Marketer-agency model is under delivering, says Forrester

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Agencies need to do better to meet the needs of CMO and marketers, according to a recent Forrester report. Titled “The New Agency Operating Model for Brands”, the research firm noted that they are failing to deliver on “customer obsessed strategies” for their clients.

According to the report, marketers see long-term strategic thinking, knowledge on new technology innovations and the ability to adapt to dynamic market conditions. Only 50% of respondents were satisfied with their lead agency partners.

Intense competitive pressure

Elsewhere, agencies are also under intense competitive pressure not just from other competitors or new startups, but from IT consultants themselves.

Forrester noted that Accenture’s buy of Kamarama and Deloitte’s purchase of Heat are bringing creative strategy talents into their firms. In turn, these acquisitions allow them to offer a full suite of marketing services to the clients, replacing many of the tasks that creative agencies used to do.

The approach is also gaining traction among marketers, with over 60% of marketers saying they are open to working with consultants. Online talent marketplaces and easier access to freelance agents are also making it a challenge for agencies, especially when many agencies act as brokers for some services to offer comprehensive marketing offerings. 

Marketers also have a range of media planning and management tools at their disposal that do not need agencies’ involvement. Meanwhile, SaaS tools, like Salesforce, are ramping up their features for customer insight generation that agencies used to do.

Digital dilemma

Agencies also face a digital dilemma. While many have expanded their support for digital marketing campaigns, which Forrester reported drove revenue growth by 13.5% in 2015, traditional channels suffered. It has allowed digital-savvy competitors into the fray, driving down margins and “increasing scrutiny on trading desk pricing models.”

Within agencies, the challenges are mounting with a fragmented pool of expertise, disconnect between performance measurements and enhancements in a creative idea and customer experience, non-strategic use of technology and eroding trust led by ad fraud and media markups.

Marketers are to blame, too. The report noted that channel silos, short-term thinking rewards, squeezing on prices, not making an effort to measure agency value and the inability to build “repeatable” intellectual property by restricting their agencies from working with other companies in the same industry (a concern that professional services players do not seem to have) are key hurdles for agencies.

In conclusion, the report called for a new agency operating model that urged marketers to reassess the real-world value of agencies, ensure that they do not pay for tasks that can be automated, understand the capabilities of internal resources, and empower brand managers to have direct relationships with agencies to speed up decisions.

Further reading:

Accenture Interactive Studios set to help CMOs disrupt

Mobile foundation vital for B2C marketing success

Businesses yet to tap into full potential of digital transformation