It’s been one of the more discussed trends of this year – and it looks likely to carry over into 2018: consultancies moving in on agencies’ turf. And a new report from Advertiser Perceptions, based on a survey of more than 600 US marketers, confirms that some are considering moving their business from traditional agencies to the digital arms of consulting firms.
Specifically, about one-third (32%) of marketers agreed (top-2 box on a 5-point scale) that digital agencies operating in a consultative capacity is an option they’re considering. Likewise, a similar proportion (29%) agreed that agencies operated out of consultancies such as IBM, Accenture and Deloitte can provide them with more services than those provided by traditional agency holding companies.
The results bring to mind other recent research from Warc, in which brands surveyed around the world were more likely to agree (38%) than disagree (31%) that management consultancies are better placed than agencies to help them achieve digital transformation.
Earlier this year, a study from the Society of Digital Agencies (SoDA) revealed that 77% of client-side marketers reported being open to working with a consultancy for digital agency work, almost double the share from last year (41%). In fact, whereas agencies ranked as the top partners last year for client marketers looking to innovate product and services offerings and engage with consumers in new ways, consultancies – such as Accenture, Deloitte and McKinsey – topped the list this year.
Transparency Proving An Issue
While the move towards consultancies may be more about perceptions of innovation than anything else, there continue to be some issues surrounding transparency.
For example, two-thirds of marketers responding to the Advertiser Perceptions survey feel that their agencies aren’t open and transparent on costs. And in Warc’s study, a majority (51%) of brands agreed that there’s a crisis of trust between media agencies and clients. More than one-quarter (28%) of agencies surveyed view the transparency of their relationships with clients as a big cause for concern as they draw up their marketing plans for 2018.
Another Trend: In-Sourcing
Agencies are not only battling consultancies, but also a growing tendency for brands to expand their own in-house capabilities.
In the SoDA study released earlier this year, about 6 in 10 agencies reported that the in-sourcing of digital marketing work is having an impact on their business.
New survey results concerning programmatic buying from the ANA, meanwhile, indicate that 35% of advertisers have cut the role of external agencies as a result of their expansion of in-house capabilities. That represents a large uptick from 14% last year who had reduced agencies’ role in programmatic buying.
Meanwhile, 30% of the marketers surveyed by Advertiser Perceptions agree that they’re more likely to bring their ad planning and buying in-house as a result of innovations in advertising technology.
All of this adds up to a more difficult environment for agencies. A recent study from RSW/US [download page] revealed that 34% of agencies found it harder to obtain new business this year than last. That was almost twice the share (19%) who found it easier to obtain new business this year.
On the positive side, the proportion of agencies having a tougher time with new business this year was down from last year (43%).
Interestingly, the generally more difficult environment for winning business comes even as a large share of agencies are seeing the opportunities for new business increase. That suggests that heightened competition (perhaps from consultancies) may be a bigger obstacle for agencies than in-sourcing.
Which Agencies (And Consultancies) Rank Best?
In its report – “Choosing the Right Agency” – Advertiser Perceptions asked marketers to rank a variety of agency types. WPP emerged as the leading option among holding companies, ranking in the top quartile across 6 key criteria measured.
To come full circle, though, the digital “agencies” that received top honors? Consultancies Accenture Interactive and Deloitte Digital, with IBM Interactive Experience 4th on the list.
It will be interesting to see how these trends take shape in 2018…