Forrester Report Forecasts 2023 Agency Culture Upheaval

Agency employees probably aren't ever returning to the office for a five-day work week. In 2023, Forrester predicts, industry leaders will finally understand that hybrid work is here for good, and opt to leave their old ways behind. That will bring about a transformation in agency culture, in which leaders will define creativity differently and refocus on pairing service offerings with products, building their b-to-b marketing expertise and taking on privacy and data compliance risks. This is according to Forrester principal analyst Jay Pattisall, whose 2023 agency predictions report promises significant change for agencies is on the horizon. "Agency culture used to be very collaborative, very in-person, and it was part of [their] superpower," Pattisall told Adweek. "What agencies will need to contend with is that part of the superpower of their creative cultural environment has been permanently altered. And they will need to replicate the magic." Publicis Groupe Leads Forrester’s Global Marketing Services Report Hybrid work officially changes agency culture Industry jobs reached 220,000 in May—an all-time high—according to the Bureau of Labor Statistics. But even with seats filled, agency leaders should not expect employees to come back to the office full time anytime soon, and perhaps ever. As of Q2 this year, less than 20% of agency staff had returned to the workplace most or all of the time, according to the 4A’s and Forrester Study Q2 2022 US Agency and Marketing Talent Survey. And that reality is not endemic to the ad industry. "If we look at all North American workers, only 37% agree with the statement that they like being in the office, compared to 72% that say they like working from home," said Pattisall, citing Forrester data. "What it results in is a change in the way that people are working. Not all for good, not all for bad—it's a little bit of both. There is a healthy mindset around work collectively, where people are prioritizing more of a balance," said Pattisall. Hybrid work's long-term effect on agency culture, Pattisall told Adweek, could make agencies a friendlier place for people who either could not or would not tolerate the hustle culture that they traditionally are known for. And as new hires receive higher salaries due to increased competition for talent, agencies' dependence on what Pattisall calls, "an abundance of free labor," will reverse itself, creating socioeconomic shifts that make working in the ad industry a more viable career path for young people and those on the margins. The change will hopefully address issues of racial and gender parity in the industry—and lead agency leaders to reprioritize. "The expectation amongst the leaders was that this was a temporary situation—and I think that is an important element of this—that this necessitates a mindset change for leadership," Pattisall said. Product-oriented leaders ascend to top jobs New priorities will include hiring even more digital experts. Positions in analytics, computer sciences and digital interface design will grow another 20%, Pattisall predicts, as agencies invest heaps of money in Web3 and metaverse work. Leaders will also hire product development or operational leaders that can package and sell their technology products in addition to servicing clients. Pattisall identifies the industry leaders who represent the product-first future of agencies: Mat Baxter at Huge, Christina Hanson at OMD, Carla Serrano at Publicis Groupe, Luke Taylor at OPMG and Elspeth Rollert and Abe Geiger at Stagwell Marketing Cloud. One holding company, the analyst predicts, will replace its CEO with a product-focused leader, mirroring when IPG's Philippe Krakowsky—a former software executive—joined the holding company's C-suite. "The investment in that digital talent far transcends the metaverse or the nascent quality of Web3," Pattisall said, acknowledging that emerging technologies aren't necessarily eliciting the results for clients that they may eventually produce. B-to-b marketing gets its time to shine Leaders will make technology investments alongside investments in bolstered b-to-b service offerings, according to the report. Some agencies already launched or acquired b-to-b-specific expertise. For example, Horizon Media launched Green Thread, Dentsu consolidated DWA and Gyro into its subsidiary, Merkle, and Publicis Groupe purchased Octopus Group. These changes are harbingers of what's to come, Pattisall said. "The marketing and digital transformation underway in the consumer world has made its way to the b-to-b marketing world." While b-to-b-specialty agencies are going to have a head start in terms of expertise, historically b-to-c-focused agencies will have an edge when it comes to execution, said the analyst. Agencies like Horizon Media can expect a deeper b-to-b focus to lead to growth. Privacy concerns stymie in-house media expansion Industry trends converge with privacy and data compliance needs, which are becoming increasingly important. Recently Sephora received a hefty fine for violating state privacy laws. The looming legal risks associated with media and data management mean that more brands will balk at managing digital media themselves, according to Pattisall. As a result, in-house digital media operations will fold or be paused as the onus shifts toward external partnerships, and external media agencies will assume more consumer privacy and data risks. "When you get beyond search, display and programmatic, it starts to get much more complex. Part of that complexity is the world of audiences and identity and privacy," Pattisall said. Agencies will double-down on the fact that they have established privacy expertise, and will build liability into contractual agreements with clients. "Imagine a consumer privacy law that allows individual consumers to file claims," Pattisall said. "Sephora paying a $1 million dollar fine is one thing. Class action lawsuits are very different."

The Future of Agencies

Forrester's Agency Predictions Report Forecasts 2023 Culture Upheaval

Following hybrid work acceptance, companies will hone product, b-to-b and privacy expertise

Olivia Morley

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Olivia Morley