Brands have specific ideas on how they want ad agencies to evolve

By AdNews | 9 October 2023
Credit: Eugene Zhyvchik via Unsplash

The traditional agency ecosystem needs to reinvent itself, according to research from the World Federation of Advertisers (WFA) and media advisors MediaSense.

The Future of Media Agency Models report shows an overwhelming proportion of major multinational brands looking to improve their agency model with just 11% of respondents believing it fits their future needs, while 24% believe it is unfit for future purpose.

The study, based on a survey of more than 70 multinational companies representing more than $US50 billion in ad spend, shows that the traditional holding groups will still have their role to play.

But a new breed of agile, specialist and tech-focused agencies can also add measurable value to a more centralised media model.

The study finds that growth among these is building while the attitude of client-side global media leads is evolving:

  • 45% of respondents are looking for more flexibility, specifically in the way they are serviced
  • 37% want simplification through fewer and better integrated partners
  • 97% rate access to talent a key priority for the future, alongside 92% for integration, and 92% for greater speed
  • While media and creative requirements remain distinct, 1 in 4 of those surveyed plan to consolidate media, creative, data & technology

“Clients are looking for a more ‘networked’ model, where global agency capabilities can be leveraged to unlock speed, agility and talent,” says Catherine Lautier, VP, Global Head of Media & Integrated Brand Communication, Danone and People & Partners Co-Brand Champion within WFA’s Media Charter.

“Yet this new WFA and MediaSense research reveals that the gap between expectation and reality is found to be largest for these very attributes.

“So, as an industry, we have work to do to come up with the models and approaches that unleash greater effectiveness.”

The report finds that modern media organisations are calling out for more streamlined offerings, capable of joining the dots between an increasingly broad set of marketing touchpoints."

This requires investment in data and strategic capabilities, alongside a more diverse talent pool capable of going deep and wide. The future is focused less on individual channel execution but more agile, integrated consumer experiences.

Ryan Kangisser, managing partner at MediaSense, says the past three years have been transformative for the advertising industry with brands and agencies on a march to unlock capability, integration and speed.

"The blurring of lines between the different marketing disciplines is accelerating this, highlighting the need for agencies to evolve their models from channel to consumer centric," says Kangisser.

"Although we may not be seeing media and creative coming back together (just yet), this study reveals a clear intention towards integration with an urgent need for talent and processes to make this a reality.”

Research also points to a growing march towards centralisation and more effective servicing models. When asked to consider the next three years:

  • 53% agreed we will see greater centralisation of agency services and 66% agreed we will see greater near & offshoring of agency services to unlock efficiencies
  • 47% agreed the need for specialist agencies will remain strong with the research highlighting a high level of appetite towards retail media, influencer and in-house support as key disciplines where specialists can thrive

Matt Green, director of global media services at the WFA, says this appetite towards simplification can be satisfied through a distributed model where the processes, ways of working, incentives and governance are aligned, and where there is the right organisational structure and talent.

“The traditional media agency model is evolving," he says.

"The focus is on a more ‘networked’ model, where global agency capabilities – regardless of where they are based – are being leveraged to unlock speed and agility and improve access to talent.”

The Future of Media Agency Models report also highlights dissatisfaction with traditional compensation models, with 52% of respondents saying there is room for improvement and 21% revealing it is unfit for future purpose.

Many argue that commission or fixed time and materials-based models limit flexibility and fluidity when bringing in talent or exploring different servicing models.

Almost three quarters (74%) agree that in the next three years we will see a shift towards output or outcome based, as an alternative model.

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