5 challenges facing agency leaders as 2025 looms

The pace of change in the ad industry has accelerated so much in the past few years it’s giving everyone whiplash. And there are no signs of it slowing down anytime soon. Agency leaders are particularly under pressure to keep up with disruption stemming from new technologies such as generative AI, an evolving creator economy and shifting means to reach consumers, such as retail media. They are also grappling with how to service clients as marketers ask them to get into the weeds of their businesses and solve more complex problems. And they’re balancing those demands with trying to retain talent and maintain their own culture. Check out the latest Ad Age events and award programs All these issues surfaced during a conversation with Ad Age organized by the 4A’s and held during Advertising Week to discuss agency leaders’ biggest challenges and growth opportunities heading into 2025. The conversation included Joe Baratelli, RPA chief creative officer and executive VP; Vicki Bolton, Burrell Communications Group senior VP managing director; Stacy DeRiso, Initiative U.S. CEO; Britta Dougherty, The Martin Agency partner and global executive VP; John Elder, Supernatural co-founder and CEO; George Sargent, Arnold Worldwide CEO; and Caroline Winterton, adam&eveDDB CEO. “We’re at the fastest pace of transformation in many ways,” DeRiso said, noting that it’s caused her to spend more time “thinking about the right way we’re transforming how we work, transforming how we grow, et cetera, et cetera; and making sure we’re ready for it.” Amid this rapid change, here are five areas that are top of mind for these agency CEOs and leaders heading into 2025. Maintaining culture The market is crowded. It’s become harder to stand out when there is a continuous influx of new independent agencies. As such, most of the agency leaders at the event expressed concern over how to maintain an agency culture that sets a shop apart and attracts both clients and talent. Sargent said that’s been a big focus for Arnold as it scales (in the last year, the Havas-owned agency has added 100 employees)—figuring out how to maintain culture while allowing it to evolve with the agency. Burrell has had to consider how to maintain culture through its recent ownership change. Bolton said Burrell wasn’t benefiting enough from its previous parent, French holding company Publicis Groupe. So, in October 2023, a consortium led by Black-owned private equity firm FVLCRUM Partners and Channing Johnson, a Los Angeles attorney at Loeb & Loeb, stepped in to buy a majority stake in Burrell including the 49% stake Publicis had held in the agency since 1999. The relationship with Publicis had become “more financial-driven than anything,” Bolton said. “So we didn’t really benefit from the relationship. There was always the desire to kind of break free and go our separate ways.” Under its new owner, Burrell is “still figuring out” how to maintain and evolve its culture in a world where talent is partly remote. “I don’t think we have the answer yet,” she said, noting the continuous challenges around fostering collaboration in a world where not everyone is in the office together all the time. DeRiso said culture is the reason Initiative is “pretty adamant about being in the office. The collaboration, the connection, all of those things happen in unspoken and tangible ways.” The IPG agency has a three-day-a-week in-office policy that it frames as “returning to being together,” and it has intentional days where everyone is in the office, she said. Retaining talent All of the agency leaders at the event expressed some concern over retaining employees in an industry where turnover is high. Winterton said the “pace of change is crushing our talent,” which makes it hard from a retainment perspective. For RPA, being independent can make it tougher to hold on to talent, Baratelli said. “We don’t have a big network to push things off on. We have to not overload the people, but also give them the tools they need to do things.” And when clients are demanding more for less, placing constraints on profits and margins, Baratelli said RPA’s “biggest challenge is trying to keep our costs down for our clients” while looking out for its employees. Recent news: How agencies can remain independent The Martin Agency’s Dougherty said her IPG shop has had to prioritize finding “moments of joy” for its employees. “There are so many pressures on our client side and our side, and there is value in trying to find those moments where we all feel that together,” she said. Reaching diverse audiences The 44% of what is considered the U.S. multicultural population this year is projected to continue to grow, while the non-Hispanic white population will continue to shrink, according to Multicultural Marketing Resources. That’s why it’s critical for brands to be placing more investment in reaching diverse audiences if they want to grow their customer bases, Bolton said. She said she’s finding marketers still don’t fully understand how to do that. “We’ve been doing this for 52 years, and there still seems to be a lack of understanding of the value of multicultural,” Bolton said. “Multicultural is general market. Creativity is sparked by Black culture. We can’t deny the influence and the power that these consumers have; they have huge spending power.” Her focus in 2025 will be continuing to educate marketers on the value of reaching diverse consumers. “It’s over a billion dollars in value that African Americans have to spend, and they are loyal to brands that they still support them and are involved in their community,” she said. Dougherty said that from where she sits at The Martin Agency, clients are “focusing deeper growth strategies” on “bigger pools” of people and likened this to a shift in multicultural marketing—there is a greater push to consider all consumers as the general market, versus separating out a multicultural segment. Whether the term multicultural marketing should be retired is still up for debate. From a media buying perspective, DeRiso said Initiative’s clients have been focused on reaching a more diverse set of consumers through a “total audience” approach. Also read: NAACP calls out racial justice supporters who went silent Agency Review Tracker Stay up to date with the latest account reviews Click here New business woes As M.T. Fletcher wrote an Ad Age piece this year, new business pitches are broken—they’ve only continued to get more expensive and dragged out. This continues to be a challenge for agencies heading into 2025. Winterton said the pitch process has become so “prolonged.” Adam&eveDDB is in a pitch that was supposed to be done in six months—which have now elapsed—and there is not even feedback on what the outcome might be, she said.More news: Why agency rosters on the rise Martin’s Dougherty said it feels like marketers are not providing enough constructive criticism and feedback throughout the process. “It feels like the feedback you get from the marketing team isn’t reflective of whatever decision is made,” she said, noting how much more “complicated” relationships have become. “Building relationships with clients and having some continuity there” is what RPA is “trying to do,” Baratelli said. “If you have that relationship, and you’re paid fairly, it should all work out.” Using generative AI Navigating how to use generative AI amid murky legal risks and restrictions continues to be top of mind for agency leaders. Advertisers are only at “the very tip of the iceberg of what AI can do,” Elder said. Several of the executives said they mostly currently use AI to decipher data. Agencies must consider all of the tensions that surround using generative AI, including the fear some employees have that it will eventually replace them and that while some clients embrace its use, others ban their vendors, including agencies, from using it. More about AI: How influencers are promoting AI platforms On the client side, Winterton said marketers are more concerned with how agencies are using AI, and that they’re disclosing it. “We do a lot of work in health care, and one of the big issues when you start working with a hospital network” is a concern over exposing patient data, Elder said. Supernatural AI has gotten around that by using lookalike models, he said, “and that so far has worked.” On the talent front, generative AI should be viewed as a tool to make advertising jobs easier, not eliminate certain roles, Elder said. “Humans have to create the idea. I don't think in our lifetime, generative AI is going to come up with the creative idea, because computers are pattern recognition machines. They’re not good at doing things that have never been done before. So you still need that human creativity to break the mold,” he said. AI is not going to take anyone’s job, but people could lose their jobs if they don’t learn how to use it, DeRiso said. “It does the joyless work … so we’re using it; we’re trying it.” A-List & Creativity Awards Enter for a chance to be recognized as the best in advertising Submit your entry here

5 challenges facing agency leaders as 2025 looms

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