How agencies are adapting to marketers’ increased focus on the creator economy

In the scheme of agency holding company acquisitions, Stagwell’s $15 million deal to acquire Movers+Shakers could seem like small potatoes, especially coming three days after Omnicom Group laid out $835 million to buy digital commerce specialist Flywheel. Despite its comparatively low price tag, the Stagwell deal is significant, and points to a growing trend in the agency world—the increasingly high profile of social media and influencer marketing. Though agencies have long embraced social, large creative shops have often viewed it as a low-profit ancillary service rather than the thriving practice it’s now becoming. Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here Agencies are waking up to social and influencer marketing’s potential for several reasons. It pays less, but it’s also less costly to produce. Clients, who have been keeping a tight rein on other media, are doubling or tripling down on social spending in pursuit of Gen Z audiences. This has resulted in a plethora of social-only RFPs during a tough new business environment littered with project work and fewer full-service accounts up for grabs. And winning a social account for a major marketer can be a golden ticket, opening the door for the agency to snag more of its business. “Social content is one of the only spots in the advertising ecosystem where we see demand outstrip supply,” said Matt Ryan, CEO of Roth Ryan Hayes. “There are more advertisers, of every size and category, looking for support in social in part to the very nature of always on.” Also read: Connelly Partners to launch West Coast office Demand is rising Just in the past year, brands including Ford Motor Co.,Tinder, BMW Motorrad, TGI Fridays, Dave & Buster’s, Marriott, Rolls-Royce and the Westminster Kennel Club have appointed social agencies of record. This summer, Austin, Texas-based GSD&M was named Stanley’s first TikTok agency of record, and Roc Skincare chose Gravity Road as its TikTok AOR. And as the discipline grows, so do budgets: Greg Paull, principal of consultancy R3, said his consultancy is currently helping a consumer packaged goods client that is spending eight-digit figures on influencer and social work. “RFPs for social-only assignments in the past were typically coming from smaller, younger brands looking to use limited funds really wisely,” said Mona Munayyer Gonzalez, chief growth officer of Pereira O’Dell. “Now we're seeing larger legacy brands reaching out with social-focused assignments. It is also taking up a bigger spotlight in pitch asks.” Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here Jason Mitchell, founder and CEO of social media agency Movement Strategy, said he has seen a significant shift in the conversation around social media from marketers in the last six months. “For a long time it’s been a siloed thing,” said Mitchell, who founded his agency 15 years ago. “You have your brand creative and that’s focused around TV or whatever it is, and then there’s a social team and it’s like, ‘Okay, take this and translate it to social.’ More and more social is getting a bigger and bigger seat at the table.” “We have clients where we were doing their more traditional social media and now they’re coming to us and saying, Hey, can you do more of our brand-level work? And that’s fairly new,” he added. “Clients no longer need to be convinced that influencers can provide a real ROI,” said Munayyer Gonzalez. “They’re now much more interested in how an agency partner can help find authentic macro-micro influencers and build a collaborative dialogue with them.” James DeJulio, founder and CEO of content creation platform Tongal, said 81% of its projects this year required at least some video creative for social media—an increase from 59% just two years ago. TikTok projects made up 33% of all Tongal projects this year compared to none on the platform in 2021, he said. Recent news: 5 new TikTok trends that brands can follow Gen Z’s medium of choice In 2023, an estimated 4.9 billion people use social media globally, and that number is expected to climb to about 5.85 billion by 2027, according to a report from Forbes. The current creator economy is valued at $250 billion, according to Goldman Sachs, and the Interactive Advertising Bureau predicts accelerated growth over the next five years, roughly doubling the total addressable market to $480 billion. Social media marketing is also a direct line to Gen Z, a generation of consumers who are diverse, socially conscious and spend a lot of time online. According to a survey by Morning Consult, 38% of Gen Zers spend more than four hours a day across social apps. Amy Worley, chief connections officer at VML, said she has seen more clients move to social media as they focus on connecting with Gen Z. “[Gen Z] is not even watching TV for the most part, or if they are, they’re watching it all in streaming,” said Worley, who oversaw VML’s acquisition of influencer agency Obviously. “So having a TV commercial isn’t going to [reach] them.” Cost and risk Multiple advertising executives interviewed by Ad Age said marketers are viewing social as less risky of an expense compared to TV work, for example. “None of our clients are walking around with extra money right now, and at the same time, every consumer expects to have brands meet them on a uniquely personalized, authentic and a culturally attuned level,” said Cameron Crane, chief growth officer of Cashmere Agency. “There’s no reason an amazing social asset or campaign can’t level up to other media, but it’s very hard to go the other way.” While a typical social assignment can be worth 20% to 40% less than a creative engagement, it also typically costs about 20% to 50% less for an agency to pitch, according to Paull. A recent study by the ANA and 4A’s found that the average agency review costs a combined $1 million for the marketers and agencies involved. Many agency executives have cited this year’s pitch market as being particularly competitive, which can make social work an attractive way for agencies to win the attention of new clients. “We're just trying to find a way in with clients, because once you get a contract and once you get a scope of work—no matter what it is—then you can actually show them your true value,” said the chief growth officer of a large agency. “Social is in the spotlight more because it’s a nice and easy way for agencies to show their value without clients feeling like they have to make a huge shift in the agencies.” Big shops, big ideas One big agency that has been dialing up its social practice is Interpublic Group of Cos.’ Hill Holliday, which recently hired Adam Vohlidka, a former group creative director at Hero Collective, as its first executive VP of social creative and digital content to launch Social Force, a creative offering tailored to digital and social content for clients. Other top agencies report bringing influencers into client pitches, and others are using unconventional means to bring social talent to their teams. @mcdonalds woww lots of peoplee r tryingg the grimace shake ♬ original sound - McDonald’s Wieden+Kennedy’s Bodega, which helped capitalize on the Grimace Shake trend that grew on TikTok after McDonald’s released its Grimace Birthday Meal, has grown exponentially since it launched in 2020. Revenue has increased five-fold, and its team has grown from three or four to over 40 in three years. The agency credits some of its success to its recruiting tactics. “When we find super comedic voices online the Bodega management team is thinking that voice would be great for McDonald’s,” said John “JP” Petty III, the global executive creative director of Wieden+Kennedy Bodega. “We are now sliding into their DMs versus trying to track them down on LinkedIn or meet them at a career fair. When we see somebody make an amazing meme or video or something that … we’re trying to get them to be a part of the fold.” The comedians behind McDonald’s social posts (from 2022) Droga5 said it is “investing even more in deepening [its social] practice and capability and making sure we have the right thinkers and the right number of thinkers to be able to do that for all of our clients because it’s just now really core to every ask,” Dan Gonda, CEO of the Accenture Interactive agency said. Gonda declined to provide specifics. For 60 pancakin’ years, we’ve been IHOP. Now, we’re flippin’ our name to IHOb. Find out what it could b on 6.11.18. #IHOb pic.twitter.com/evSxKV3QmT— IHOP (@IHOP) June 4, 2018 “We’ve always really thought about how to orchestrate social as a part of campaigns and getting ideas into culture,” he added, referencing its IHOB work for IHOP, which began with a tweet. VaynerMedia’s clients are building their creative strategy from social media, said Chief Client Officer Nick Miaritis, who called social media “an insights machine.” “In social media, you can create advertising around what’s contextually relevant to an audience to find momentum to see if your idea actually has any power, and then continue to build off of it based on the inputs you get back from the consumer,” Miaritis said. Ad Age A-List & Creativity Awards Final deadline approaching for annual program Enter here More acquisitions to come Buying Movers+Shakers gave Stagwell an immediate entree into an agency discipline that isn’t easy to build, and it may well precede a flurry of other social and influencer agency acquisitions. “It makes sense why the holding companies want to snatch up the best [agencies], because it’s hard to create a really great social media agency, especially one for enterprise-level companies that can do organic work that really breaks through,” said Movement Strategy’s Mitchell, who added he gets weekly emails from larger agencies trying to acquire his shop. Steve Connelly, founder of Connelly Partners, which won Ad Age’s inaugural Small Agency Best Use of TikTok award, said larger agencies believe they can “snap their fingers” and become experts at any capability, but it’s not that easy. “A TikTok creative does not have the same skill sets in their DNA as an agency creative,” he said. “You have to learn it and vice versa. I don’t think you can just be a big agency with a creative department and say, ‘Hey guys, go do some TikTok things.’ That’s not how it works.” Whether through acquisition or beefing up offerings, social media is a marketing vertical that will remain important to clients, said Petty. “There’s no way around social,” he said. “You can’t avoid social media surfaces as we define them today. So it’s just smart for agencies and creative organizations to start prioritizing not just this work, but also this more dynamic way of thinking.”

How agencies are adapting to marketers’ increased focus on the creator economy

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