There is little doubt that 2017 will be another challenging year for agencies. Continuing uncertainty over Brexit, a weak currency, and high inflation will mean that budgets will continue to be under pressure and clients will want to agencies deliver savings to offset their cost increases.
Declining revenue from traditional business sectors will be offset to some extent by well-funded new start-up businesses in emerging sectors.
I don’t expect to see many ‘news making’ mergers or acquisitions happening on the agency side in 2017, in spite of the fact that there will continue to be significant investment capital out there.
However, following Accenture’s recent deal to buy Karmarama, expect to see some activity in terms of marketing agencies being acquired by management consultancy firms, as it seems clear that the trend to find new ways of working and doing business will continue.
We will also continue to see new start-ups, both agencies and non-agencies, entering the fray, which will put traditional agency models under threat. The big agency groups will look to protect and build their relationships and revenue with global clients, so there is some obvious tension there.
All agency principals will need to embrace change or suffer the consequences. Outsourcing will grow as agencies look to manage central overhead costs and deal with flexible work requirements.
However, one traditional service we see having a renaissance is client servicing. As part of the Agency Of The Future project, the MAA has identified a skills gap emerging as classic proactive client account management is being lost and, as it turns out, it’s a service clients value highly.
Digital will continue to be the key communication battleground and will continue to grow, especially mobile, while streaming will expand rapidly at the expense of downloads and traditional “appointment to view” entertainment.
I also believe that consumers will become increasingly happy to pay for premium content and ad blocking will help to drive this move away from free content.
In terms of technology, VR/AI will start to impact our lives more meaningfully through both social channels, gaming and video content, putting consumers at the centre of live immersive experiences.
On the other side, e-commerce will continue to outpace traditional retail, re-emphasising the need for always-on communication that drives a commercial outcome. Meanwhile I see no let up in te growth of key social channels, with messaging apps being the big winners. And technology will lead to a greater emphasis on marketing performance, data and attribution studies, making the field of measurement even more sophisticated.
One of the buzzwords for 2017 will be “purpose”, as brands struggle to deal with greater consumer ambivalence/antipathy towards their products in the face of growing proliferation. This is an interesting concept because it relies on businesses defining and focusing energy on values that don’t directly drive sales and profit. Something that seems at odds with the continued obsession and downward pressure on costs.
Tim Bourne is chairman of the Marketing Agencies Association
