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.View Article