Media agencies once used their buying power to compete with each other.
But as clients transform their marketing processes for a digital world, clout doesn’t have the cache it once did, according to Forrester’s first Global Media Agency Wave Q3 2018, which was released Monday.
“In a programmatic environment, buying clout becomes less important,” said Jay Pattisall, principal analyst at Forrester and author of the report. “The smart agencies are making strides to build consulting, marketing and data analytics services beyond conventional media services.”
The report evaluated the offerings of the eight largest media agencies based on 23 criteria across planning and buying, strategy and market presence. Forrester evaluates and scored agencies based on their product fit, client testimonials and demand from Forrester clients.
Forrester named IPG’s UM and Publicis Groupe’s Zenith as leaders; Publicis’ Starcom and Dentsu’s Carat as strong contenders; and Omnicom’s OMD and WPP’s Mindshare, MediaCom and Wavemaker as contenders.
UM made leader status for “pursuing a vision to become a media consultancy that delivers scale,” the report said, as well as for its investments in AI and machine learning, strategic data partnerships and business analytics. The report recognized Zenith for embracing the convergence between media and commerce with investments in ecommerce, personalization, consulting, AI and data visualization.
“Media and commerce are colliding,” Pattisall said. “The agencies that play into that collision are the leaders. They’re not describing themselves as media agencies anymore. Although its part and parcel with what they do, they’re doing so much more.”
The report deemed Starcom a strong contender for its investments in data and human experience technology, but it lacks in performance marketing and emerging technology investments.
And while Carat was a strong contender because of its abilities in media personalization, it needs to improve in programmatic, emerging technology and data science.
Finally, Mindshare, MediaCom, OMD and Wavemaker were contenders because they relied too heavily on buying clout or don’t have a clear enough strategic vision for the future. And, according to Forrester, they are still catching up in data and tech.
“Our traditional understanding of what a media agency does is no more,” Pattisall said. “It’s all about the things these companies do in addition to their media activity. It’s the rebirth of the media consultancy.”
As media agencies invest in more strategic areas such as consulting and analytics, clout isn’t the only tenet that’s gone out the window. Programmatic skill isn’t as important for agencies these days, as clients have started doing it themselves, Pattisal said. According to Forrester, 64% of agencies use their own in-house teams for services including programmatic.
“Some of the large advertisers have their own groups running programmatic,” he said. “They’re just not looking to that as a service from their media agencies anymore.”
Transparency by contract only
While clients of the 34 media agencies interviewed for the Forrester report prioritized transparency, many agencies said they are only transparent if clients require it in their contracts.
“Clients are, in some ways, taking their fate into their own hands,” Pattisall said. “If they were not forced by virtue of guidelines and contracts, we’d be in the same situation we were in a couple of years ago. Media agencies don't necessarily do this willingly.”
In fact, half of the agencies listed in the report declined to formally participate in the Forrester study because they didn’t want to share information required for inclusion, such as their billings, strategic roadmaps and details of their media planning and buying offerings, Pattisall said.
“For an industry that is very focused on transparency, not allowing visibility into the operations was a bit of an irony,” he said. “There’s no mistake that the leaders were more than willing to offer visibility into their business.”
Despite being recognized by the Wave, agencies must continue to step up their game in new areas to stay relevant to clients. Sixty-four percent of marketers intend to review their media agencies this coming year, according to Forrester.
“The traditional media practice is dead,” Pattisall said. “What’s emerging is the hybrid business and marketing consultancy as it relates to media.”