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Industry Snapshot with Fusion 5's Natale Panella and Samran Waheed
Posted on March 18, 2019

How is the media agency model changing, and why?

Reductions in overheads, running costs and headcounts, while diversifying talent portfolio, have become a necessity for agencies. It is a market actuality that all agencies have realised, and that most have started to act upon. The key to success in such a situation is to get leaner, but smarter.

Additional revenue streams are being sourced and agencies are broadening their scope of work and services to gain share of the pie across the entire marketing spectrum. Agencies are not only striving to cannibalise their direct competition, but also taking on creative jobs. Most media agencies now have their own content creation arms, technology units and other capacities that were not previously required.

These changes are namely driven by a 35 per cent to 40 per cent drop in marketing budgets, which is forcing agencies to survive under such market dynamics; it’s down to the survival of the fittest, in its true sense.

How is your relationship with clients and creative agencies changing?

With major tech advancements in consumer lifestyles and the exponential evolution of their daily journey, marketers are required to address these changes in their communication. This presents a huge challenge for brands and requires agencies to facilitate a unified and seamless communication strategy that flows smoothly
across all marketing disciplines. This dictates a very close relationship and chemistry between creative and media agencies. We can see these agencies forming coalitions outside of their own parent networks, at times based on mutual understanding and compatibility.

What are the biggest challenges facing the industry?

Staying up to speed with technological disruption and dealing with the implications these have on consumer relations can be tricky. Agencies need to analyse and understand these trends in real-time to be able to connect the dots through their marketing efforts. Relaying brand stories by riding the bandwagon of the changes in technology is the real challenge our industry is facing, and it is about time that everyone realised that with the growing maturity of artificial intelligence and machine learning, this is the new modus operandi.

How is the industry tackling those challenges? And what else needs to be done?

The answer lies in data, but the relevant kind. Data is becoming the focal point of all strategies. Data validation and collection is being scrutinised and taken much more seriously than ever before. For instance, we can see greater consumer engagement and customer loyalty through the adoption of advanced analytics and big data.

Building partnerships with platforms sitting on data is key and plays a vital role for e-commerce businesses; partnerships with platforms such as Amazon can be a make-or-break deal for smaller players.

What advances in media are you most excited about in the next few years?

Technology is radically changing consumer habits and, consequently, the media touchpoints. New technologies and trends such as 5G networks, IoT devices, virtual and augmented reality, and location-based services are truly reshaping the media landscape. The VR market is quickly transforming into an entertainment and productivity platform; 5G is rendering TV on demand fluid and on-scale; and IoT devices are interpreting and enhancing our day-to-day activities.

From a content perspective, the opportunities to innovate in the next five years and beyond are seemingly endless. We wouldn’t be surprised to see screens in self-driving cars becoming the next TV, and home devices such as Alexa or Google Home the next radio.

Clients are taking some of their media in-house. How can media agencies stay relevant?

Agile models and performance are the keys to staying relevant as a media agency. The reality
is that the larger the client organisation, the more likely the presence of hierarchy that can’t always move as quickly as is shown on paper. This is where the value of an external agency comes into play.

Also, the competition among agencies drives innovation and technology, and as innovation and technology increase, so does the speed to market.

While internal teams may have a restricted vision of their one and only client (themselves), external agencies present the opportunity of a been-there-done-that mentality in which applying knowledge they’ve learned from many clients may make the media discipline more effective or the campaign more refined from the start.

How important is size for a media agency? What factors other than scale and leverage are emerging as differentiators?

Size used to be a key unique selling point in the past, for two reasons: better commercial deals and broader geographic scope. Nowadays, clients are looking for a lean structure with the ability of quick execution and global capabilities. With digital overcoming mainstream media and spend concentrated on biddable media, clients are relying more on team competence and capabilities to scale performance instead of economies of scale and deals structuring.

From a geographic scope, we observe digital media becoming centralised thanks to the characteristic of being scalable regionally and globally, from anywhere in the world. Country-specific media needs can be addressed through decentralised global networks and partnerships (for example Tribe Global Network, which we belong to), where different agencies specialised in different disciplines and markets partner together to offer superior services.

What industry change would you most like to see at an institutional level?

The automation of activities enables productivity growth and other benefits at both the level of individual and business processes, as well as at the level of entire economies, where productivity acceleration is sorely needed.

Institutions need to embrace the opportunity to benefit from the potential of productivity growth and put in place policies to encourage investment and market incentives to encourage continued progress and innovation.

Initiatives such as rethinking education and training, as well as transition support for professionals, can allow individuals in the workplace to engage more with machines as part of their everyday activities and acquire new skills that will be in demand in the new automation age.

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