Advertising: Adapt or die

A study by Winterberry Group examines how market and industry trends are driving systemic
change across the agency landscape, further transforming the agency/client dynamic.

Compiled in more than 70 interviews with senior-level executives, the study demonstrates that the traditional agency model is dying.

• - The complex demands of the multichannel selling environment require that agencies provide clients with a unified offering spanning both "“above-the-line"” and "“below-the-line"” marketing channels
- Compressed margin availability, expanded client scrutiny and the
emergence of alternative service providers are raising the competitive
pressure for agencies of all sizes
- Integrated service providers are seeking to command a greater
presence in the agency environment, but struggle to sell their strategic
and creative offerings to marketers who associate their brand with
other services
- Clients are increasingly leaning on internal strategy and creative
capabilities-—as well as procurement departments-—to support
marketing initiatives and generate leverage in negotiations with
external agencies
- The prevalent "“agency holding company"” model is poorly equipped to
provide the organizational agility and cross-channel service offering
that today'’s marketers demand.

The study sparked a lot of discussions around the blogosphere. The change is irreversible and those unable to switch will parish.

As Noelle Weaver says, the way forward is getting past the medium and get to know the consumer. Intimately.
Also, Blue Flavor'’s Director of Strategy, Brian Fling, in his post The Agency Model is Dead, says there are five reasons why the old model doesn't work anymore:

1. Segmentation (Too many choices, pervasive media weakened)
2. Big Ideas: They don'’t always reap big rewards
3. The Cost of Trial and Error
4. The Growth of In-House Resources
5. The Talent Pool

The study concludes that "Forward-thinking shops-—those that embrace media-agnostic planning and employ integrated "“across-the-line"” methods-—represent a model to which
many others are likely to convert in the years ahead. Merger and acquisition
activity may well drive this hybridization. Already prime acquisition targets, for
example, interactive agencies will continue to be incorporated into general and
direct agencies as they are likely too "“siloed"” to survive as standalone entities.

Despite the seismic shifts that have occurred on the agency landscape, the
results from this study confirm that agencies are adapting to the new rules of
engagement and even flourishing beneath them. It is impossible to state with
certainty how the terrain will change in the future, but these findings suggest
that agencies with accountable, innovative marketing programs will always be
in demand."

via experience planner

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