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Outlook Report 2010: The Great Recession and Ad Agency New Business

May 24, 2010

Advertising and PR agencies have lost 65,000 jobs, or about 14 percent of the pre-recession total. Moody’s Analytics estimates our industrywill lose even more within five years.

Federal Reserve Chairman Ben Bernanke calls it “the worst financial crisis in modern history.” His predecessor, Alan Greenspan, says it was “the most virulent global financial crisis ever.” The resulting recession was longer and deeper than any the U.S. has suffered since World War II.

On hopefully the heels of The Great Recession, my good friend, David Deal sent me the new sixth annual Razorfish Outlook Report 2010, it suggests the economic recession is subsiding.

“For this year’s report, we examined the data differently to acknowledge the new realities the Great Recession presented our clients and us,” said Jeremy Lockhorn, VP of emerging media. “We analyzed how our clients adapted to the challenging environment, what media proved effective, what didn’t deliver as expected, and how this information can be used to direct successful strategy moving forward.”

The report explores the effect last year’s down economy had on media consumption and client spending. The report predicts mobile and social media marketing will become key parts of clients’ media budgets. Among the findings:

There was a recovery in spending in 2009 over 2008, albeit a small one. The average client media spend increased 4% in 2009, as opposed to decreasing 13% in 2008.
Contrary to popular belief, not every brand shifted its advertising focus to direct response as a result of reduced consumer spending. In fact, 60% of clients who did switch the approach of their ads actually moved to a more brand-focused message.
Clients continued to experiment with new media. Digital out-of-home in particular experienced significant growth, along with ad exchanges, data brokers and social media.
Social media, which has exploded in popularity over the past few years, still only garners 4% of average client media spend. However, much of the cost of social media comes in the form of labor, not ad space – an important distinction when analyzing and planning media budgets.

This report also highlights other media trends, which are currently not getting as much attention as mobile and social, but will still have an impact in 2010, this year’s Razorfish Outlook Report can be viewed in its entirety online at http://razorfishoutlook.razorfish.com

Quick Ad Agency TwtPoll: Is your agency’s business up, down or about the same from 2009? Click Here

Additional articles that may be of interest:

Leave a Comment » | Agency Leadership, New Business Trends, Research | Tagged: Advertising, agency new business, Digital, Razorfish | Permalink
Posted by Michael Gass

Ad Agency New Business: What irks CMOs most about their current ad agency?

April 20, 2010

If want to know what irks CMOs the most about ad agencies the recently released Gerson Lehrman Group, GLG Councils Report —“Closing the CMO / Agency Gap: How Agencies Can Win Business and Build Stronger Client Relationships,” provides some excellent insight.

This report is based on a survey of more than 80 senior marketing executives. It analyzes the disconnect between client expectations and the performance of marketing services agencies.

This study was designed to help agencies better understand how marketing executives view their agency relationships and how they make decisions on engaging an agency.

The relationship between agencies and their corporate clients is more important now than ever before and needs fixing. As Founder of The CMO Club, I constantly hear from CMOs in the club about their challenges and concerns, particularly regarding the gaps in their agency relationships.

Right now, there is a considerable gap between the service CMOs receive from marketing services agencies, and the service they expect and need from them.

Pete Krainik, Founder of The CMO Club and Member of the GLG Councils

Insight: What about their current ad agency irks CMOs the most?

More than half (51%) of the respondents reported that agencies did not have sufficient industry knowledge and clients felt their agencies had not conducted sufficient research.

Insight: Research on a prospective client’s market AND business strategy is critical.

79% of respondents said they decided against hiring an agency because of issues related to the agency’s understanding of their business, market, or how they could add value to that business.
91% of respondents listed the above three factors as the most important components for making a decision about engaging a particular agency.

Insight: CMOs want agencies that do their homework, even once business is won.

49% of respondents expected a marketing agency to invest at least 20 hours of research into their industry, business strategy, and product prior to a pitch.
88% of respondents stated that agency understanding of their industries and business was either “critically important” or “very important.”
52% of respondents reported the most frustrating aspect of their agency relationships was a “lack of industry or street knowledge” or “not sufficient diligence in campaign” development. When asked what frustrated them most about their experiences with agencies, they report, “agencies not willing to do their homework – proposing cookie-cutter solutions,” and that agencies need to have a “[g]ood understanding of the technology and positioning.”

Insight: Agencies get passed over by marketing executives for three primary reasons:

Marketing executives strongly indicated they were either not convinced of the value of what the agencies were offering (34%)
They were concerned the vendors did not have sufficient market insight (26%).
The third ranked reason agencies were not chosen, “not understanding needs” (19%).

Insight: Gap between client expectations and agency services

Clients are dissatisfied with the level of business and market knowledge that agencies possess, both during the pitch process and throughout the relationship. A significant gap exists between what marketing executives expect and what agencies offer. The gap is caused primarily by inadequate research on client strategy and market.

Developing and demonstrating this knowledge is key for agencies that want to secure new business and maintain a strong existing relationship with their clients. Social media provides a great opportunity to both develop and demonstrate your agency’s knowledge to targeted prospective clients.

Click Here – to download the full report

5 Comments | Agency Leadership, Agency Search Consultants, Best Practices, Research | Tagged: Agency client repationships, Blogs I Recommend, GLG Councils Report, Michael Gass, Pete Krainik, The CMO Club | Permalink
Posted by Michael Gass

If you could offer one piece of advice to your advertising agency what would it be?

March 17, 2010

New analysis of chief marketers’ Attitudes on Agencies released at 4A’s Transformation 2010 Conference

In January 2010, Ad-ology Research conducted a survey of chief marketing professionals to study their attitudes about the outsides agencies they employ and to forecast their marketing and advertising plans for 2010.

Among the survey questions asked, “If you could offer one piece of advice to advertising/marketing agencies in general, what would it be” Here are some of the responses from among 327 chief marketing professionals:

Try to become more knowledgeable about the product category than your client.
Talk less and listen more.
Do a better job with the upfront strategic messaging part.
Act as a partner, not only a provider.
Know our markets.
Know our industry and be willing to offer suggestions not previously considered.
Social media knowledge is a must.
Simply respond in a timely and professional manner.
Do not add too many layers between the client and the creative folks.
Be good to your employees – there is way too much turnover.
Make sure you have the required expertise in the industry that you are selling to.
Talk in plain language and not technical jargon.
Hire people based on their passion and work, not just based on the education they have, creativity cannot be taught.
Be excited and treat each opportunity with a fresh look.
Come work for the company you are representing for a week to get a feel for our values and goals.
Concentrate more on ROI.
Get Creative! Partner with us – don’t position yourself as the “parent” and we’re the “child.”
Over communicate.
Be nice.

Other key findings:

19% of companies with marketing budgets less than $1 million say they do not use social media, 34% say the same for online video.
Companies with marketing budgets more than $1 million are more likely to have mandates to improve customer insight and retention.
Fifty percent of those surveyed plan increased marketing budgets in 2010 versus 2009, with social media, online advertising and online video expected to see the greatest spending increases.
After cost, marketers tend to choose agencies based on creative capability and quality of previous work.

“There are three deadly account service sins for advertising agencies: Inadequate communication, relying on the clients for industry insights and not listening,” said C. Lee Smith, president and CEO of Ad-ology Research.

Additional articles that may be of interest:

9 Comments | New Business Trends, Research | Tagged: 4 A's, Ad-ology, advertising agencies, C. Lee Smith, chief marketing officers, client survey, president and CEO of Ad-ology | Permalink
Posted by Michael Gass

Ad Agencies in “The Great Race” for New Business

January 4, 2010

The whole advertising industry is in a flux. Forrester’s Research has referred to it as “the great race” as traditional agencies scramble to add digital capabilities and digital shops seek capabilities beyond being Web site and banner ad specialists.

“When you consider the fact that traditional budgets are getting slashed, that interactive budgets are expected to grow significantly in the next five years and that technology is becoming more and more integral to marketing.

We see digital becoming the backbone of marketing and technology becoming so vital that everyone needs digital capabilities. Everyone is coming from a different strength. Everyone is trying to add the other’s capabilities.

The market is now ready to take a big step to join, and in some cases even replace, traditional agencies in leading marketing strategy for top brands.” Sean Corocran, The Forrester Blog for Interactive Professionals

Interactive agencies may have an enormous opportunity but all agencies are adapting and will be competing more than ever.

The role of small-to mid-size ad agencies will continue to evolve. Is your agency ready?

Additional articles that may be of interest:

12 Comments | New Business Tools, New Business Trends, Research | Tagged: Advertising Industry, digital shops, Forrester's Research, Interactive Professionals, Sean Corocran, The Forrester Blog | Permalink
Posted by Michael Gass

23 ad agency blogs. Select the one that best understands social media.

December 28, 2009

Examples of ad agency blogs. Review and decide which of them really “gets it” when it comes to social media. Pick-up ideas for your own blog.

23 ad agency blogs have been submitted to Fuel Lines. Vote for the best agency blog for the month of December. The winner will be featured on Fuel Lines throughout the month of January and included in the voting for ad agency blog of the year.

Cast your VOTE by Clicking Here

These are the ad agency blogs submitted for the month of December:

Alstin Communication’s Blog, Philadelphia, PA
ART + Science, The Partners + Simons blog, Boston, MA
B2B Ideas@Work Blog, MLT Creative, Clarkston, GA
Beloved Experiences, Beloved Experiential, Orlando, FL
Brand Rants, The Duffy Agency, Malmo, Sweden
BroganBlog, Brogan & Partners Convergence Marketing, Birmingham, MI and Cary, NC
Dana Communications blog, New York, NY
Content to Commerce, Big Fuel, New York, NY
Demi & Cooper Advertising Blog, Elgin, IL
Fluid’s Big Idea Blog, Fluid Studio, Salt Lake City, UT
FootPrints, Walker Sands Communications, Chicago, IL
Logical Juice, Media Logic blog, Albany, NY
Media Two Point {OH}!, Media Two Interactive, Raleigh, NC
MDi Media Group Blog, Mobile, AL
New Jersey Marketing, Advertising and Public Relations, a blog from Brigham and Rago Marketing Communications, Morristown, NJ
RIESTER BLOG, RIESTER Agency, Los Angeles, Phoenix, and Salt Lake City
The Core Nation | Rants, Core-Create, Inc. Somerset, NJ
Share, BCAD Group, Toronto, CDN
Sound Bytes, Mason, Inc. Bethany, CT
Tangent, Sharpe Partners Interactive Agency, New York, NY
The Ad Contrarian, Hoffman/Lewis advertising, San Francisco, CA
TV Is Not Dead, Ad Partners, Tampa, FL
Up Your Ups, Wheeler Advertising, Arlington, TX

Leave a Comment » | Research, Social Media | Tagged: Ad Agency Blogs, Michael Gass, Social Media | Permalink
Posted by Michael Gass

10 Most Popular Blog Posts About Blogging for New Business

December 4, 2009

A blog is now as important to your agency as was your agency’s Website. The blog is becoming the “gate-way” and the face of the agency as its Website becomes more the agency’s brochure. Here’s some excellent resources to help your agency blog for new business.

Zemalf.com is the personal blog of Antti Kokkonen. He has assembled a great list of 42 most popular blog post about blogging in 2009. The posts on Antti’s list were picked from Digg, Delicious, Twitter and other social networks, based on the number of “votes” the posts have received in those services.

I perused through this list to find the top 10 that are most relevant and helpful for your agency’s blog:

Click on the following link for the entire list of the: 42 Most Popular Blog Posts About Blogging

Four people that I read and highly recommend as a resource for blogging:

Additional articles that may be of interest:

1 Comment | New Business Tips, New Business Trends, Research | Tagged: Ad Agencies, ad agency blog, Antti Kokkonen, new business, Social Media | Permalink
Posted by Michael Gass

How Teens Use Media: A Nielsen report on the myths and realities of teen media trends

June 27, 2009

This is one of those rare post stepping outside the sphere of agency new business. I found this new Nielsen report very enlightening and wanted to share it with my readers. The report debunks a lot of the myths on “How Teens Use Media.”

You may be surprised to learn that teens can often be reached by the same means as their parents.

Here are a few key findings:

Teens are NOT abandoning TV for new media: In fact, they watch more TV than ever, up 6% oveer the past five years in the U.S.
Teens love the Internet … but spend far less time browsing than adults: Teens spend 11 hours and 32 minutes per month online – far below the average of 29 hours and 15 minutes.
Teens watch less online video than most adults, but the ads are highly engaging to them: Teens spend 35% less time watching online video than adults 25-34.
Teens read newspapers, listen to the radio and even like advertising more than most.
Teens’ favorite TV shows, top websites and genre preferences across media are most are mostly the same as their parents.

Click here to view the entire report.

8 Comments | New Business Trends, Research | Tagged: new media, Nielsen, teens, traditional media | Permalink
Posted by Michael Gass

Report Paints a Painful View of Ad Agencies

July 2, 2008

Forrester Research believes today’s ad agencies are not well-structured to take on tomorrow’s marketing challenges, needing to move from making messages to establishing community connections.

In a report, the research firm paints a painful view of ad agencies.

“The current state of advertising is in “a world of hurt.”

Consumers are tuning out the messages the ad industry is determined on producing.

Forester believes ad agencies need to be organized around communities, not disciplines. What it is calling “the connected agency” would not only know certain communities but also be active members of these groups. Pushing messages would give way to encouraging voluntary engagement, and ongoing conversations would replace time-based campaigns.

“I can’t say there’s an agency now that’s the agency of the future,” said Peter Kim, a Forrester Research analyst and co-author of the report.

The research firm is certainly not the first to assert that agencies haven’t kept up with changing consumer habits and technology. Accenture in November said the shift from analog to digital media is catching agencies flat-footed.

In Forrester’s view, a simple fact is driving the need for needed change in how advertising agencies are structured: consumers increasingly do not trust marketing messages. Instead, they rely on advice from friends and others in their various communities to make product decisions, while using tech tools to tune out ad messages they deem irrelevant.

“I don’t think agencies are going away,” Kim said. “They’re going to be the ones that help marketers to communities of mutual interest.”

Forrester said creative and media agencies are still built around the mass model: to either produce messages or distribute them. Digital agencies have gone farther, in Forrester’s estimation, in centering their businesses around “interaction,” but it finds them lacking in the branding skills of traditional ad agencies.

Clients are finding their agencies lacking. Forrester quotes one marketing exec calling agencies “a necessary evil,” rather than a strategic partner to grow his business. Another complains, “Most senior ad execs appear more comfortable with conventional channels, which they claim are ‘integrated’ because they have tacked on a Web site.”

“The first step [agencies] need to take is with digital integration,” Kim said. He added that the organization of ad agencies around specific skill sets is the root of their problems.

Your ad agency may need to break some bones to reset them correctly.

12 Comments | New Business Trends, Research, Social Media | Tagged: Blogs I Recommend, forester research, Michael Gass, midsize advertising agencies, peter kim, small advertising agencies, the connected agency | Permalink
Posted by Michael Gass