Welcome to the latest Agency Wire, where we follow major trends in the communications and marketing industry.
Is Now The Right Time To Open An Agency?
A panel of independent agency heads at this year's Advertising Week in NY agreed that now is as good a time as any to open an advertising agency, despite the challenges coming from consulting firms, procurement teams and in-house agencies. One of the biggest challenges for agencies right now is not losing their identity amongst the fragmented landscape and industry jargon and really holding on to their value. The agency heads agreed that while the previous trend was to have several partners, many clients are moving back towards "having one neck to choke." There is a lot of confusion and competition among clients; they are looking for reliable partners to navigate the landscape and differentiate their business, creating ample opportunities for new players to enter the game.
Consulting Firms Surge Ahead In M&A
For the first time in the four-year history of R3's M&A League tracking, the consulting firm Accenture took the top spot on the table in August. They held on to their number one position in this month's report with nine total deals to date this year, their most recent being the San Francisco-based product design firm, Matter. WPP and Dentsu trail behind in second and third place, respectively. September marks the first month in 2017 that Dentsu made no acquisitions, while several new players made their first appearance on the global table, including RhythmOne, BlueFocus and Havas Group.
In China, Platforms Are Cutting Out Media-buying Agencies
If China is at the forefront of agency trends, the future is looking bleak for media agencies according to a recent Digiday article. In the closed-off media landscape where the big Western media players are absent from the ecosystem, many marketers are moving their media budgets away from agencies and cutting direct deals with Baidu, Alibaba and Tencent (BAT), the Chinese media giants. This trend isn't totally a cost-cutting measure, but also reflects marketers' growing desire for transparency in the region, where agency trading desks are largely viewed as "black boxes." The move goes well beyond programmatic, with the 2016 Agency Scope study showing that in-house resources are taking the lead role across digital strategy, data analytics and other marketing disciplines.
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.
Through our regular "AgencyScope" research, now covering more than 1,000 marketers in China, India and other markets, we are learning about true client preferences for the best local agencies in each market and helping agency holding groups form strategic partnerships with the best local agencies.