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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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