Marketing and advertising agencies are on the chopping block more so than they've ever been before --under new levels of scrutiny, primarily due to the pressures their CMO counterparts are facing internally. In fact, according to a report revealed last year by Advertiser's Perceptions, more than 60 percent of the largest advertisers were expected to put their agencies up for review.
Why has marketing been put under an intensified microscope? Much of it has stemmed from the onset of digital being used as the primary channel for marketing. It's enabled us to gain deeper insights into how marketing strategies are stacking up and aligning with business goals, but it's also raised the ante on what marketers are on the hook for.
Today, agencies must be prepared to demonstrate they understand and can deliver on business goals, maintain transparency, and integrate multiple disciplines --areas many traditional agencies have historically failed. The model has changed dramatically, and will continue to change as digital extends its roots and brands come to expect more out of their agency partners.
Digital's impact on modern marketing
While the fundamentals of marketing haven't truly changed, what has is the channel through which we deliver marketing messages. It's gone digital.
This is significant because it has given us a way to track, measure, and make the necessary pivots in real time. And this has completely changed the game for agencies.
Long gone are the days of fat contracts, locked in under long-term deals, with little accountability for reporting. Today, agencies have to be more competitive than ever. And an inability to demonstrate agility and return on investment, will quickly be greeted by a closed door.
"Through digital, we have real-time access to data and insights --customer activity, customer sentiment, all of the things that traditionally were so hard to measure outside of a focus group," said Kevin Sellers, chief marketing officer at Avnet. "That means I've got to have a partner who can speak that language."
Agencies have to be able to answer who's buying and why they're buying, what content is working and why, what's not working and why, if the targets correct, and if these strategies are generating a return on the investment. All of these are a byproduct of digital, and they've all increased the pressures put on marketers.
"We're under much more intense pressure to demonstrate results," Sellers said. "I've never felt it to this extreme. Leadership wants to know how all this money being spent on marketing is producing a return, and we will move on quickly if you're not delivering results simply because of the pressure we're under."
This is one of the biggest changes, outside of digital transformation, that agencies will have to adapt to. And there are three key qualities that will define this adaptation and ensure agencies are equipped to be solid partners to clients.
1. The ability to demonstrate impact
It's no longer about having a "cool" campaign. The real question is, "How are you demonstrating real impact?"
Agencies have to be able to measure the effects of those campaigns and demonstrate the ability to acquire customers and drive revenue. In the past, success metrics were defined by likeability scores and brand awareness, but now partners want to know how marketing is directly impacting the bottom line.
"While brand perception is still important, what's become more important is the ability to demonstrate ROI," Sellers said. "To show data and even use advanced technologies like artificial intelligence to create predictive algorithms, better segmentation of audiences, and comparisons of the work you're doing against competitors."
2. Possess data and technology savvy
With the top-down pressures being put on CMOs to demonstrate bottom-line impact, and deliver it in a measurable way, you can bet they are leaning on their agency partners to not only be able to produce metrics, but know how to derive meaning from that data and put it to work.
In other words, agencies must know how to glean, clean, and utilize data to optimize their marketing strategies. As part of possessing the skill set to utilize data and analytics, agencies first have to have a deep understanding of the business and its strategy.
3. Business before creative
Creativity is no longer a differentiator, it's a table stake. Brands want to first know their agency partners have a real understanding of the business, the industry they operate in, and the competitive landscape. They want to know you have a strategic understanding of how the business runs and the metrics that matter most to them.
"You really have to demonstrate you've done your homework and understand the business the client is in, and the challenges of the business and its competition," Sellers said.
The ability to execute a campaign is a given. And brands today want to first establish you understand the business they're in and can measurably help them solve for their greatest challenges rather than beginning the conversation around ideas for creative execution.
"Obviously I want to see the thinking around what you'd propose for my company, but nonetheless, I'm really looking for do you have strategic insight, can you measure, can you provide analytics to help me refine, in real time, my marketing mix and approach?," Sellers said. "Wow me with your storytelling, but don't start there."