Marketers expect agencies to know more about data, technology and social media but are they willing to pay for it?
In a new survey from RSW/US, top marketing executives were asked to identify the most troubling trend among agencies. Admittedly, their anecdotal responses were all over the map: lack of innovation, turnover, arrogance, complacency, organizational silos and more.
But one of the few common themes was in the overlapping areas of tech, data and social media. In short, many brand marketers believe agencies talk a big game but fail to deliver deep insights.
The complaint that creative-focused agencies downplay data isn't exactly new, but agency leaders say that marketers are becoming their own worst enemies by refusing to pay for the level of depth they claim to want.
Marketers increasingly are slashing the fees they pay agencies, agency leaders point out, thereby making it more difficult to invest in senior talent that could make them smarter. Furthermore, marketers are accused of being less patient and are becoming more furtive, making some agencies less inclined to spend ahead of revenue.
In addition, each camp accuses the other of chasing shiny objects—be it a hot agency, new communication channel or emerging technology. In sum, the survey captures a certain crankiness in the marketplace, even as the U.S. economy picks up and media spending rises, albeit modestly.
Such friction is "more pronounced now because in general nobody is really sure exactly how to work their way through this maze of change that's going on," said Mark Sneider, president of RSW/US, the Cincinnati-based marketing consultancy behind the survey.
"The tensions are a little heightened. Clearly, marketers are having to operate with less and deliver more," Sneider added. "So, I think they're getting pressured probably to some extent at equal levels. The agencies are then getting pressured by them."
From the perspective of agencies, however, they add value to brands and should be seen as an investment, not just another line item expense.
"If clients are making unreasonable demands, we need to stand our ground and get paid fairly for what our teams do," said Carter Murray, global CEO of FCB.
On a brighter note, the survey shows 51 percent of the marketers who participated in the survey plan to spend more on marketing this year, up from 50 percent a year ago and 38 percent two years ago. The group included the likes of Unilever, JVC, Choice Hotels, Kao, Costco, Post Foods and Kroger.
That said, some marketers are shifting dollars out of traditional media and into digital marketing, benefiting some shops at the expense of others. Also, big players like Kraft are tightening their agency rosters after years of expansion. Finally, the likes of Apple, Marriott and Red Bull are building in-house advertising groups, meaning that fewer dollars are flowing outside their companies.
So, the expected rise in spending represents a classic case of good news, bad news, with even the agencies that benefit from it feeling it less.
The consolidation trend in particular represents an opportunity for full-service shops that can provide most services under one roof, according to Sneider. Why? Because marketers are "feeling like they're losing a bit of control over" brand equity, given that "there's too much infighting in the sandbox among these specialty agencies and not enough communication across those agencies," Sneider said.
Figliulo&Partners CEO Mark Figliulo has seen such battles firsthand and agrees that marketers generally are looking to work with fewer, better agencies, with some telling him, "We don't need an army; we need a few, smart people."
Agencies, meanwhile, continue to hold out hope that they can grow their businesses instead of watching existing accounts splinter. Sixty-three percent of the agency leaders—from a survey pool that included shops like JWT, Mullen, Cramer-Krasselt, DDB, Young & Rubicam and Porter Novelli—expect new business opportunities to increase in 2015 compared to last year. Agencies represented in the survey included JWT, Mullen, Cramer-Krasselt, DDB, Young & Rubicam and Porter Novelli.