A survey of 150 senior marketers at $1bn+ revenue companies in the US, UK and APAC, conducted by global digital services provider Kepler, has revealed profound changes in brand sentiment:
- 85% say data optimization, rather than media buying clout, is now the most important criterion determining media investment performance
- 81% agree automation will reduce the importance of agency network scale and traditional buying power
- 65% say traditional media agencies do not have the technology expertise their organization requires to maximize media investment
- 61% believe media agency talent and operating models are not evolving fast enough to deliver the support and service their organization requires
- 60% struggle to find agencies that can support their in-housing strategies
NEW YORK, Nov. 30th, 2021-- Brands are redefining the role of the media agency, with data capabilities becoming more important than media buying scale, according to an international study commissioned by Kepler.
Based on an international survey of 150 senior marketers, the past five years have seen profound changes in what marketers require of media agencies. Today, the vast majority of marketers say buying clout is no longer their primary rationale for choosing to work with a particular agency or group. Rather, as brands continue to in-house technology and talent – and as first-party data capabilities and automated buying platforms become more important to campaign performance – a gap has formed between brands’ needs and media agencies’ abilities and business models.
Today, media agencies must deliver a wide range of services, with data and technology capability, flexible talent, and strong relationships with the tech platforms emerging as dominant requirements. Media buying alone is no longer enough.
As brands build in-house expertise, agencies must offer more
Half of marketers surveyed (52%) say they plan to eventually take all aspects of media investment in-house. Larger enterprises appear more committed to the idea, with 63% of respondents from companies with $10 billion or more in revenue considering full in-housing. This could mean major shifts in how media agencies serve brands and the skills they must provide.
- 78% of marketers say they will prioritize agencies which have a talent and trading model that can flex around their in-house operations
- 73% agree they need greater in-house technology expertise to partner with technology giants
- 71% believe their digital media performance is suffering because their media agency partner/s do not have strong enough relationships with the technology giants
Even if they aren’t taking direct control of their actual media management, the vast majority of marketers plan to take more control of their media technology relationships. More than three quarters (83%) are expanding or plan to expand their in-house media technology, and this intent is event stronger (92%) at companies with over $10 billion in revenue.
Trust, transparency and ethics matter
The research suggests brands are becoming more vigilant when it comes to their media investments. Three quarters of senior marketers agree that trust and transparency have become a major factor in media investment decisions. Half of them state they will not use media agencies that cannot provide complete transparency of trading practices, and a similar percentage (51%) indicate that corporate ethics will increasingly influence how and with whom they invest digital budgets.
But concerns remain: 58% of marketers say they worry that they do not have the complete picture when it comes to the way their media is invested and associated results, and 47% say their media agency partners need to improve on sharing learnings and consulting with client teams. Accordingly, this is yet another area where agency models must continue to evolve.
Will changing client needs trigger large scale agency realignment?
The data suggests traditional agencies are increasingly vulnerable, with 94% of respondents stating they will likely review their media agency relationships due to data and technology’s rise in importance.
“Over the past ten years, we have seen these profound changes among our own clients,” says Kepler CEO Rick Greenberg. “As such, we and other services providers have had to adapt our models, requiring new offerings around media in-housing, organizational design, technology installation, data enablement, and cross-channel insights. It’s been thrilling to witness and respond to these trends, and we only expect the pace of change to accelerate in the years to come.”
Upon seeing the results of the research, the World Federation of Advertisers’ (WFA) Director of Global Media Services, Matt Green commented, “With the rapid transformation of the industry, media agencies are being asked to be many things. Clients expect their agencies to offer depth in digital and data, excellence in media planning, breadth in market knowledge. And executed consistently worldwide. More than this, clients expect their agencies to be responding to the growing Environmental, Social, and Governance (ESG) agenda.
Agencies should be diverse and inclusive and should be offering responsible, sustainable and ethical media solutions.
“The traditional model is becoming stretched. And while price is important, for many clients this is one factor among many. Clients need to focus on finding fair and appropriate incentivization models and agencies need to set themselves up to adapt to these changes.”
Kepler partnered with Vanson Bourne, an independent business research company, to conduct the study. Using a combination of online and telephone interviews the study included 150 C-suite leaders, Strategic Business Unit (SBU) leaders, and senior managers within SBUs. All had responsibility for media investment decision-making on behalf of their organizations.
The companies represented are based in the US, UK and in APAC (Japan, Australia, Singapore) countries, with 55% operating primarily in multiple countries and 45% operating primarily in a single country, and all had revenues above $1 billion (43% over $10 billion). Industries represented included financial services, retail, FMCG, manufacturing and production, healthcare and pharmaceuticals, automotive, IT and technology, electronics, travel and tourism, telecoms, construction and property, consumer services, media, leisure and entertainment, energy, oil/gas and utilities, business and professional services, distribution and transport.
Download the research report here
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Kepler’s mission is to help clients harness data, technology and insights to transform their marketing, forge more personalized consumer connections, and drive breakthrough business impact. The company’s 600+ professionals serve clients in financial services, retail, healthcare, media/entertainment and other industries from offices in Boston, Chicago, New York, Philadelphia, San Francisco, Costa Rica, London, Singapore, and Tokyo.
Kepler is a member of the kyu collective, a strategic operating unit of Hakuhodo DY Holdings Inc. Fellow member companies include IDEO, Sid Lee, SYPartners, Godfrey Dadich, and BEworks. More information can be found at www.keplergrp.com.