Will 2017 be the year agencies fall dangerously out of touch with client expectations?
How will the shift towards project-based work impact your agency's ability to retain long-term clients?
Do clients intend to move more marketing services in-house in 2017?
A new report from RSW/US examines these and other troubling trends, offering valuable insights into both agency and marketer perspectives on key topics such as spending, project work versus AORs, and the explosive rise of marketing technology.
Now in its 11th year of publication, the annual RSW/US New Year Outlook Report gathers and analyzes data from over 10,000 agencies and over 100,000 marketing decision makers across the US and Canada. As you begin to set your marketing and sales priorities for 2017, consider how the RSW/US data will impact your goals.
5 Trends Defining Agency New Business
1) There's a growing disconnect between marketer plans and agency expectations for spending in 2017.
Since RSW/US first conducted the survey in 2011, marketer plans for marketing and advertising spending has seen a steady increase.
According to the 2017 survey, marketers will continue to get more aggressive with their spending, with 67% of marketers saying their budgets will increase somewhat or significantly this year.
While broadening client budgets might seem like great news for agencies, there appears to be a growing expectations gap between what marketers plan on spending and what agencies predict they will spend this year.
Of the agencies surveyed, only 48% expected marketer spending to increase somewhat or significantly in 2017. That's a nearly 20% disconnect -- one of the largest gaps in spending expectations between agencies and clients since 2011.
Mark Sneider, the president and owner of RSW/US, chalks this lack of alignment up to cautious optimism on the part of agencies, rather than an indication of a greater underlying disconnect between agencies and their clients. He urges agencies to take advantage of marketers' willingness to spend more in 2017 by regularly pursuing new prospects, and keeping current clients consistently engaged with new project opportunities.
2) Agencies are investing slightly less in business operations (people, marketing, and sales).
Even though a solid majority of agencies (89%) say they plan to invest somewhat or heavily in their business operations for 2017, this percentage has seen a slight decline since 2014, when a whopping 96% of agencies reported plans to invest more internally in their people, marketing, and sales resources.
So why are agencies more reluctant than previous years to invest in their own business functions? It could be due to a perceived shift in client marketing/ad spends going towards project-based and in-house work, which agencies might take as a sign to invest less aggressively in building up their resources.
3) Nearly half (44%) of marketers plan to move money away from marketing and into marketing technology.
If there's one area agencies should be growing their expertise and beefing up their services offerings, it's marketing technology. Marketers are actively seeking opportunities to leverage automation and analytics to make more data-driven decisions -- and agencies need to keep pace.
Marketers are so committed to investing in marketing technologies, many are dipping into their traditional marketing and advertising budgets to reallocate money towards new tools. 44% of marketers told RSW/US they plan on moving funds away from marketing and towards marketing technology in 2017, and 74% said they plan on investing in more in marketing technology over the next three years.
Agencies planning on spending less on resources and talent in 2017 might want to reconsider. Meeting marketer expectations over the next few years is going to require an advanced understanding of data and automation, and agencies shouldn't wait to fortify their teams against the impending shift.
4) Marketers are parsing out the majority of their work as projects (versus discipline-specific AORs)
The shift away from AORs and towards project-based work continues to intensify, with 35% of agencies reporting that over 60% of their current work is project-based. This is a 15 point jump from last year, when only 20% of agencies reported over 60% of their work as project-based.
So what does this shift mean for agencies looking to build long-term client relationships? Project work can no longer be approached as a quick payout option -- it's just the starting point of a relationship that needs to be nurtured over time. Agencies need to look beyond a single project and evaluate whether or not it sets them up for future opportunities with the client.
5) Agencies are seeing more marketers move agency services in-house.
Nearly 80% of agencies predict their clients will move some marketing services in-house in 2017 -- that's a 23% increase over 2016's prediction.
Even though this number seems intimidating, agencies shouldn't start to panic yet. Marketers themselves reported a much smaller shift, with a solid majority (84%) saying they'll be moving 20% or less of their marketing services in-house in 2017.
According to the RSW/US report, most of what marketers are moving in-house is "smaller stuff," and as long as agencies continue to offer large value propositions, they shouldn't get overly worried.