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How agencies are adapting to continued pressures on their business model

To contend with increased financial pressures, agencies are adjusting to new cost structures and angling for new roles.

Tim Peterson on December 29, 2017 at 10:00 am

The modern advertising agency is dead. Long live the modern advertising agency.

Agencies are effectively mercenaries, independent entities hired to help a business conquer a market. That has always been the case and will remain the case in 2018. But recent pressures on agency business models are forcing these shops to shift how they serve clients and prove their worth.

“The modern agency is going to have to really shift away from communications and messaging as the sole driver of revenue and have to really understand product and experience as the core thing they create and layer messaging around that. I think that a modern agency is building a lot more than agencies ever have in the past,” said Ben Gaddis, president of independent agency T3.

Financial pressures

Often isolated from brands’ marketing organizations, many agencies are angling to ingrain themselves deeper within clients’ businesses, to centralize themselves closer to the bottom line. At the heart of this repositioning among agencies is a broad retrenchment among marketers.

“One of the flashpoint issues for agencies is the financial reality of their business model and clients’ continued activity around margin compression,” said Forrester analyst Jay Pattisall.

[Read the full article on MarTech Today.]

Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.

About The Author

Tim Peterson

Tim Peterson, Third Door Media's Social Media Reporter, has been covering the digital marketing industry since 2011. He has reported for Advertising Age, Adweek and Direct Marketing News. A born-and-raised Angeleno who graduated from New York University, he currently lives in Los Angeles. He has broken stories on Snapchat's ad plans, Hulu founding CEO Jason Kilar's attempt to take on YouTube and the assemblage of Amazon's ad-tech stack; analyzed YouTube's programming strategy, Facebook's ad-tech ambitions and ad blocking's rise; and documented digital video's biggest annual event VidCon, BuzzFeed's branded video production process and Snapchat Discover's ad load six months after launch. He has also developed tools to monitor brands' early adoption of live-streaming apps, compare Yahoo's and Google's search designs and examine the NFL's YouTube and Facebook video strategies.