NEW YORK: Agencies must rapidly respond to the trend of disintermediation, and the "alert call" of brands setting up in-house shops, by creating more responsive and flexible models, a paper from Warc has argued.
Warc's new report, How to Manage Advertising Agencies, draws on insights from leading practitioners and academics, as well as the opinions of senior client-side executives.
"For the last decade, 'disintermediation' is the word that has continued to strike fear into the heart of advertising agencies," the paper said.
One driver behind this shift is the rising use of data as a guide to decision-making. More specifically, brands can now go directly to their media – and often retail – partners for the facts and figures on which insights are based.
Another, however, ties back to a debate that agencies largely started by separating the main components of the marketing process into silos – thus sending the message "that the individual parts were greater than the whole."
"For decades, advertising agencies have demonstrated how much value they can contribute to building and maintaining brand health. But new market conditions demand new business models," the report added.
"And unless (or until) agencies recognise their new roles in the communications value chain, disintermediation will be part of the discussion."
Several clients have made provisional steps forward in restructuring their approach to managing agencies. One involves building an overarching shop that combines the collective expertise of various major networks.
Team Detroit, a full-service agency within WPP Group – and bringing together networks like Ogilvy, JWT and Mindshare – is an instructive example. Ford, the automaker, is perhaps its best-known client.
"More common is the 'brand team' – less formal groups from disparate agencies brought together by the client," Warc's paper continued.
A more transformative strategy being pursued by some marketers has rested on developing in-house multi-disciplinary agencies.
Research last year from the Association of National Advertisers (ANA), the trade body, found that 58% of brand owners have an internal unit handling responsibilities that agencies traditionally managed, up from 24% in 2008.
"It's not quite disintermediation, but it's another step down that path – an organisational alert call to agencies to make their models more responsive to their clients' needs," Warc's paper said.
Data sourced from Warc