Brands cut agency rosters

9 October 2012
NEW YORK: A majority of US brand owners have trimmed their advertising agency rosters in the last three years, and many plan to make future reductions in this area, new figures show.

Avidan Strategies, the consultancy, polled 1,900 client-side executives responsible for marketing, media and procurement, and found 51% of featured firms had cut the number of agencies they employed in this period.

Moreover, an additional 44% of respondents believed that their existing portfolio of partners in this field was still too large, and thus intended to implement further consolidation going forward.

Some 69% of this group expected to cut the amount of digital shops they worked with, while 48% anticipated following a parallel strategy with regard to creative agencies.

When asked to name the ways in which agencies must improve, 71% of brand managers cited accountability. Another 55% agreed a growing focus on this issue, especially at the CEO and board level, was the trend currently exerting the greatest influence on marketing.

"Corporate America is questioning the return on their advertising investment, and agencies continue to struggle to prove their value. There is an impatience for efficiency and effectiveness, and there are higher expectations of accountability," Avi Dan, the founder of Avidan Strategies, wrote in Forbes.

Elsewhere, most marketers wanted agencies to lead their various partners in integrating communications. However, 72% reported that results to date had been "inconsistent" and 24% took the view that agencies were "falling short".

Similarly, 46% of advertisers believed agencies were "struggling" to incorporate digital into existing business models, and 36% argued shops had made progress in buying digital assets but not in fully exploiting them.

For 78% of interviewees, business performance was the main trigger for reviews of agencies, with 63% pointing to changes in marketing leadership, and 59% to the quality of creative delivered.

The most important characteristics for agencies to possess were "creative ideas and strategy" on 90%, understanding their customers' business on 74%, and offering coordination and integration on 56%.

An extra 58% of the sample agreed agencies must be evaluated once a year, and 38% stated this should occur on a "semi-annual" basis. For 77% of the sample, clients and agencies should assess each other.

In terms of remuneration, 82% of the panel concurred that "fee-plus-performance" payments were the ideal. The same number thought they needed to provide better briefs, and 67% suggested they could do more to align in-house and agency teams.

Data sourced from Forbes; additional content by Warc staff
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