The Chief Marketing Officer (CMO) Council has just released a report entitles “More Gain, Less Strain” on client/agency effectiveness. The report clearly shows that brands and marketing technologists alike are are becoming increasingly disillusioned with traditional ad agencies. For the report, the CMO Council surveyed 6,000 corporate marketers. The results were dramatic. Only 9% of senior marketers believe that traditional ad agencies are doing a good job of extending their services in the digital age. 22% of marketers surveyed reported their agencies as struggling to transition their service models, while another 51% of senior marketers see their agencies as playing catch up in regards to new marketing technology solutions.
The report also questioned advertisers from 20 leading brands including Coca-Cola, Allstate, Crayola and Kia Motors. The brand advertisers overwhelmingly cited an incremental demand for an evidence-based marketing strategy as a consideration during agency selection. The top five factors that are influencing agency shift are:
- Breakthrough creative, new skills, and fresh approaches are needed in marketing
- Budgets are flat and more value must be realized from marketing investments
- New digital marketing competencies are lacking inside the organization
- There is a greater need to integrate both online and offline marketing campaigns
- An increasingly metrics-driven environment is driving greater accountability
“There’s an underlying level of frustration among senior corporate marketers worldwide when it comes to agency contributions to business value creation, strategic thinking, and digital marketing development,” stated Donovan Neale-May, executive director of the CMO Council. “Our members report quite a bit of switching of digital marketing resources, as well as a view that big, global agencies don’t have a truly integrated offering and capacity to execute in an effective, localized way in emerging markets.”
So why are the big boys failing to change with the times? According to feedback from CMO Council board members, agencies are struggling to keep up as all avenues of traditional media go digital. However, as brands demand deeper analytics and visibility across all advertising channels, marketing technologists will be required to provide greater customer insight and intelligence in order to maximize ROI. If agencies can’t accurately and efficiently capture customer data they will remain at a disadvantage to marketers who have mastered customer data integration.
“More Gain, Less Strain” should be seen as nothing less than a death knell for traditional advertising. If agencies can’t adapt to an evidence-based model they will soon go the way of the dinosaurs, replaced by leaner, more specialized service providers. Nearly 50% of marketers surveyed plan on switching agency rosters within the next year while 15% are considering it. 48% are hiring boutique digital and cloud marketing service providers to implement social, mobile and interactive marketing strategies, while 47% plan to ramp up internal digital marketing capabilities. The meteor is already speeding toward earth.
Agencies have two choices: evolve and embrace an integrated marketing model, or be replaced by those agencies that have.