Just one in 10 (11%) major international brands believes its current media agency model fits its future needs, according to research.
The study, by MediaSense and the World Federation of Advertisers, found a quarter (24%) of brands believed their model was unfit for future purpose, while a majority (64%) felt they had the correct model but there was “room for improvement”.
Future of Media Agency Models was based on online surveys completed by more than 70 multinational marketing organisations from sectors including CPG, healthcare, food and drink, retail and tech, as well as on interviews with global media agency chief executives.
The report said there had been a “marked shift” over the past two years “in the way agency models are being optimised by clients” and many had been on a “journey to simplify their model through consolidation”.
The research said the established holding company model was “well aligned to this ambition” and 77% operated within it, but 23% were “taking the simplification agenda even further, and aim to consolidate media, creative, data and technology into a single partner”.
Diffferent agency partners across media, creative, ecommerce and influencer meant it could be “highly challenging to deliver a truly integrated experience for consumers”, the report stated.
“The suggestion here is that a more simplified agency model, combining multiple marketing disciplines into one shop, could accelerate the journey towards true full-funnel marketing,” it said.
The survey found 45% of respondents were looking for more flexibility, specifically in the way they were serviced, and 37% were “looking for simplification through fewer and better integrated partners”.
More than half (53%) agreed that there would be greater centralisation of agency services over the next three years and 66% agreed that there will be more near- and off-shoring of agency services “to unlock efficiencies”.
When it came to compensation models, 52% thought there was “room for improvement”, 27% said it was aligned to future requirements, and 21% felt it was unfit. According to the report, commission or fixed-time and materials-based models “limit flexibility and fluidity” and 74% of respondents agreed that there would be a shift towards output or outcome-based pricing in the next three years.
Ryan Kangisser, managing partner at MediaSense, said: “The past three years have been transformative for the advertising industry with brands and agencies on a march to unlock much-needed capability, integration and speed.
“The blurring of lines between the different marketing disciplines is accelerating this, highlighting the need for agencies to evolve their models from channel- to consumer-centric.
“Although we may not be seeing media and creative coming back together (just yet), this study reveals a clear intention towards integration with an urgent need for talent and processes to make this a reality.”
Catherine Lautier, vice-president global head of media and integrated brand communication at Danone, and people and partners co-brand champion within WFA’s Media Charter, said: “Clients are looking for a more ‘networked’ model, where global agency capabilities can be leveraged to unlock speed, agility and talent.
“Yet this new WFA and MediaSense research reveals that the gap between expectation and reality is found to be largest for these very attributes. So, as an industry, we have work to do to come up with the models and approaches that unleash greater effectiveness.”