Digital Agencies and Client Relationships

Adam Hopkinson and Sam Garrity

Originally published as a podcast on all platforms 21st November 2021. You can listen here

Introduction The digital advertising landscape has been undergoing significant transformations, influenced by shifts in consumer behaviour, technological advancements, and the evolving business models of agencies. This essay delves into the nuances of these changes, examining the impact on digital agencies, the trend of in-housing, and the necessity for standard reporting in the industry. By exploring these themes, we aim to unravel the complexity of the current state of digital advertising and envision possible future directions.

The Changing Landscape of Digital Advertising

• Digital advertising, once dominated by agencies with a traditional model, is witnessing a paradigm shift. Clients are now seeking more than just execution of advertising campaigns; they desire strategic partners who can navigate the complexities of the digital world and deliver innovative solutions.
• Agencies are expected to evolve, integrating data science, creative work, and media planning into a seamless service. However, there is a notable inconsistency in the quality of creative work across the industry, raising questions about the future of digital agencies and their role in brand building and advertising.

In-Housing and Agency Consultancy

• In response to these changes, many brands are considering or have already started to bring advertising functions in-house. Agencies are finding themselves in a unique position, providing consultancy to assist clients in this transition.
• This shift has not rendered agencies obsolete; instead, it has transformed the nature of their engagement with clients. Agencies are now taking on a more consultative role, helping clients build internal capabilities while continuing to offer strategic and specialised services.
• The trend of in-housing is predominantly observed in larger businesses with substantial budgets. However, it poses significant challenges in terms of talent retention, infrastructure, and the ability to keep pace with the rapid changes in the digital landscape.

The Need for Standard Reporting

• The digital advertising industry is in dire need of standard reporting metrics. The current state of affairs is marked by inconsistencies, with different brands and channels attributing the impact of advertising in varied ways. This lack of measurement consistency has led to ongoing debates about the efficacy of brand versus performance advertising.
• Drawing a parallel with the financial industry, the essay highlights the transformation that took place after the 1929 stock market crash. The creation of the Securities and Exchange Commission (SEC) and the establishment of global accounting standards provide a blueprint for the advertising industry.
• By adopting standard reporting metrics, the advertising industry can move towards a more transparent and effective system, fostering trust and accountability. This is particularly crucial as the industry grapples with a crisis of confidence and the need to deliver better consumer experiences.

Conclusion In conclusion, the digital advertising industry is at a crossroads, navigating through challenges and opportunities presented by technological advancements, changes in consumer behaviour, and the evolving roles of digital agencies. The trend of in-housing, while significant, appears to be a short-term solution for larger brands, with mid-market brands continuing to rely on the expertise and resources of agencies. The need for standard reporting is paramount, as it would address longstanding issues of transparency and accountability, fostering a healthier advertising ecosystem. Digital agencies have a unique opportunity to spearhead this change, advocating for standard metrics and best practices that benefit the entire industry. The future of digital advertising hinges on the industry's ability to adapt, innovate, and uphold the highest standards of transparency and effectiveness. By embracing change and striving for excellence, digital agencies can continue to play a crucial role in shaping the advertising landscape of tomorrow.

Sam Garrity is the Chairman and Co-Founder of RocketMill (now PMG)

Adam Hopkinson is MD of Pashn media agency and presenter of the podcast Let's Do The Right Thing.