 agency models will help facilitate more clarity around the situation than there was previously.
The Drum Consulting provides advice, guidance and insight for brands and businesses that can boost marketing performance and impact.
Fill in the form below to download the full infographic highlighting the 20 different agency structures identified in the current industry landscape.