Feb, 2018

Welcome to the latest Agency Wire, where we follow major trends in the communications and marketing industry.
Media Shops Face Crisis as Clients Move More Work In-House

Mediapalooza is back again as the next round of big-budget media reviews has begun, and it might be masking an existential threat to the established agency business model itself. According to a recent Adweek article, clients are taking more and more of their media in-house. R3's managing director for the US, Melissa Lea, commented, “The first question they [our clients] always ask is, ‘What’s the right model for us?’ I don’t think it’s about price anymore. Lots of those [accounts] in play right now were long-standing relationships [that got] to the point where the only thing they could do was run a review. They’d been getting promises but not receiving the changes they needed.” 

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New Business Revenue Fell By 10% in 2017

 'Increasingly piecemeal' assignments sent creative revenue plunging by nearly 17%, but media firms saw a 5.4% revenue increase. Creative, media, and digital agencies reaped 10% less new business revenue in 2017 than in 2016. We tracked 7,400 new business wins from more than 700 agencies globally. The total number of wins for creative agencies increased slightly (from 4,688 to 4,840), but year-over-year revenue fell 16.9%. Media agencies saw the inverse: The number of wins decreased by 24%, but revenue grew 5.4% over the previous year. 

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Transparency Taking the Forefront for CMOs in 2018

According to a recent Digiday article, Absolut's CMO is aiming to shift their media strategy away from the idea that media is a commodity to buy at the lowest possible cost to the idea that it can act as an true growth driver. Absolut's CMO, Craig Johnson, asserted that even with the transparency and fake news issues, Facebook and YouTube's audience is too attractive for brands to pass up. The brand said they are willing to pay more as long as they know that the reach is good and the impressions are quality. Their approach to working with the platforms is closer to the low-key approach of Unilever CMO Keith Weed than the more aggressive stance of their Procter & Gamble counterpart, Marc Pritchard.

R3 is a global marketing consultancy focused on improving the effectiveness and efficiency of marketers and their agencies. Founded in 2002, we work with eight of the world's top twenty global marketers.
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