Ad Agencies and the Cockroach Instinct

competitors

In the complex world of marketing, media companies and ad agencies are hoping for a share of enterprise ad budgets. As we continue to move to more digitization of media, which of these service providers will have an edge? Brad Wieser, Senior adagencycompeteResearch Analyst at Pivotal Research Group recently published an article  supporting Publicis’ Rishad Tobaccowala's  contention that ad agencies will adapt and survive as successfully as cockroaches have done over the past few million years.

How will agencies adapt?  Wieser suggests first looking at the expected expansion of the global ad market for 2014 which stands at better than 2%. He points out that the market has only exceeded that level in 2004 and 2010 in the past 13 years – a particularly challenging time economically.  This year's ad market growth is good news for media companies. But, if the global economy remains stable in 2014, Wieser believes that large publicly-​traded agencies could be looking at up to a 5% jump in revenue.

He notes, “over the very long-​run, agencies have the potential to perform better than media because of marketers’ increasing reliance on un-​paid media and the role that agencies have in performing related work.”  Pivotal Research is one company that  believes the future for ad-​supported media may be dimmer than it is for agencies. Analysts are looking at the way marketers are engaging with paid-​media providers. The negative trend for traditional print has been obvious for a while, but will marketers shun other paid media sites in favor of using their own Big Data resources to target consumers with personalized e‑mail campaigns and digital coupons through mobile apps? This may happen to some extent, though Wieser reminds his readers that  ‘digital-​centric entities’ like Google and Facebook will add a new dimension to the paid-​media universe.

At the same time, it’s worth asking if media companies will transition into offering more digital and agency-​like services to their marketing clients in order to survive in the new world of advertising.

What’s your take on this topic? Will ad agencies rule or will they find themselves competing for clients with media companies who will also adapt and offer marketers new services?

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.