Digital Marketing
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AGENCY BUSINESS
Are we seeing the rapid demise of the traditional ‘agency of record’?
By our News Team | 2023
Agencies did more new business pitches in 2022, but the value of the business they won decreased notably. Is the AOR model on the way out?
Is the traditional ‘agency of record’ – commonly known as ‘AOR’ – working model dead? The annual ‘New Business League’ study by independent global consulting firm R3 suggests that it is, with ad agencies doing more pitches for new business, but with the value of the business won decreasing by a significant 35% year-on-year.
Instead, the multinational companies that typically spend the most on marketing- and advertising-related agency services are diversifying beyond traditional Creative and Media.
Photo by Kampus Production from Pexels
“The future is in eCommerce, Data and Performance Marketing, and agencies need to sell more advanced solutions to clients,” explained Greg Paull, Principal at R3. “The biggest moves in 2022 (the year under review by the study) have all been focused on the ability to serve the convergence of Media, Commerce, Entertainment and Shopping.”
Where possible, these same large multinational advertisers are consolidating their marketing by gravitating towards ad holding groups that offer integrated services that are diversified beyond what was traditionally offered.
Current economic uncertainty also played a role
But not all of the decrease in the value of new business won has been attributed to the ‘death of the AOR’ model. In the critical US market, for example, some of this was down to current economic uncertainty.
Where new business pitches were won by agencies – and there was plenty of that in 2022, with the number of pitches going up by 11% over the previous year – there was a notable move to ‘new guard’ independent agencies, suggesting that chief marketing officers are “looking for bold ideas that maximise value”, Paull observed in the study .
Among the big-name multinationals that felt the need to move to a new creative agency or media-buying agency last year were Burger King, KFC, AB InBev, Kellogg’s, Amazon and Under Armour.
The agency group that won the most new business (creative and media combined) in 2022 was French-based Publicis Groupe, which tops the study’s New Business League – Holding Group Ranking with 2,249 successful pitches worth an estimated US$804.6-million.
WPP comes in a distant second, with Omnicom third, Interpublic fourth and Havas fifth.
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