The media agency model has been under attack in recent years. Advertisers’ concerns over agency transparency and undeclared income has been a regular topic in the press. Privacy changes such as the infamous GDPR have muddied the waters over user targeting and consultancies, led by giants such as Accenture and Deloitte, have entered the market offering media planning and buying – areas that have long been the exclusive preserve of media agencies. At the same time, more and more clients have looked to take digital media buying in house, while media, data and technology continue to reshape the landscape. These dynamics certainly put pressure on the media agency but, far from dying out, agencies are adapting and a viable model for the future is becoming increasingly clear, as we shall see.
The large agency groups have had to adapt the most. For some time, they have relied upon their buying power to retain control of the media budgets of large brands. However, in more and more instances, buying power has limited (if any) benefit. This is already the case in digital channels and is forecast to apply across all channels in the coming year. The large agency groups have also been savagely undercutting each other to attract business and have, in many cases, used undisclosed income to fill in the gap. This behaviour will surely cost them market share until they can show more value to brands in places where they really do have an advantage such as global reach, access to data, full service capabilities and scale of relationships.
I would argue there has never been a better time to be an independent. As independents have never been able to rely on buying power or trading deals, they have focused on providing service and value to their clients. This needs to be the core focus of the agency of the future – and independents are the experts in this. Consultancies are trying hard to get some of the action here, and their higher pay rates (which have not been knocked down by endless pitching and procurement) attract some top talent, but it will be interesting to see if consultancies can sustain this or try to train up their own staff. This is where independent agencies have excelled, nurturing and growing talent at highly efficient rates and using that talent to provide value for brands.
The agency of the future will need to continue this expertise, but it will need to apply it in more areas. An independent agency’s core skill has always been in planning, buying, media strategy and creative. Digital marketing has increased the need for skills in specialist channels, ad technology and user privacy. Brands demand ever-more skills to meet the needs of an increasingly complex digital world: legal skills, AI and machine learning, advanced technology, project management and more. These skills add up to far more expertise than any brands (bar the largest) could ever hope to have in house and, even then, most will choose to bring in experts to some degree.
The successful independent agencies of the future will offer more of the services that brands value most. This is much more complicated than simply being able to buy things cheaply. The agencies of the future will need to offer essential skills and associated services; specialist agencies will package up a subset, large agency groups will look to become full service shops while consultancies will try to grow their services and may even become indistinguishable from media agencies.
The opportunity for independents has never been greater. The combination of expertise, flexibility, value-based pricing and the close relationships that owner-led independents have with their clients, becomes even more valuable in a rapidly evolving media landscape. By making the most of existingexpertise and enhancing these with the skills needed to meet future demands, the independent agency can look forward to a bright future.