Widening Divide Between Agencies and Clients Could End Badly for Some Agencies
The Association of National Advertisers' recent brand and media conferences and last week's 4A's confab together serve as a good barometer of the overall mood of the industry. The ANA and 4A's were united in their calls for change as well as in their resolve on big challenges like ad blocking and traffic fraud.
However, what was more apparent this year is that the two trade groups and the constituencies they serve -- marketers and agencies -- have actually never been farther apart.
At the 4A's conference, agencies as a group appeared to be facing a crisis of identity as they contend with disintermediation and a shift in focus.
This was called out during a panel of visionaries. Group M's Rob Norman said that agencies have stressed "plumbing over poetry." Publicis' Rishad Tobaccowala agreed and said there's a lot of attention lately on "efficiency over effectiveness."
Meanwhile, brand marketers at the ANA events were resolute in their need for measurable brand growth and business outcomes. This was reiterated by ANA CEO Bob Liodice and other ANA members several times over the course of the association's two recent events.
This divide is dangerous territory for agencies if it is indeed systemic.
Agencies veering away from what marketers want could spur more of them to bring capabilities in house or simply look for other options. This comes just as choices proliferate. These now include management consultancies, tech companies, independent hybrid agencies and talent firms. All stress outcomes.
This shift in focus by agencies could also create an opportunity for platforms and publishers to step in.
Facebook and Google are already gobbling up consumer attention, ad budgets and top talent. It's conceivable they will take the next disintermediation step and cultivate in-house agencies.
A growing divide between agencies and marketers could also encourage more media owners to further assert themselves as end-to-end providers. This is slowly happening.
The New York Times' T-Brand Studio, for example, offers a formidable combination of creative content services and distribution. It has scaled to a sizable $60 million business, CEO Mark Thompson said at the 4A's event.
This could pick up as the media owners become more frustrated with agencies. The Washington Post's Jeff Burkett at the 4A's event expressed dissatisfaction that some agencies have put pressure on the Post to run intrusive formats.
To its credit, the agency world is certainly not waiting around. The 4A's is trying to help it move up the value chain. Change is slowly happening
Maurice Levy, CEO of Publicis, said his firm is no longer a holding company but a "connecting company" that increasingly fuses creativity and technology. He cited a new effort called Sapient Inside that aims to inculcate deeper technology capabilities across its agencies.
A similar effort at DDB called DDB Flex aims to cross-pollinate capabilities from the outside, including media partners, according to CEO Wendy Clark.
However, as a group, the agencies appeared angry at times. They continued to push hard on lightning-rod issues that could further alienate them with marketers and at the worst time.
One such issue is a rallying cry for an end to free spec work. This generated widespread applause at the 4A's event. However, it raised some eyebrows on Twitter from, among others, the ANA's Bill Duggan.
Clients have the right to ask for spec work. Agencies have the right to say no. #4AsTransformation— Bill Duggan (@BillDuggan) March 22, 2016
A public departure away from focusing on clients, their customers and their business challenges is dicey. Not only will it inhibit agencies' ability to get meaningful work done and justify their value to CMOs, but it could impact their efforts to recruit and retain the best talent too.
Much of the agency world at the 4A's appeared stuck in paralysis by analysis. Meanwhile, leading marketers were lucid in their need to connect with ever-changing digital consumers.
These two groups should be very closely aligned. They need each other.
However, with the divide widening, it will open the field for all kinds of new players to step in and capitalize.
That might solve the agency world's identity crisis but not in the way the 4A's hopes -- this unless its members can get aligned with the ANA and focus on marketers.