New Report Finds Triple Threat Facing Marketing Agencies, Including AI

Research from Funnel outlines the mounting risks facing marketing agencies and the opportunities for adaptation

STOCKHOLM, Sept. 20, 2024 /PRNewswire/ -- Funnel (www.funnel.io), the marketing intelligence platform, and market insights company Ravn Research (ravnresearch.com) have today released a report on the state of global marketing department and agency relations. You can download the report here: page.funnel.io/access-agency-acceleration 

The report draws upon quantitative and qualitative research from 327 in-house marketing professionals and marketing agency leaders, examining existential challenges to agencies. Funnel and Ravn have found that marketing agencies are facing a triple threat: pressure from regulators and Big Tech, shortages of advanced analytical skills and changing perceptions about the value of agencies themselves, with AI and automation replacing human work in some instances.

AI is becoming more prevalent in marketing

Many in-house marketers say AI will invariably affect their agency relationships.

Key findings:

• 43% of marketers say AI will make their company less dependent on agencies
• Agencies, meanwhile, are largely unphased: two-thirds of agency professionals expect their financial condition to improve over the next year, with AI having a net positive impact on their business
• Less than a quarter view increased in-housing of marketing functions, partially resulting from AI adoption, as a major threat to their business

AI is beginning to affect the marketing and advertising industry but is not expected to replace human and agency work any time soon.

Agencies facing mistrust from clients

With the future of marketing dependent on sophisticated measurement models and vast amounts of data needing to be shared between clients and agencies, closer partnerships are required for success. Yet, Funnel's report indicates a general mistrust in agencies and a frustration with repetitive processes on the clients' side.

Key findings from surveying in-house marketers:

• More than half of in-house marketers do not trust their agency partnerships, particularly when controlling costs and delivering tailored, innovative solutions
  • 75% claim that their company's outsourcing rates to agencies will fall or remain flat over the next year
• Additionally, only 40% of marketers say their agencies are invested in the long-term growth and success of their company; just 47% believe their agencies are communicating well on measurable outcomes

Question: Do you agree or disagree with the following statements about your agency?

Marketers did note, however, that agencies were better at sharing honest feedback and setting realistic expectations.

"Our agency is in the business of making sense of data analysis, AI, machine learning, language models, and more," explains Benjamin Keller, Chapter Lead Data and Business Intelligence at Sunlab. "What can be difficult is presenting it in a way that clients can understand and synthesize."

Agencies' golden opportunity for value-add

As the last-click attribution method used for measuring marketing impact is slowly eroded by regulatory and Big Tech data limitations, many marketers now face uphill battles to evolve to advanced analytics and rely less on third-party data.

Innovations in advanced analytics, used in marketing, come in three forms:

• Marketing mix modelling (MMM) uses statistical models to measure the impact of marketing activities on business outcomes such as sales and ROI
• Incrementality testing estimates the additional impact of a specific campaign or activity by comparing the results of a test group exposed to the campaign with a control group that was not
• Multi-touch attribution deploys user-level and micro-level tracking to assess user journeys and the impacts of individual touchpoints

Key findings on advanced analytics usage and proficiency:

• Teams generally do not have an advanced analytics expert to inform decision-making; for example, 69% of marketers surveyed say they have no clear, documented roadmap to adapt to the deprecation of third-party cookies
  • Since their clients do not have experts or roadmaps to track performance, most agencies (66%) therefore believe that offering advanced analytics is a major opportunity for their organization
• Approximately 60% of marketers are already using some kind of data analytics to measure performance
  • But very few are using the most advanced probabilistic forms, such as MMM (26%) and incrementality testing (26%)
• Few marketers (15%) have plans to outsource additional advanced analytics services in the coming 12-18 months, leaving the majority with reduced visibility on the impact of marketing spend

Question: Does your marketing team do any of these things in-house?

While many in-house marketing teams require help from agency partners to pull new strategies off, agencies themselves can spread the costs of domain experts across multiple clients, explain methodologies behind their recommendations and guide clients through the complex marketing landscape.

"This report comes at a critical crossroads for the industry," says Con Cirillo, Head of Marketing, United States, at Funnel. With AI on the rise, cross-device and web tracking falling and marketing teams reassessing their budgets, it is important to examine the relationship between in-house marketers and agency partners. We have unearthed significant findings alongside Ravn Research, particularly concerning confidence in agencies and emerging technologies, as well as a lack of preparedness for advanced analytics among marketing teams. Both sides need to innovate and thankfully there are higher quality tools available than ever to achieve this."

"Through our qualitative and quantitative research, surveying and interviewing over three hundred in-house marketing and agency professionals globally, we have highlighted the unique challenges facing agencies and captured the general mood of the sector at present," adds Clare McDermott, Founder of Ravn Research. "This represented a wide range of countries, company sizes, industries and roles, providing strong indications that the industry is undergoing significant changes."

Demographics

How many full-time employees currently work for your company/agency?

What best describes your level of responsibility within your company?

Survey respondents represented by region

Which of these agency types does your company work with?

About Funnel

Founded in Stockholm in 2014 by Fredrik Skantze (CEO) and Per Made (CMO), Funnel (www.funnel.io) is the Marketing Intelligence Platform that is trusted by globally recognized brands such as Adidas and Sony. Funnel's unique Data Hub serves as the foundation for marketing reporting for thousands of organizations. With its cutting-edge platform, users can automatically collect, model, visualize, and analyze data from over 500 marketing platforms. The firm has grown to over 300 employees and generated over $50M in ARR in 2023, consistently featuring in the FT 1000 list of Europe's fastest-growing companies.

About Ravn Research

Ravn Research (ravnresearch.com) is a research services company founded by Clare McDermott in 2021 producing original qualitative and quantitative analysis and data journalism to help brands build authority, create connections, earn followers and tell stories.

Press Contact details

Alex Gallo - [email protected], +44 7762 984 690

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SOURCE Funnel