Navigating Media Investment Models: How Hybrid Models Could Change the Game

eMarketer’s analysis of US Ad Spending suggests the media industry is stabilizing after the turmoil of 2020. ?Direct, or in-house, spending has grown slowly following huge growth from 2019-2021.? Independent agencies have settled in around 41-42%.?? Agency holding companies are continuing to cede share but at minimal rates.

I don’t know about you, but the ecosystem has felt far from stable in the last few years. Is the stability real? Will it last? Or is there something else going on beneath the surface?? In this article I propose that there is a fourth category hiding in this chart, the Hybrid model.

For many brands, agencies, and advertisers, the media landscape feels less like a smooth road and more like navigating shifting sands. The challenges faced by large agency groups and the rise of hybrid models signal an industry in transformation. To thrive in this environment, brands must rethink their media model, blending agility, expertise, and innovation in ways that fit their unique circumstances.

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The Erosion of Large Agencies’ Value Propositions

?For decades, large agencies dominated the media ecosystem, offering scale, talent, and technology as their core strengths:

? Scale: Agency networks provided upfront discounts and valuable publisher partnerships, creating efficiencies for advertisers.

? Talent: Large teams of junior employees executed complex campaigns across regions, filling gaps in advertisers’ expertise in TV, print, and even early social media.

? Technology: Partnerships with data aggregators delivered insights advertisers could not access on their own.

These advantages once made agencies indispensable. However, the modern marketing environment has reshaped their relevance:

? Scale: The rise of biddable, programmatic platforms has undermined traditional scale discounts. Upfront agreements and large teams now hinder agility.

??Talent: Retail media highlights the disparity, with in-house retail talent often outpacing agency counterparts who lack firsthand category expertise.

??Technology: Agencies have fallen behind in developing proprietary tools, particularly in retail media, where innovation is essential.

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Acquisitions to the Rescue

To address these gaps, agencies have turned to acquisitions.? Omnicom acquired Flywheel Digital in 2023 after Flywheel built a proprietary suite of tools supporting eCommerce and Retail Media.? Most recently, Publicis acquired Mars United Commerce, formerly the largest independent commerce marketing company in the world. ?While these moves provide access to new capabilities, they often struggle to maintain the acquired company’s innovation and service levels. Much like CPG giants acquiring startups, the results can be mixed.? We’ve all seen this movie before:

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1. The acquired company is absorbed into the legacy playbook, losing its original edge.
2. Advertisers, drawn by the promise of something new, find the spark that differentiated the startup has faded.
3. The cycle repeats as gaps in innovation persist.

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Hybrid Models: The Middle Ground

Amid this upheaval, hybrid models have emerged as a powerful alternative. Rather than relying solely on agencies or fully in-housing media operations, brands are finding value in a blended approach tailored to their needs.

Hybrid models are gaining traction because they address the increasing complexity of the media ecosystem while rejecting the outdated “build vs. buy” dichotomy. Their key advantages include:

??Agency Infrastructure: Brands can leverage agencies’ resources, from junior talent to scaled buying in non-programmatic channels.

??Integrated Strategy: In-house leadership uses proprietary data—such as supply chain forecasts or profitability metrics—for more informed decision-making. Leaning on the brand for strategic leadership also brings a deep understanding of the unique category dynamics and a holistic view of their end-to-end business operations, ensuring that media strategies are aligned with broader business goals.

??Aligned Incentives: By reducing dependency on external partners, brands minimize conflicts of interest tied to non-transparent buying practices.? We touched on the topic of incentives in last month’s article focused on Managed Service vs Self Service.

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Hybrid Models in Action: Fitting the Strategy to the Brand

?To fully appreciate the potential of hybrid models, I’ve found the analogy to a golfer buying their clubs to be illuminating. This process, called a club fitting, is a deliberate and highly personalized approach to choosing the right tools for success.

During a fitting, a golf professional asks detailed questions and uses precise measurements to customize clubs for a player’s unique abilities and goals. The process doesn’t assume a one-size-fits-all solution; instead, it focuses on tailoring the tools to maximize performance.

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Here’s how the analogy applies to media investment strategies:

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1. Assessing Experience and Skill Level

o?? Golf Fitting: Are you an experienced golfer, or are you just starting out?

o?? Media Fitting: Does your brand already have internal media expertise, or are you starting from scratch?

o?? Example: A company with robust internal teams might lean heavily into strategy-driven hybrid models, while a novice might prioritize external agency partnerships.

2. Understanding the Environment

o?? Golf Fitting: What type of courses do you typically play on? Is the ground soft or firm, and is the weather usually hot or cold?

o?? Media Fitting: What complexities define your category? Do your campaigns focus on retail-heavy media, niche platforms, or broader mass-market strategies?

o?? Example: A retail-heavy brand may need in-house talent with deep category knowledge, while a mass-market company might rely more on agency buying power.

3. Frequency and Commitment

o?? Golf Fitting: How often do you play? Are you committed to practicing and improving?

o?? Media Fitting: Are you prepared to invest in hiring, training, and retaining talent? How much effort will you put into building long-term capabilities?

o?? Example: Brands willing to invest in ongoing training may build a hybrid model where in-house teams handle strategy, while agencies execute tactical campaigns.

4. Defining Goals

o?? Golf Fitting: Are you looking to have fun and play recreationally, or do you aspire to compete at the highest levels?

o?? Media Fitting: Is media a cost center to manage or a growth engine to accelerate? Are you aiming for industry leadership or simply to keep pace with competitors?

o?? Example: High-growth brands often view media as a strategic driver and may adopt aggressive hybrid models, while more conservative firms might focus on efficient cost management.

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The Impression that I Get from the golf fitting analogy is that no two brands— or golfers —are the same. The best strategy depends on aligning tools, expertise, and goals with the specific needs of the individual or organization.

We’re all well versed in diagnosing ourselves based on an article we found.? Highly encourage brand side media leaders to answer these questions before you commit to a model that may not be custom fit for you.

Hybrid models are not a one-size-fits-all solution. Their success depends on each advertiser’s category, capabilities, and vision. Yet, for those willing to rethink traditional approaches, they represent a chance to turn media investment into a strategic advantage.?