Performance Pressures, Threat of Service 'Commoditization' Portend New Era for Marketing Agencies
Tuesday, 18 July 2006
Faced with an increasingly complex media environment, heightened accountability requirements and a more demanding client base, marketing agencies must achieve a new level of organizational and financial agility if they are to succeed in the future, according to a new white paper released today by Winterberry Group, a leading strategic consulting firm serving the marketing industry.
The white paper, entitled The State of the Agency: Market Transformation & the New Client Dynamic, examines how market and industry trends are driving systemic change across the agency landscape, thus transforming the relationship shared by agencies and their clients. Based on over 70 interviews with senior-level executives at leading agencies and marketers throughout the nation, the study outlines six key developments reshaping the business of strategic and creative development. They include:
- The complex demands of the multichannel selling environment require that agencies provide clients with a unified offering spanning both “above-the-line” and “below-the-line” marketing channels
- Heightened demand for marketing program accountability is forcing agencies to adapt their service offerings, pricing structures, reporting capabilities and managerial focus
- Compressed margin availability, expanded client scrutiny and the emergence of alternative service providers are raising the competitive pressure for agencies of all sizes
- Integrated service providers are seeking to command a greater presence in the agency environment, but struggle to sell their strategic and creative offerings to marketers who associate their brand with other services
- Clients are increasingly leaning on internal strategy and creative capabilities—as well as procurement departments—to support marketing initiatives and generate leverage in negotiations with external agencies
- The prevalent “agency holding company” model is poorly equipped to provide the organizational agility and cross-channel service offering that today’s marketers demand
“The agency world is evolving, and firms that are able to adapt to new technologies, financial models and client expectations will be best prepared for the changes ahead,” said Bruce Biegel, Winterberry Group’s senior managing director. “The message from our study participants was clear—agencies must prepare to lead the way in service innovation and media integration if they are to remain at the center of the marketing engagement.”
The State of the Agency: Market Transformation & the New Client Dynamic is available for complementary download via the Research page of Winterberry Group’s Web site, located at http://www.winterberrygroup.com/research/.