The marketing communications industry has found itself in a period of low fees and poor service, according to Stephen Knight, company founder and CEO at marketing agency network, Pimento.
Speaking at the Marketing Show North, Knight revealed that a survey of senior business figures – including CEOs, MDs and heads of marketing – found that while clients still seek plenty of ‘bang for their buck’, the industry is looking far beyond the obvious perception of value.
Polling opinions from 82 of the UK’s leading brands – including Visa, Caffè Nero, Celebrity Cruises, IHG and Inspired Education – revealed the sector had ‘lost sight of what’s important’.
These results tallied with the AAR's New Business Pulse report, which showed the total number of agency appointments in 2019 had fallen by 12.2% compared with the previous year – resulting in a ‘call to arms’ for the industry.
“With existing agency staff feeling increasingly stretched, corners being cut on quality control and stress levels reaching an all-time-high, is it any surprise to read that mental health charity, Mind, found that more than 70% of employees have experienced mental health problems?” questioned Knight.
Attitudes driven by millennials and gen z – whose value sets and demands differ from previous generations – are impacting on the traditional way of working, thinking and delivery models, and as such, a simple transactional business relationship will no longer cut it.
“We’re seeing agencies struggling to remain relevant at a time when clients – and their respective procurement departments – are looking to ecosystems of creative suppliers rather than lead agency models,” continued Knight.
“The culmination of a myriad of communications channels, the rise of digital and the vast array of agency solutions and specialisms on offer has seen clients drive down the price of services in a crowded market – leaving profit margins tumbling. The annual Kingston Smith survey showed the average profit margins for the top 50 agencies at worryingly low levels.”
The resulting advice from Knight is that companies must now look to harness the power of data far beyond personalisation, and aim to once again deliver outstanding creativity and innovative solutions which truly push the envelope.
Knight’s final statement rallies the industry to regain its focus: “Clients want honesty, flexibility, fair value and collaboration with other specialists. It’s no longer necessary for all talents to exist under a single roof – moreover, agencies should look to create a virtual company for the benefit of each client if they’re to establish themselves as trailblazers.”