Flash Report: Agency of Record Model Falls Victim to Decentralization

Recently, the CMO club released its survey findings showing CMO’s are not happy with the centralized Agency of Record (AOR) model – in which a company relies heavily on a single agency to provide most of its advertising management. According to the survey of 106 marketing officers, 47% of respondents maintain their reliance on the AOR model, although only 14% are satisfied with the performance of their current agency. Why? Lack of innovation (55%).

Agency Model Marketers

Consequently, brands are on the lookout for small to mid-sized agencies to provide flexibility in dealing with personalized content and boosting creativity. But changing agencies isn’t as easy as it sounds with 55% of respondents saying their biggest challenge is the investment of educating new agencies when they come on-board.

Marketers Agencies

Of those who use multiple external agencies, around 55% of marketers use about 4-6 agencies. But if brands choose this decentralized open agency model, they must be wary of brand fragmentation. As the CMO of Kelly Services Pete Boland said, “You must institute a rigid and clear process for insuring that you inculcate your master brief and brand across all agencies.”

When looking to do “more with less” brands are also looking in-house. A recent Association of National Advertisers (ANA) study showed that 42% of its members are moving ad efforts in-house to mitigate costs.

If you enjoyed this post, don’t forget to sign up to our newsletter below!