By Kristen Abramo, Managing Director, Anagram
The world is shifting. Stubborn inflation, energy shocks, sky-high interest rates, smaller investment budgets and dwindling startup funding have not spared the marketing world, and the worst may be yet to come. Brands are tightening budgets and the first place they look to cut is often marketing and media spend. And with that comes cuts to agency partners and shifts away from heavy brand-building towards performance-based initiatives.
But calling ourselves “agency partners” implies that the relationship between agencies and brands takes place against the backdrop of an equal partnership. These days, agencies are often treated more like vendors than true partners. For some time now, brands have sought to squeeze their agencies, demanding more work for less pay and this will only become exacerbated as economic uncertainty looms ahead.
The current economic uncertainty is an incredible opportunity for agencies to clearly showcase what they do best and establish themselves as more than a line item—and instead as an essential strategic ally well worth saving.
So how did we get here?
The scales have tipped in favor of brands ever since the age of mad men and in recent years it’s begun to tip further and further. There are two main drivers that explain this. The first is that many brands have become accustomed to living inside walled garden platforms and have given up on the work of connecting the dots between them. This preference for native technology and measurement has given brands the impression that media is easy to in-house. There was a time when brands turned to agencies for the expertise of understanding their consumers, where we can find them and how we can engage with them. Slowly advertisers came to rely more directly on the platforms to inform their media investments instead of on their agencies. In a sense, agencies were disintermediated.
Brands have also become more performance-oriented and have centered measurement and campaign goals around bottom-line metrics like new customer acquisition and sales. There is an increased appetite for provable outcomes and less patience than ever for the planning, creative and strategic thinking that leads to those outcomes.
On both these points, agencies really do still offer value. In fact, the best agencies are early adopters and first movers when it comes to new platforms and tools. They secure a front-row seat to the ever-complex marketing landscape which affords a level of access and institutional knowledge that is often a challenge for brands to secure on their own. Their expertise is more important than ever as the landscape becomes more complex. Finally, brands are right in expecting their agency to hit performance metrics but not at the expense of building for the future.
But for agencies to maintain ringside access to new technology, tools and talent requires investment. And these investments are critical for agencies to equip themselves to modernize and deliver board-worthy results in the face of signal loss, the proliferation of platforms and the rise of privacy legislation.
Media today is fragmenting on multiple levels. Walled gardens have emerged around the most valuable inventory but those gardens are changing all the time; witness Twitter, TikTok and Snap alone in the last few weeks. Cookies and mobile ad ids are giving way to a diverse range of data and contextual solutions for targeting. We’re seeing the death of multi-touch attribution, the rise of media mix modeling and the displacement of Nielsen as the source of truth within connected TV. Fragmentation in all these areas portends increased complexity, friction and the need for more interoperability and cooperation. It’s a complicated landscape.
And that’s where agencies can reestablish their value.
Yes, platforms can tell you volumes about your audience but which platforms should your brand be on when and what should your strategy be over time? You need a full omnichannel picture to build a brand and that’s where agencies have expertise. We need to understand the brave new,fragmented world of media and be the guides for brands.
This is where agencies still have enormous value. The ecosystem has become so much more complex, fragmented and powerful than ever before. Brands by themselves have blindspots and keeping up with the pace of change in media, marketing and ad tech from the inside out is nearly impossible. By understanding the true state of media from the outside in, we become trusted partners to our clients. We help them navigate the world of paywalls, seller-defined audiences, omnichannel optimization and retail media incentives, to name just a few of the recent distribution challenges. And in the process, we become essential.
As agency professionals, we need to rebalance our relationships with brands and the current economic climate is the perfect catalyst for making that happen. We have a vested interest in helping our clients and partners navigate this newfound complexity. Fragmentation makes data, technology and services even more essential than ever before. And when everything is broken into pieces that don’t talk to each other, the connective tissue—like a good agency partner—becomes indispensable.