18 Jan 2023
At the time of researching and writing this piece, we were all doing it. Trying to ascertain what 2023 was going to look like for our businesses. I was certainly asking everyone what growth figures they were hoping for, with responses broadly falling into one of three categories:
To offer some meaningful insight I contacted colleagues across the globe, all of whom run consultancies that operate at the intersection of where the world of brands and agencies meet, as we do at AAR Towers. Some are pitch consultants; others focus on optimising the relationship between brands and their agency partners. Others have practices that help brands sort out their marketing ecosystems. A few, like AAR, do all of the above.
I asked their opinion on four topics that at the time seemed relevant, were of interest to me and hopefully will be of use to you.
For clarity, my findings are not based on a statistically significant sample, have not followed the guidelines set out by the Market Research Society and were all coerced with the promise of a large glass of Rioja or chilled Chablis for responding to the call to share their POV.
If some or all of these predictions prove to be accurate, the glory is all theirs. If not, I will own the shame.
So here goes…
Perhaps not surprisingly the general consensus is that 2023 will be relatively flat in terms of new new business opportunities for agencies, as opposed to any organic growth that is achieved.
2021 was a bumper year for many as the post-COVID bounce took effect. But by the end of 2022 the new business ball was certainly not bouncing as vigorously as it had done the previous year with some predicting that it will have lost its bounce completely by next year.
But there are some pockets of optimism, with growing opportunities predicted in areas of specialism including data analytics, e-commerce, tech automation and integrated agency offerings.
This is surely aligned to the advent of a cookieless world (will someone please let me know when this is actually happening!) and the need for expertise (more of which later).
Then there’s always media. I think media is too often seen as the soft under-belly of marketing; an opportunity for brands to go to market and make some savings. And there is a never-ending stream of global supertanker media brands that are on a continuous cycle of pitching their business.
For next year’s brands that may come to market, all you need to do is identify which were last in market three or four years ago. And a word of caution, for any businesses that pitched their media within the last two years and are back in market in 2023, my advice to you is step away. Step away!
Encouragingly there are also some notable exceptions where new business activity is predicted to be on the up. Public Sector is predicted to be more active but, of course, you must be on the roster to benefit from this.
And as with London 2012, the Paris Olympics in 2024 is expected to engender a flurry of activity for domestic and international brands to prepare for the upturn that the Olympics bring.
The overall sentiment is an expectation that CMOs are looking to simplify their agency arrangements, the result of which will be fewer agency partners. This is considered to have practical and financial benefits. Russel Wohlwerth of Roth Ryan Hayes referred to this as radical simplification; a phrase that I think captures the sentiment rather well.
But alongside this point of view comes a universal recognition that such an approach will require an orchestrator or lead agency partner to set the overall direction of travel. And in our experience the CMO needs to make clear which of their agency partners is to take on this leadership role. Without this direction, ensuing chaos and inter agency discord is an inevitability.
But fewer agencies cannot come at the cost of the expertise CMOs demand of their agency partners. Indeed, to paraphrase, expertise eats operational simplicity for dinner (breakfast was already taken by culture). Without such expertise, operational excellence can only strive to achieve, at best, marketing mediocrity and who has ever set mediocrity as a brief?
Again, there are exceptions. Notably in less mature markets in which the desire for more specialist agencies is still strong, driven by a combination of eggs and baskets, and less choice of multi-disciplined and integrated agencies of the calibre required by CMOs.
Predictions about future trends in in-housing are less clear cut. Markets in which this is a well-established practice, notably USA, are indicating that in some quarters, serious questions are now being asked as to the benefits of in-housing. The immediate cost savings originally achieved are not being replicated to the same extent, if at all, in subsequent years.
Another observation is that some in-house operations when first established, were not set up for success and there have been more than a few that have quietly been de-commissioned, with agencies picking up duties for work that was in their original scope, was subsequently taken in-house, and has now been reinstated. Such occurrences rarely enjoy any trade press headlines.
The other significant aspect around in-housing is the attraction and retention of talent. The post-pandemic talent crisis is one that affects in-house departments as much as it does agencies; something that’s giving pause for thought to brands struggling to fill their in-house marketing vacancies.
Not surprisingly in a market the scale of America there were alternative views by some who see a take up of in-housing for the first time, if only for the immediate cost benefits it offers.
And other markets (Australia, Spain and Italy) are showing a continued interest in and growth of in-housing, particularly at the more operational end of the marketing services spectrum.
One aspect of this debate that those smart people at Navigare Cam Carter and Jeff Estok pointed out is what can be considered an alternative to in-housing, namely that of off-shoring, in particular to India. Off-shoring has commercial, creative and operational appeal without the down sides that in-housing can bring when it doesn’t work out as planned.
One subject where there was complete agreement is around the in-housing of digital media expertise, driven to a large extent by the lack of transparency that currently exists about where and how much of the marketing £ or $ or Euro, or Yen is seen by the end customer. Media agencies need to do more on this or will lose out.
You may recognise the saying ‘If America sneezes the world catches a cold’. I think it’s pretty clear that Europe has a bad case of influenza whose origins are Russian, not American. Against this backdrop, what are CMOs focused on in 2023?
ROI, cost management, growth (or lack of it), inflation, ROI, supply chain and supply chain costs, justification of marketing as an investment, ROI, measurement and attribution. Did I mention ROI?
Of course, none of this is news to you but what I find somewhat disappointing is there was hardly any mention of creativity. For creativity must be the not-so secret weapon that brands can employ to help achieve their marketing and business ambitions. At least that’s what we think here at AAR Towers!
Other topics mentioned are sustainability in marketing and the wider CSR ambitions that all businesses now have. The continued rise of a mixed economy in which e-commerce is taking more and more focus and customer share of wallet has become a permanent fixture on every CMOs to do list.
And on ROI, one small point…whether it’s ROI or ROAS, about which there has been much recent debate as to what’s right to measure, fighting for marketing in the boardroom is what matters. If agencies of all descriptions don’t provide their CMOs with the ammunition to make their case in the boardroom, The City, The Street or to PE and VC investment, then we are all doing a disservice to those that put food on all our plates.
This all makes for rather sobering reading, but we’re living in sobering times. As I said in my introductory comments, thanks and praise goes to those who will be proven to have gotten it right.
Hopefully some of this will help as we look to navigate 2023 successfully for our own companies as well as those of our clients.
With thanks to and recognition for their wise observations:
AAR Partners, Roth Ryan Hayes, Joanne Davis Consulting, Agency Mania, Navigare, Trinity P3, Scopen, Cherrypicker, Francis Drake, Pitchville, VT Scan, GG Marketing, Breezway, Independent Agency Selection and R3.