Over 40% of Marketers Use Niche Agencies

BY Kathy Crosett
Featured image for “Over 40% of Marketers Use Niche Agencies”

The world of advertising is changing. Agencies can no longer count on the traditional AOR model. Earlier this month we wrote a piece about how smaller agencies can win more business by specializing. New research from The CMO Club reiterates just how important that strategy is. Here’s what’s happening in client-​agency relationships.

The CMO Club’s new survey reveals that companies are using their following arrangements for the advertising needs:

  • Single holding company/​multiple agencies from the company 27%
  • Single AOR and independent agencies 25%
  • Multiple, independent agencies 24%
  • Single AOR 22%
  • Other 3%

The traditional AOR relationship is associated with a slow-​moving RFP process every time a marketer wants to make a change. Only 14% of marketers say they’re highly satisfied with the current agency model. Another 55% call themselves moderately satisfied. Despite these mediocre scores, marketers are slow to search for a new partner. The process is expensive and time consuming.

Instead, they’re trying out other business arrangements. For example, if they are testing the market with a new product that targets a new type of customer, they’re turning to smaller agencies. The smaller agencies offer fast and adaptive services.

Still, any change in agency services comes with costs. Marketers say their biggest issues in these cases fall along the lines of the cost of educating new agencies (53%) and finding/​vetting specialist agencies (34%).

Independent smaller agencies find themselves in demand because they have specialized knowledge, offer personalized service, possess unique creativity or understand the local market. They can increase their chances of winning new clients by doing their homework upfront and showing they’re eager to quickly and efficiently learn about their new business partners. If you're prospecting for new clients, check out the Local Account Intelligence Reports published by AdMall from SalesFuel. With over 400 profiles on businesses, you'll learn what these businesses are facing in the next year.

In the survey 55%, of businesses reported working with between 4–6 agencies. While this breadth of service partners can maximize creative solutions, the strategy could also result in maximum chaos. That’s why over 40% of marketers count on their smaller agency partners to focus on a specific niche. At the same time, they need some oversight. So, 34% of marketers use a large agency to coordinate planning across all of the partners.

These market trends send a clear message to agencies seeking business from large marketers. Find your niche and leverage it. Prove to your prospective partners that you can be a team player with the other agencies that have a piece of the marketer’s advertising pie.