What’s the right marketing agency model for your brand?

In our work with marketing organisations and brands in the UK and around the world we’ve identified some characteristics and principles that help determine the right marketing communications agency model for a brand or company.  At the core is a universal truth – which is that the agency model should reflect the strategy of the organisation.  But underpinning that there are some further considerations and levers that point the way to the right model.

At its most simplified, we’ve identified 7 key types of marketing and communications agency models:

They range from models which offer a greater number of agencies to work with to models that include a few or just one agency partner.  However, with more choice comes more complexity to co-ordinate and manage them; whilst a less complex interface may offer potentially easier governance but with less options and nevertheless require careful management.

It’s worth emphasising that a real-life example of an agency model may not be so cut and dried as this graphic suggests – in reality clients may deploy a hybrid of a couple of models, but there is generally one dominant model.

Many companies do not operate within these identified models.  Marketing and Procurement teams often approach us when their roster of agencies has become bloated over time or distorted form their original intent and they need support to address these issues and return to a carefully curated and managed choice of agency partner(s).

So what are the considerations that influence the identification of an agency model?

The Operating Model

What’s the operating model of the brand or company – centralised, decentralised or centres of excellence.  Luxury brands often favour a centralised model to ensure strong brand consistency and management.  Whilst brands that require cultural and market-nuanced communications (such as food or beverages) tend to favour a decentralised model.

The Geographic Remit

Global teams may require different models to their regional and market-based colleagues as the communications challenges and requirements are different, e.g. brand platform versus activation.

Role in the Communications Process

While creative, production and media obviously need to be aligned in one development process there may be some variation in the agency models adopted for these different disciplines.

Communications Task

The balance between brand and tactical work will also influence the model, including to some extent the disciplines and deliverables required within the overall Scope of Work.

Resourcing and Capabilities

The size of the marketing team, their experience, capabilities and maturity also needs to be considered when selecting an ideal agency model.  Whilst some of the models offer a simple interface via one agency group, the governance and management of the agency can be quite complex to put in place and optimise.

Conversely having too many agencies can be a considerable burden on both marketing and procurement teams because of the additional agency relationship management involved.

Budgets

Similarly some of the ‘single source’ agency models may be cost prohibitive to some brands and companies because of the overhead of centralised agency management.  Nevertheless for those brands that are able to fund a single source agency model there are efficiency and effectiveness benefits that can offset this overhead.

Industry Sector

The industry sector the brand or company operates in is one factor that does not necessarily influence the choice of agency model.  We are often asked by brands we work with to show them examples of agency models from their competitor set.  When we do this we are able to reinforce the universal truth that structure should follow strategy – because there isn’t a default sector model and we’ve been able to demonstrate that across multiple categories and industry sectors.

The following chart illustrates some of the tensions and characteristics that brands need to balance and consider in an agency model:

Macro Trends

There are some macro trends that are influencing all types of agency models and will have a significant impact on whether an existing model is fit-for-purpose in the future.

1. In-housing

In December 2023 we published with the World Federation of Advertisers a report on Global Trends in Agency In-housing.  Key insights from that report were the increasing use of in-housing with 66% of major brands surveyed having in-house offerings – a 16% growth from 2020.  With the skill-sets, scope and scale of the in-house resource also expanding.  With a desire by brands to have tighter control and flexibility, these trends are set to continue and have a bearing on the external agency model.

2. AI

But the biggest disruption to existing agency models and agency rosters used by brands is likely to be from AI, and the speed of that change will likely catch many brands off guard.  AI is offering considerable opportunities at multiple stages in the communications process:

• Data management and analysis
• Getting from insight to strategy more quickly
• Creativity
• Production
• Activation and optimisation

3. Convergence of Creative, Production & Media

Not a new trend but one that has been gaining traction over a number of years.  Connected consumer experience and the need for greater agility, scale and speed to market is driving integration and convergence of creative production and media.

4. The Rise of ‘Inside-out’ Approaches

An increasing focus on data-driven digital communication has led to a new approach emerging with digital-first content creation at the heart of the model set-up.

5. Client-side restructuring

Marketing Week’s 2024 Career & Salary Survey reveals almost half (46.5%) of marketing teams restructured in the previous 12 months.  A five percentage point increase over the prior year.  This suggests that many brands are still looking at how to position their teams best to grow and survive the current socio and economic conditions.  To stay in balance and alignment with their agency partners, restructured marketing teams need to look at the structure and model of their external resources.  Reinforcing again that structure should follow strategy.

Restructuring, whether that’s internal or external resources is difficult and shouldn’t be taken on lightly, it’s helpful to have external expertise and insight to challenge thinking, provide new perspective and independent impartial assessment.  If you are looking to restructure and review your marketing resources do get in touch to find out more.