Our friends at RSW, the outsourced lead generation and business development partner for marketing services firms, have published their annual New Year Outlook Report. They were kind enough to share its findings with us. Here are some thoughts on trends and predictions based on this survey of marketers and advertising agencies.
Focus Still on Data and Tech Stack
Marketers seem to still be focused on cost, data and marketing resources—on short-term tools and ROI, as opposed to long-term investment in brand building. Even as they emphasize data and efficiency, they cite the need for their agency partners to have a “better understanding of their brand.” With so many agencies believing they are more brand-focused than their bottom-line obsessed clients, we’re not sure agencies and clients define “brand” in the same way.
Agencies and clients seem to have reached a point where they simply don’t speak the same language anymore. Marketers persist in believing data is the answer to marketing success, even as major marketers have begun to discredit a short-term, digital focus and its damage to brand strength. (Watch for more on “short-termism” in our next issue of Second Wind Magazine.)
In addition, marketers continue to cut marketing investment. This makes it ever more difficult for agencies to deliver on clients’ often unreasonable ROI expectations. Agencies are boosting their own investment in data analytics to try to catch up, but see reduced profits as the ultimate outcome of the present agency-client disconnect. Given that marketers report business investment is likely to be lower than at any time in the past five years, agencies may need to adjust their expectations even lower.
The end result is one thing both marketers and agencies agree on—agencies must demonstrate their value to clients. Clients demand it as justification for what they are willing to spend, and agencies need to prove value to increase client trust and willingness to be advised by the agency. How the agency solves problems and develops strategies will become ever more important. But clients continue to seek data analytics and tech-stack understanding, never a strong suit for agencies whose focus has been (and should be) on how to motivate people to buy.
Even as agencies deplore clients’ obsession with personalization and efficiency over brand building or strong creative messaging, agencies acknowledge that providing data and analytics services will be highly important in the coming year.
In-Housing Has Plateaued
On the plus side for agencies, marketers are again consolidating their marketing partners, with 70% of marketers reverting to using two or fewer agencies to support their business needs. Fewer marketers say they plan to pull more marketing activities in-house, and agencies concur that the in-housing trend seems to have plateaued.
While niche competencies remain a good way to build reputation and attract new business prospects—69% of agencies say it’s going to be more important to own a unique positioning moving forward—agencies must be capable of delivering what clients need. This means agencies should build partner lists so they can offer key capabilities on demand, even where those capabilities are not embedded in the agency’s services. Having strategic partners also will help agencies keep overhead low and make it possible to flex as the economy and marketer investment shifts.
Agencies Are Refocusing on Ideas and Value
Eighty percent of agencies say bringing new ideas to their clients has grown in importance as compared to just a year ago, with 71% saying they must come to first meetings with insights about a prospect’s industry or company. A strong 78% of agencies rate active pursuit of new business as of primary importance, and 69% rate owning a unique positioning as critical. A surprising 60% say they need to push out value-added thought leadership content—something we have seen fewer agencies doing over time. If thought leadership is a goal for your agency, make sure you build it around your core competencies to gain the most benefit.
The challenge for agencies is whether to completely abandon their creative heritage in favor of data management/analytics, and short-term strategies, or to try to offer the latter while also pushing hard to commit to creative strategies built on research and insights. Data is great for seeing where you were, but can mislead you in planning for new directions and opportunities. Agencies must walk the tightrope of accepting clients’ focus on hard data and science, and balance that with engaging creative and the “art” of persuading people to buy.
You can download a copy of the RSW 2020 New Year Outlook Report at RSW’s website.