Marketing agencies may be facing a multiple threats from the rise of AI – pressure from regulators and big tech; skills shortages and changing perceptions about the value of they bring to name just a few – but most are bullish, not fearful, about the future.
So says a new report from marketing intelligence platform Funnel and insights company Ravn Research on the state of global marketing department and agency relations.
The report draws on quantitative and qualitative research from 327 in-house marketing professionals and marketing agency leaders, examining existential challenges to agencies.
Many in-house marketers say AI will invariably affect their agency relationships, with 43% of saying the technology will make their company less dependent on agencies.
Even so, agencies, are largely unphased: two-thirds of agency professionals expect their financial condition to improve over the next year, with AI having a net positive impact on their business, and less than a quarter view increased in-housing of marketing functions, partially resulting from AI adoption, as a major threat to their business.
With the future of marketing dependent on sophisticated measurement models and vast amounts of data needing to be shared between clients and agencies, it is accepted that closer partnerships are required for success. Yet, this report indicates a general mistrust in agencies and a frustration with repetitive processes on the clients’ side.
In fact, more than half of in-house marketers do not trust their agency partnerships, particularly when controlling costs and delivering tailored, innovative solutions, with three-quarters (75%) saying their company’s outsourcing rates to agencies will fall or remain flat over the next year.
In addition, only 40% of marketers say their agencies are invested in the long-term growth and success of their company; just 47% believe their agencies are communicating well on measurable outcomes.
Marketers did note, however, that agencies were better at sharing honest feedback and setting realistic expectations.
Sunlab chapter lead for data and business intelligence Benjamin Keller said: “Our agency is in the business of making sense of data analysis, AI, machine learning, language models, and more. What can be difficult is presenting it in a way that clients can understand and synthesise.”
As the last-click attribution method used for measuring marketing impact is slowly eroded by regulatory and big tech data limitations, the report argues that many marketers now face an uphill battle to evolve to advanced analytics and rely less on third-party data.
For example, 69% of marketers surveyed say they have no clear, documented roadmap to adapt to the deprecation of third-party cookies.
Since their clients do not have experts or roadmaps to track performance, most agencies (66%) therefore believe that offering advanced analytics is a major opportunity for their organisation.
Approximately 60% of marketers are already using some kind of data analytics to measure performance but very few are using the most advanced probabilistic forms, such as marketing mix modelling (26%) and incrementality testing (26%).
Even so, few marketers (15%) have plans to outsource additional advanced analytics services in the coming 12-18 months, leaving the majority with reduced visibility on the impact of marketing spend.
And, while many in-house marketing teams require help from agency partners to pull new strategies off, agencies themselves can spread the costs of domain experts across multiple clients, explain methodologies behind their recommendations and guide clients through the complex marketing landscape.
Funnel head of marketing Con Cirillo said: “This report comes at a critical crossroads for the industry. With AI on the rise, cross-device and web tracking falling and marketing teams reassessing their budgets, it is important to examine the relationship between in-house marketers and agency partners.
“We have unearthed significant findings, particularly concerning confidence in agencies and emerging technologies, as well as a lack of preparedness for advanced analytics among marketing teams. Both sides need to innovate and thankfully there are higher quality tools available than ever to achieve this.”
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