Media agencies warned to embrace data and tech or die

The exponential rise of data-driven marketing is forcing brand owners to redefine the role of their media agencies; buying clout is no longer top dog – data and technology capabilities, flexible talent, and strong relationships with the tech platforms are now much more important factors.

That is according to an international study commissioned by Kepler, and carried out by Vanson Bourne which quizzed 150 senior marketers.

It reveals that size simply does not matter anymore, and as first-party data capabilities and automated buying platforms become more important to campaign performance, there is a gulf between brands’ needs and media agencies’ abilities and business models.

One of the biggest drivers is the in-housing trend; half of marketers surveyed (52%) say they plan to eventually run all aspects of media investment. Larger enterprises appear more committed to the idea, with 63% of respondents from companies with $10bn (£7.5bn) or more in revenue considering full in-housing. This could mean major shifts in how media agencies serve brands and the skills they must provide.

Consequently, nearly four-fifths (78%) of marketers say they will prioritise agencies which have a talent and trading model that can flex around their in-house operations, while nearly three-quarters (73%) agree they need greater in-house technology expertise to partner with technology giants.

A similar proportion (71%) believe their digital media performance is suffering because their media agency partners do not have strong enough relationships with the technology giants.

And, even if they are not planning to take direct control of their media management, the vast majority want to control their media technology relationships.

More than three quarters (83%) are expanding or plan to expand their in-house media technology, and this intent is event stronger (92%) at companies with over $10bn in revenue.

The research suggests brands are becoming more vigilant when it comes to their media investments. Three quarters of senior marketers agree that trust and transparency have become a major factor in media investment decisions.

Half of them state they will not use media agencies that cannot provide complete transparency of trading practices, and a similar percentage (51%) indicate that corporate ethics will increasingly influence how and with whom they invest digital budgets.

But concerns remain: three-fifths (58%) of marketers say they worry that they do not have the complete picture when it comes to the way their media is invested and associated results, and just under half (47%) say their media agency partners need to improve on sharing learnings and consulting with client teams.

Accordingly, this is yet another area where agency models must continue to evolve.

The data suggests traditional agencies are increasingly vulnerable, with nearly all (94%) of respondents stating they will likely review their media agency relationships due to data and technology’s rise in importance.

Kepler UK and APAC chief executive Martin Kelly said: “We can see our clients investing in organisational change, in-housing media capability and seeking a new kind of relationship with media and technology partners.

“The whole agency industry is being shaped by these forces and the evolving needs of brands. We commissioned this research to better understand these trends, where brands are headed to and their priorities. What we found provides a very strong affirmation of that direction of travel.”

Commenting on the results of the survey, the World Federation of Advertisers director of global media services Matt Green commented: “With the rapid transformation of the industry, media agencies are being asked to be many things. Clients expect their agencies to offer depth in digital and data, excellence in media planning, breadth in market knowledge. And executed consistently worldwide.

“More than this, clients expect their agencies to be responding to the growing environmental, social, and governance (ESG) agenda. Agencies should be diverse and inclusive and should be offering responsible, sustainable and ethical media solutions.

“The traditional model is becoming stretched. And while price is important, for many clients this is one factor among many. Clients need to focus on finding fair and appropriate incentivisation models and agencies need to set themselves up to adapt to these changes.”