What Agencies Need to Know About the 4A's 2024: Look Ahead Report

The annual 4A’s Look Ahead report outlines the industry trends that will impact agencies the most throughout the next year. The latest version of the report, released today, homes in on the biggest threats facing agencies right now. In 2024, according to the report, agencies must make sense of complex and still-changing data privacy legislation; they’ll experience similar challenges when it comes to ESG reporting, given new state laws and pending changes to federal guidance; and, at the same time, agencies will grapple with AI integration, declining TV spend and succession planning. Pitch processes will likely undergo further revisions this year, a boon for agencies fed up with the old, expensive review model. Plus, the 4A’s expects agencies will explore alternate compensation models that veer away from emphasizing full-time-employees. 4A’s president and CEO Marla Kaplowitz spoke with Adweek about the report and what the trade group is focused on in 2024. More confusion over privacy laws Limited federal privacy legislation and state-by-state privacy laws will continue to evolve and become more complex, according to the report. The 4A's doesn't expect federal privacy legislation to make tremendous progress this year, leaving privacy decisions up to state governments. This creates confusion for advertisers who must keep track of, and abide by, privacy laws in any geography they serve media. Exclusive: Yahoo’s ID Testing Lets Advertisers Compare Campaigns Without Cookies "Not only are we going to continue to see data privacy state-by-state, but we also believe that from a federal regulatory standpoint, we see the FTC and Health and Human Services are taking steps to look at new rules around privacy," Kaplowitz said. Alongside the ANA, the 4A's leads the Responsible Privacy in Advertising Initiative, which exists to help advertisers understand and become compliant with privacy laws. Know your carbon footprint As some did with privacy legislation, states are beginning to create their own ESG reporting and sustainability measures. In the absence of federal laws, California is now mandating Scope 1, 2 and 3 reporting. The 4A's is now waiting on the FTC to issue an update on its Green Guides, which are now outdated at more than a decade old. "In the same way we saw California trigger this focus on data privacy at the state level because the federal government had not stepped in, we're starting to see this happen when it comes to emissions reporting," said Kaplowitz. The 4A's is now working with agencies to help them calculate their carbon footprint, in partnership with EMEA-based company 51 to Carbon Zero. Those that are in acquisition mode? They are looking for the areas that they need to strengthen. Usually, it's in tech or data analytics. Definitely AI. Marla Kaplowitz, president and CEO, 4A's Changes to the pitch process (maybe) Last summer the 4A's published its Cost of the Pitch report, which concluded that a pitch involving three agencies can cost upwards of $1 million, and identified common reasons clients initiate reviews. This year the 4A's will expand its research and focus on "understanding the expected actions and behaviors that are associated with a commitment to a long-term relationship," Kaplowitz said. Peppered with questions about new compensation models, Kaplowitz and her team will soon release guidance for agencies that wish to understand their options. "It's really just making sure that people understand what are alternative compensation models beyond cost-plus or FTE models. This is going to be really important, especially with the acceleration of AI within our industry," said Kaplowitz. Adapt to AI, or risk losing relevance Artificial intelligence will remain one of the most important industry trends, and agencies should not ignore it. "This is one of those adapt or become irrelevant moments, and so there will be a lot of bumps in the road," Kaplowitz said, acknowledging that agency employees must find the right tools, determine how to use them and then push adoption inside their organizations. The 4A's recently published guidance for agencies on navigating the nuances of AI and its own "AI philosophy"—the 4A's take on the technology and advice for those agencies just getting started. Its Agency Operations & Business Transformation Committee is also developing resources for agencies, covering how to adapt to an accelerated pace of change, and later scale that change across its practice areas. What Agencies Need to Know From the ANA/4A’s Joint Report on the Cost of Pitching TV spend dwindles while other privacy concerns mount TV investments are shrinking, and that's as the supply side is offering more measurement options and currencies. These developments, while theoretically helpful to determine return on ad spend, pose challenges for advertisers, according to Kaplowitz, and leave the industry in flux. The 4A's predicts the TV ecosystem will encounter privacy issues, especially at the local TV level. M&A continues, with a need for succession planning This year, agency owners will think more about succession planning and how to manage it, according to Kaplowitz. They'll consider if they should pass their companies on to someone else, transform their shop into an employee-owned shop or sell to a larger firm. Kaplowitz anticipates the industry's many agency collectives, often considered "small holding companies" in their own right, will continue to acquire companies and expand. "Those that are in acquisition mode? They are looking for the areas that they need to strengthen. Usually, it's in tech or data analytics. Definitely AI," she said.