To say that 2020 is a year defined by challenges that many of us never saw coming is a fair statement. There is no real comparison to the events of these past few months.
As a result, the advertising industry has been in hot water. Agencies find themselves grappling with a stark reality: Clients aren’t spending in media like they used to.
According to a recent survey from the Interactive Advertising Bureau, nearly a quarter of media buyers, planners and brands will not begin reinvesting in media until the end of the second quarter, and even then the levels of investment, especially when it comes to traditional media budgets, are still in question. Around the globe, ad spend is falling in crucial markets, including the United States, which is down an anticipated 10 percent year-over-year in the first half of 2020, and in China, down an expected 8 percent YoY, according to projections by eMarketer and Accenture.
Of course it’s not all doom and gloom; in fact, over the last week data shared by Advertiser Perceptions signals a clear rebound on the horizon. From a longer-term win perspective, many agencies already had the groundwork in place to help clients embrace the online opportunity and are now putting themselves on an even faster track to evolve with the acceleration happening in digital.
But what about those just now reacting to this shift—to this challenge—that we did see coming? Worse, what about the agencies that are still trading predominantly on traditional media buying through a cut of ad spend alone?
The threat of the future has been upon us for some time. If it’s taken these trying circumstances and jarring cutbacks in media spend to recognize the flaws of this traditional model, it may be too late for an agency to save its business.
External forces are undoubtedly a factor in the undoing of the traditional media agency model, but agencies have also increasingly found themselves at the mercy of Google, Facebook and the other all-important media owners. This we’ve known. Automation is real, and it’s been coming for the industry. In the future, there won’t be a choice of automated campaigns or not, meaning an agency can no longer take credit for doing the buying, the optimization or even the planning in some scenarios. This has, of course, resulted in more conversations around moving traditional agency-side functions in-house or turning to flexible resourcing that remote or distributed teams offer.
Where, then, do media agencies contribute value? On this journey, it would be wise to remember Theodore Levitt’s question, “What business are we really in?” Beyond their own businesses, agencies have a responsibility to clients—to the brands navigating the world’s constantly changing realities and the companies figuring out how to contribute to people’s experiences in positive, productive ways. When the focus is on business and brand growth, there’s far more opportunity and more skin in the game.
If agencies’ main activity is no longer to just buy media, then their focus must be on strategic guidance based on their wealth of collective experience and broad perspective spanning industries, markets and platforms—part of what has always made agencies more valuable than any in-house or consultative alternative. So it makes sense that many have made a move in this direction, with a marked increase in “strategy” job titles and efforts to repackage offerings into consultative services, though the teams serving clients are still predominantly in media buying roles. But this is just a cosmetic exercise that isn’t fooling savvy clients.
Further along, some agencies are transitioning to having a primary focus on media while also working on a full-time equivalent, or FTE, basis, where a client is open and eager to put their time against other areas—for instance, applying traditional media buying activity such as forecasting to a variety of other demand forecasting efforts across a business. This is indeed forward-thinking, but it’s really only the middle ground to where agencies could and need to be.
The future is set for agencies who truly commit to a new type of service model and genuine consultative services that support clients in navigating through the complex scenarios they face today.Those who will succeed will reach far beyond the areas they currently work in, applying their experience and expertise to broader areas where insights once delivered to influence marketing decisions can also be used to guide a business’ strategies around staffing, supply chain or company logistics.
This wider focus on skill sets across strategy, technology and analysis, now, will build the foundation for an agency’s future talent structure. Whatever happens to media buying in the future, these roles won’t be dictated by further automation of the major platforms. In fact, they’ll be elevated by them, because jobs can be done faster and smarter while saving the real brainpower for solving problems and challenging clients with fresh thinking.
There’s still a crucial place for agencies to truly serve the modern brands of the future, but this place won’t be occupied by media planners beholden to any one digital ad platform. Instead, strategic and statistical thinkers and teams need to be built with the goal of nurturing long-standing partnerships with clients, where there is fluidity with services and resources in order to impact brands’ businesses as a whole where and when they need it most.
This might render agencies of the future completely unrecognizable. But would this be such a bad thing?