Marketers and agencies are miles apart: A potential shift in the sphere of influence?

Agencies and marketers find common ground—and challenges—in MarTech

As in many industries, Martech seems to be moving faster than marketers’ ability to stay on top of the advancements. In fact, many comms pros are just starting to figure it all out—or feel they’re being altogether left behind.

In its first-ever Marketing Technology Survey Report, marketing-focused lead generation and biz-dev firm RSW/US confirms these challenges—but also reveals Martech’s great opportunities.

RSW/US President Mark Sneider attended this year’s MarTech West conference in San Jose and was impressed with the energy, new ideas, and new platforms that permeated the conference.

He and his team saw the explosion in the space, and also heard agency clients and marketing prospects grappling with it as they tried to stay ahead.

Case in point: Chiefmartech’s famous Technology Landscape Supergraphic, which in 2011 had 150 Marketing Technology firms, and in 2019 now numbers 7,040.

In previous years, RSW released its Agency New Business Tools report, surveying agencies, PR firms and marketing services firms on the tools and platforms they found most useful to their new business efforts.

While well-received, the team at RSW continued to see a lack of meaningful innovation and progress in the tools available—i.e., more of the same.

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16 Agency Business Development Tools You Need to Thrive in 2019

16 Business Development Tools You Need to Thrive in 2019

And as Mark Kelly points out on Smart Insights, the ultra-competitive nature of the modern agency landscape means that you can’t ignore agency new business development tools.

When you’re competing against not just your local agencies but shops sitting halfway across the world (who can undercut you on price), you have to be proactive in your search for new business.

Which is why all but 14% of agencies say that new business is a “vital” area of focus for them.

Like all businesses, agencies need a steady stream of clients to keep growing.

Yet, “business development” is often considered a dirty word, especially among the more creatively-inclined shops.

There is a perception that if you keep doing excellent work, the work will come your way.

Then there is the issue of sales cycles. Agencies rarely have the organizational setup for a traditional B2B sales process. They’re too happy to chase down easy-to-get leads instead of waiting for those fat contracts that take 6-12 months to close. The former takes a query on your site; the latter requires extensive, consistent business development.

It doesn’t help that “creativity” is tough to sell, especially if your business development team doesn’t share a creative background.

To make new business easier, you need agency business development tools.

There has been a steady rise in the number of agencies using such tools.

For instance, an RSW/US survey found that the percentage of agency execs using list building software increased from 45% in 2015 to 69% in 2018.

 

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Agencies’ New Business Worries Spike

Agencies’ New Business Worries Spike

More than half (52%) of both marketers and marketing agencies are expecting to see marketing spend increase somewhat or significantly in 2019.

But for marketers, this percentage is lower than last year’s 60%, according to recent survey data [download page] from RSW/US.

It may be due to this slight decrease in marketers’ confidence regarding spending – among other factors – that agencies increasingly believe that winning new business will become more difficult.

More than half (56%) of the 115 US and Canadian agencies executive surveyed said they believe that generating new business will be either somewhat or a lot harder in 2019 than it was in 2018.

This is the lowest confidence in winning new business agencies this decade (looking at bi-annual reports).

With the ANA reporting that the number of brands with in-house agencies has doubled in the past decade, it’s not difficult to see why winning new business is more challenging than it used to be.

Marketers Are Consolidating Agencies

One reason winning new business is even more difficult for agencies is a trend among those marketers who rely on agencies to increasingly consolidate their work with few partners, or at least not hire more agencies.

In this latest survey conducted in 2018, half (51%) of marketers surveyed who use agencies on a regular basis said they only use one or two agencies to support their business needs.

Compared to years past (2015 and 2016: 43% and 2017 45%) this indicates growing use of fewer agencies.

Moreover, more than one-quarter (26%) of marketers report using fewer agencies in the past year, a considerable jump from the 2017 survey, in which that was the case for just 15%.

Consolidation is also happening at pace on the agency side, causing concern that business is moving to a smaller number of players, many of whom have recently started to muscle in on traditional ad agency territory.

In recent years, large professional service firms including Accenture and Deloitte have made a large number of acquisitions – a fact that caused WPP to answer the question “Are consultancies eating our lunch?” in an investor presentation [PDF] last year.

Increased Importance Placed On Data and Analytics

Despite apparent inclinations towards consolidation and in-housing, data from the Society of Digital Agencies (SoDA) and Forrester reported growth in both profits and revenue for agencies in 2018 and forecasted further growth in 2019.

Customer insights and analytics is predicted to be one of the top areas for growth this year.

The importance of agency data and analytics capabilities is echoed by the marketers surveyed by RSW.

Nearly 9 in 10 marketers consider these capabilities important or highly important for their agencies.

Most encouraging is that agencies are in agreement about data and analytics capabilities.

Seven in 10 (70%) of participating agencies said it was highly important that they provide data and analytics capabilities to their clients in 2019.

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Nearly 70% of marketers to use Instagram in 2018

Nearly 70% of marketers to use Instagram in 2018

Dive Brief:

  • Just under 70% of U.S. marketers will use Instagram for marketing purposes in 2018, and just over 28% will use Snapchat, according to a new eMarketer report.
  • The projected Snapchat figure is up from 25% in 2017, and is expected to help the platform reap more than $660 million in U.S. ad revenues, an 18.7%  revenue increase from 2017. Meanwhile, Instagram has grown by over 6% and is expected to nearly double its U.S. ad revenues this year, to $6.12 billion.
  • Meanwhile, LinkedIn ranks as the top social media platform used by U.S. ad agencies for marketing purposes, as it’s used by 89% of 300 marketing and advertising agency executives surveyed earlier this year for the RSW/US-Mirren New Business Tools Report 2018. Facebook and Twitter will be used by 78% and 75%, respectively.

 

Dive Insight:

While the results indicate that there’s not much love for Snapchat among marketers, there’s more to why so many fewer marketers are embracing the platform compared to Instagram. As eMarketer points out in its report, Instagram provides a lot of support for marketers to use its platform organically by sharing promotional posts and videos with their followers, without necessarily having to buy advertising.

Snapchat, though a similar platform to Instagram in many ways, is more of a paid advertising platform that doesn’t provide as much organic support to businesses wanting to use the platform for marketing purposes. Despite the difference, neither platform appears to be hurting for advertising revenue.

Of course, it also helps Instagram that it’s owned by Facebook, which no doubt makes the most of the affiliation to help both platforms achieve better positioning and leverage with marketers and advertisers. In fact, eMarketer said that when marketers buy ads on Facebook, they “can simply check a box to add Instagram feed ads or Stories ads as additional placements.”

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How Many Marketers Use Snapchat and Instagram in the US?

Are Marketers Using Snapchat and Instagram in Different Ways?

While both may appear similar to users, marketers take very different approaches when they use these platforms.

One reason for the large difference in the percentage of marketers using both is that Snapchat is primarily a paid advertising platform, while Instagram encourages marketers to use its platform organically, without necessarily having to buy advertising.

“Many marketers create accounts on Instagram to share posts and videos with followers. Instagram Stories are also very popular,” said eMarketer principal analyst Debra Aho Williamson.

Snapchat doesn’t offer much support for marketers to use the platform organically, so their usage typically includes paid advertising.

Another factor driving strong marketer usage of Instagram is its close ties with Facebook, particularly when it comes to advertising.

When making an ad buy on Facebook, marketers can simply check a box to add Instagram feed ads or Stories ads as additional placements.

In a March 2018 survey of 300 US senior agency executives by RSW/US and Mirren, 66% of those polled said they use Instagram, and 36% said they use Snapchat.

 

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The Battle For The Best Ideas Starts With Rethinking The Creative Process

Degumming the creative process

It shouldn’t matter whether creative talent works at an agency or in-house.

Brands today need creative partners that can let go of old processes and values and frankly, many agencies haven’t changed quickly enough to meet that need. (Indeed, when prompted to identify troubling industry trends, a 2017 survey by RSW/US found that brand marketers believe legacy agencies are still stuck on “old media.”) Many high-level creatives only feel free to exercise their full potential in-house because those positions empower them to abandon the stodgy agency life of peer reviews.

To that end, we must rethink how we structure our creative teams. Often, a concept that begins as brilliant ends up diluted by too many inputs and approval barriers. Yes, eliminating approval processes means some ideas will flop harder than usual, but it also frees the greatest ideas to soar unhindered.

When ideas get lost in drawn-out processes, so does the incentive for creativity.

A new creative structure

In my experience, nonlinear teams composed of members from multiple disciplines are better able to meet the needs of today’s brands. In diverse teams, low-level marketers don’t see their ideas twisted as they rise upward: Anyone can propose a brilliant idea and see it through to completion.

In-house teams and agencies alike struggle to operate outside traditional organizational structures, yet break down those structures we must. It’s not about eliminating processes altogether; it’s about prioritizing processes that yield the best results, even when they fly in the face of traditional marketing wisdom.

So form multidisciplinary teams—of creatives and non-creatives—and give them more freedom than ever. Outside the regimented structure that agencies and in-house teams traditionally impose, these teams can blend brutal simplicity and radical creativity to discover, not force, the brand truths people care about.

The Battle For The Best Ideas Starts With Rethinking The Creative Process

With Procter & Gamble, Unilever and United Airlines joining the growing list of companies leaving agencies to fold marketing functions in-house, voices all across the agency world have wondered aloud: What gives?

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3 Ways to Steer the Right Creative Talent Toward Your Business

Showcase what your company has to offer when it comes to a creative career, and build a culture that values original employee contributions. Otherwise, your in-house creative team, and creative talent will be a short-lived experiment.

 

The landscape of opportunity for creatives and creative talent is growing. Advertising agencies are no longer the only employment option for those looking for full-time work, and career prospects have never been brighter.

In the digital, direct-to-consumer era when brands differentiate themselves by crafting unique products and identities, more and more companies are realizing that they need a creative edge.

The best way to hone this edge? Assembling in-house teams composed of copywriters, product designers, web developers, graphic designers, content producers and more.

In fact, a 2017 survey conducted by RSW/US revealed that traditional agencies are seeing fewer client referrals than ever before, which Adweek attributes to an increase in brands forming their own in-house teams.

For highly qualified creatives, this transition in agency structure provides an abundance of opportunities.

Our company has a unique perspective on the market when it comes to hiring talented creative professionals.

When we launched in 2012 as an online platform linking freelancers and full-time creative talent to companies looking for their services, about 80 percent of our clients were advertising agencies.

Today, that number is closer to 40 percent, with startups and more established brands moving into the majority position.

With the change in industry trends in mind, it’s important to remember that creatives are similar to many other professionals working at a company, which means they’ll be attracted to certain perks and the promise of a clear career trajectory.

However, we’ve dug deeper to produce useful insights into the process of hiring creative talent that companies across various industries should understand and utilize.

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Agencies see change ahead as clients take more marketing in-house

Agencies see change ahead as clients take more marketing in-house

 

But just like with the rise of digital, the agency business isn’t going away anytime soon. Instead, a trend toward client control will end up benefiting nimbler agencies over massive ones and project work over retainers. As always, adaptability will ensure survival.

“We have to look at it as a positive and adjust,” said one agency executive.

One winner: agencies that have a structure to accommodate project-based work.

Agencies are already seeing an uptick in requests around shorter, specialized projects.

According to a survey released in January from development firm RSW/US,

35 percent of 115 agencies surveyed said a majority of their assignments are now project-based, while 16 percent said over 80 percent of their work is now project-based.

Unlike longer campaigns, project-based work can be done more quickly, often requires fewer resources and has the potential to bring in just as much revenue as longer-term relationships, according to agencies.

One exec at a large agency said although it has lost some agency-of-record opportunities because clients brought resources in-house, it has been hired for more project-based work, and revenue has not slipped due to the shift. In fact, the agency is now making half of its revenue from project-based work and the other half from traditional long-term relationships, whereas a few years ago, the revenue was set at 20 percent coming from one-off projects and 80 percent coming from AOR relationships. Because of the rise in these assignments, the agency has made internal adjustments like orchestrating smaller teams that work one-on-one with clients. Over time, this could save an agency money, although the exec admits that like every other agency, it doesn’t have it “all figured out yet.”

“We have looked at a more dedicated model where we have fewer people at higher experience levels attacking these consultancy-type projects,” said this exec. “We have teams that are smaller and can get these jobs done in a more time-condensed period.” What might’ve taken the agency three or four months to finish before is now confined to two- or three-day sessions with the client and all agency partners, the exec said.

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RSW/US’s New Year Outlook survey found that marketers are increasingly taking work in-house and seeking out specialty shops.

RSW/US’s New Year Outlook survey found that marketers are increasingly taking work in-house and seeking out specialty shops.

 

-BSSP launched its first campaign for Italian frozen food brand Michael Angelo’s, focused on brand inspiration Nonna Foti (video above). “The ultimate high standard of goodness and taste is the way Grandma made it; by leaving all the compromises out,” explained BSSP creative director Paul Roberts. “For Michael Angelo’s Nonna Foti is an essential part of the brand story and we saw an opportunity to leverage that authentic voice in introducing the brand to a national audience.”

-Omnicom reached a settlement in a discrimination suit filed by a former DDB employee.

-iCrossing hired Jeff Ratner from Publicis’ Blue 449 as chief media officer.

-RSW/US’s New Year Outlook survey found that marketers are increasingly taking work in-house and seeking out specialty shops.

-Nike’s “reverse auction” review of its agency roster is not a good sign for agencies.

-M&C Saatchi hired Raquel Chicourel as chief strategy officer.

-RSA Films added Zach Merck to its directorial roster. 

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Referrals are in decline, and in-house agencies abound

 

If you’re not feeling it yet, you will.

The changing agency and marketer landscape has significantly impacted the way they find and win new business.

No longer can agencies exclusively rely on referrals and networking to drive the success of their firm.

Once a vital source of new business, referrals from marketers as a source of agency new business have dropped significantly since my firm, RSW/US, first started measuring their importance as a new business resource in 2007.

In 2007, 94 percent of marketing agencies we surveyed selected “referrals” as one of their three primary sources of new business for the firm.

Back in the day, agencies worked their contacts, and there was less of a need to actively and proactively search for new business.

Agency principals would network, the phone would ring with a new referral, and the business would grow.

Today there are more agencies going after fewer agency of record (AOR) opportunities. There are more big networked agencies pursuing opportunities they would have never considered a decade ago. There are fewer marketers, because big conglomerates are consolidating companies and cutting staff.

In 2011, the number of agencies listing referrals as a primary business source fell to 71 percent.

And in our most recent Marketer-Agency Survey, the importance of this source dropped to an all-time low of 64 percent.

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