Chinese brands are working with more agencies than ever, and on shorter tenures, as they seek out specialist skills rather than integrated solutions.
That's according to R3 and Scopen's Agency Scope Study, which compiles results from interviews with 500 senior marketers in China that took place in 2019 and 2020 to understand the process, perception, and performance of the agencies they work with. This report analyses more than 600 client-agency relationships.
It found that Chinese marketers work with 6.6 agencies on average, an increase of 13.7% from 2018, and the highest number in R3's benchmark across eight countries.
However, while there are more opportunities for agencies, this has resulted in a decrease in the duration of client-agency relationships. Chinese marketers work with agencies for an average three years—significantly below the global benchmark of 4.6 years.
This marks a shift from previous years, when R3 observed marketers consolidating their accounts with fewer agency partners.
“The move away from consolidation toward specialisation says a lot about the strength and importance of digital across media, retail, social, experiential, and entertainment,” notes R3 China MD Sabrina Lee. Aside from brand communication, Lee notes that media and events are two areas where Chinese marketers are looking for agencies with deep understanding of trends and consumer behavior.
"As the media landscape becomes more fragmented, and integrated capability is still lacking, it is inevitable that marketers will be seeking more expertise,” Lee adds.
The model favours China's growing cohort of independent shops that offer specialist services over the broader offerings of global agency networks.
Indeed, Lee notes: “Holding companies who are not able to meet the wide-ranging demands of China’s marketing ecosystem will lose out to independents.”
More than two-thirds (68.7%) of marketers interviewed said they prefer to have specialist capability operating within each discipline, versus one-third (31.3%) who prefer to work with integrated agencies.
Cesar Vacchiano, founding partner and CEO of Scopen, adds: “What we’re seeing is that China’s marketers have not been well supported by integrated offerings available and this is driving them to look elsewhere for capability.”
Elsewhere, the study found that the relationship between marketing and procurement is improving with 60.7% of professionals surveyed saying that both departments are equal partners on the agency selection process. Pitch remains the most popular selection method, with 91.5% of marketers opting to use this approach, and increase in use of workshops and chemistry sessions.
On the benefits of in-housing, around a third (35.2%) noted that in-house teams have better knowledge about market, consumers, and the brand, with a similar proportion (33%) believing that in-housing delivers cost savings and increased efficiency.
Incentive payments are becoming more accepted in China as marketers look to finds way to motivate agencies and reward performance—14.3% of marketers have an incentive payment as part of their remuneration system, up from 8.1% in 2018. Although this number is still well below the global average of 24.5%. More than 50% of marketers would agree to negotiating higher fees for improved quality of agency services.
When it comes to brands that marketers most aspire towards, Apple and Huawei were voted the top two companies most respected in China for their marketing.