What Are 10 Great Ad Agencies Of 2013, According To CMOs?
By Avi Dan
President, Avidan Strategies, LLC
Last year, I reached out to agency search consultants to ask them for their top agency picks. This year I asked 1,850 CMOs and other marketing executives from mostly domestic companies to weigh in on ad agencies, via an online, multiple-choice survey. Included in the choices were the top 30 advertising agencies as ranked by trade publication Advertising Age based on revenue. Respondents could also write in their selections. The survey was conducted Nov. 19-25, 2013.
Wieden + Kennedy emerged this year as the favorite.
The agency, which creates advertising for Old Spice, Coke, ESPN , and Nike, was voted as the best all-around agency by 66% of the respondents.
That first runner-up, receiving 36% of the votes, is seven-year old Droga5. The agency established its credentials with innovative and fresh work, such as launching the UNICEF Tap Project, an initiative encouraging restaurant patrons to donate $1 for tap water typically served with meals.
It now works for Coca-Cola, American Express, Mondelez, Unilever and Google’s Motorola.
The second runner-up is Grey, which was selected by 34% as the best agency. Once known for mundane advertising, it is now a creative frontrunner with ads for DirecTV and Febreze, and winning a coveted Emmy.
The top three are followed by these agencies as voted by the CMOs:4. BBDO (30%) 5. Ogilvy (24%) 6. The Martin Agency (16%) 7. Leo Burnett (14%) 8. CP+B (12%) 9. Goodby Silverstein & Partners (9%) 10. Publicis (6%)
In this survey, some marketer concerns emerged: There is noteworthy frustration among marketers regarding agencies’ inability to manage integrated marketing communications. Another area of discontent is the view that agencies have not adjusted their business model to the Digital Age. Marketers also seek more efficient agency operations.
I also probed marketers’ views about what it takes to win a pitch, and what is their perception of the advertising holding companies.
Integrated Marketing Communications
Integrated marketing communications has turned into the area of the greatest importance to the CMOs, who desperately seek a holistic approach to engage consumers.
Still, it was astonishing to see that 68% of the respondents put integrated marketing communications ahead of “effective advertising” (65%), when they were asked what the most important thing is that they want from an agency. Integration is also among the top reasons that marketers dismiss an agency and look for a new one, and it is a pivotal factor in selecting a particular agency in a pitch.
Why is an agency’s skill at integrated marketing communications so important to marketers?
The answer has to do with the pressure that CMOs face in a rapidly changing environment. When asked how their job has changed, most, or 54%, point to the fact that marketing is becoming more complex due to the explosion of communication channel options that is making their job more challenging. An agency partner that can integrate messages holistically across channel is at a premium.
Accountability and measurement is clearly keeping marketers up at night as the economy continues to be sluggish across industries and as marketing budgets come under greater scrutiny by the CEO and the board.
This is among the top facets of the client/agency relationship and 53% identified it as a key area of concern. This should be worrisome to agencies, as most have no clear framework, methodology or process for dealing with the accountability issue. One CMO summarized it by commenting: "For years agencies weren’t accountable. Now they are and the model is crumbling. Advertising that doesn't drive business will lead to a quick end to the ad budget and perhaps the agency as well."
In a shift from a decade-long practice of putting pressure on agencies to cut their fees, 62% of marketers now believe that the most prudent way to manage the economics of their agency relationships is improving the efficiency of agency operations.
What’s going on here is, I believe, a growing realization among these marketers that you can’t cut fees forever. Something’s got to give. Forcing agencies to work at a razor-thin margin is likely to boomerang on marketers’ ability to remain competitive. At the same time, there is much redundancy and practices that, if streamlined, could benefit both parties.
But efficiency is not a one-way street. A third of all clients report that they manage over 50 agencies, and 22% have a roster of over 100 agencies. Rosters of this size can be hard to manage, no matter how big the client is.
For their part, marketers recognize that they can make improvements by writing better briefs (74%) and getting senior client management involved in projects earlier (52%).
The Agency Model
When asked to pick up a statement that best describes how traditional agencies are adapting to the Digital Age, 48% say that agencies “[Are] struggling to transition their business models,” while another 26% say that agencies “Are acquiring assets, but are having difficulty integrating digital capabilities.” In other words, almost three-quarters of the marketers are not impressed by the way traditional agencies are transforming themselves to adopt digital marketing capabilities. A typical comment from a respondent was, “I think they have given up adapting and are laying low. I see very little interest in changing.”
But marketers too are slow to adapt. While people spend more than 30% of their time online, 60% of marketers allocate less than 20% of their budget to digital, and 19%, allocate less than 10% to it.
We also probed the marketers’ view of the holding company model. Asked if they think it adds value, 81% said “No.” Even in areas that one would think the holding companies add value, marketers tended to be skeptical – only 14% believed a holding company can negotiate better rates from the media, and a mere 7% believe that a holding company solution, concentrating all communication needs within a single holding company, will result in reduced fees for the Advertisers.
The survey also addressed one of the most critical areas for marketers and agencies: the pitch.
When asked what typically precipitates an agency change, three key issues emerge, “Dissatisfaction with creative work” (57%), “Change in marketing leadership” (53%), and “Lack of ability to deliver an integrated approach” (48%).
Asked what is the most important consideration when selecting an agency, 68% point to “Chemistry” with the proposed agency team; 62% decide based on “The belief that the creative presented is likely to be a Big Idea,” while 56% point to an agency’s ability to manage messages across channels as the key consideration.
Again, the importance of delivering on integrated marketing communications surface as a top concern for marketers.
Most believe that the CMO should “own” the pitch – 88% say that the CMO should be involved in the process, while 84% say that functional heads in marketing and communications should be involved, 38% point to P&L owners, and 36% believe that the process should include procurement. When it comes to the final say as to which agency to hire, 75% point to the CMO as having the final say, while 18% see it more as a collaborative decision by the entire marketing team.
As pressures mount, relationships are fraying. A prominent CMO voiced a dire warning, “Agency masthead doesn’t matter. It’s the team of three or four people that makes the difference. Everybody has a hub-and-spoke wheel, everybody has proprietary insights, and everybody has an angle. Who has accountability? It is an industry that is a few short years away from crashing on itself. It is boxing – very shortly a mixed martial arts model is going to come along and, like boxing, ad agencies will largely become irrelevant.”
And yet, if agencies embrace what’s coming rather than preserve what’s been, it does not have to be that bleak.
This article is reprinted with the permission of Forbes magazine.
Avi Dan is the Founder and President of Avidan Strategies LLC, a marketing consulting firm that specializes in optimizing client-agency relationships. It conducts agency searches, remuneration, performance audits and helps procurement executives improve the efficiencies of marketing operations. He can be reached at email@example.com