Age of all powerful ad agencies is ending- report

Dec 14, 2017 | Online advertising

Executives ‘shunning peers for external advice’ in pandemic
The era of client boardroom level influence is over as more and more communications are being handled in-house, according to new research.

A recent study by the University of Northampton has confirmed the breakdown in the relationship between clients and agencies.

This is the first academic study to confirm their widespread side-lining as more and more communications are being handled in-house.

These findings come in the midst of the annual Christmas battle for shoppers – with £6bn predicted to be spent on marketing in the run up to the festive season.

According to lead author Dr Kathleen Mortimer, the study explored the breakdown in the alliances that have formed between UK clients and agencies in recent years.

“The findings provide evidence of this movement towards a more traditional agency relationship, and that’s changed as clients have moved towards integrated marketing campaigns,” she said.

“Clients want their customer experience to be consistent, which requires the whole organisation to be co-ordinated. Traditional ad agencies just can’t achieve that with so many aspects of the business and communication channels in play.”

Along with her co-author, Senior Lecturer in Marketing, Sally Laurie, Dr Mortimer applied both agency theory and social power theory in the study, which brought together the views of senior management at ten agencies and seven clients.

Client sectors included hospitality, food, alcohol, non-profit and fast-moving consumer goods.

Analysis of the responses identified four main issues: clients’ increasing ownership of customer communications; the necessity for agencies to identify a new more strategic role; the need for clients to recognise the importance of defining roles and responsibilities for agencies; and the need to address the issues of agency specialisation.

The study shows that changes in the industry have resulted in shifts in power towards the clients and led to the client/agency relationship being pulled away from the business alliance model towards the traditional agency relationship – where agencies are instructed what to produce with fewer opportunities to build relationships and show initiative.

It’s not all bad news though, as the findings also suggest that agencies are recognising this shift in power and the need to put themselves forward as strategic partners – a role that is increasingly important to ensure long-term brand integration.

“Clients need to identify the value of this integrated strategic insight and step back from the short-term approach that the analysis of behavioural data can lead to,” says Dr Mortimer.

“This dynamic industry has faced many challenges in the past and is experienced at re-inventing itself. There is a need to do so again.”

Read the report here:

Mortimer, K. and Laurie, S. (2017) Partner or supplier: an examination of client/agency relationships in an IMC context. Journal of Marketing Communications 1352-7266.

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