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.
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.
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.
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