- A new report on the state of marketing by Funnel and Ravn Research shows a significant portion of marketers (43%) expect AI to reduce their reliance on traditional agencies, highlighting a major shift in how the marketing industry may operate in the future.
- The report also outlined that three out of four companies are planning to lower outsourcing expenses and a reported lack of trust in agency partnerships. How will this, combined with the disruption caused by AI, affect marketing agencies in the long run?
Leading marketing intelligence platform Funnel and market insights firm Ravn Research have jointly published a study on the changing dynamics between marketing departments and agencies across the globe. The research outlines various existential issues that marketing agencies face, such as regulatory restraints, a lack of skilled workers, and the disruption caused by artificial intelligence. The report bases its insights from over 327 in-house marketing experts and agency leaders worldwide
A key finding of the study was the growing acceptance of AI in marketing, as 43% of marketers anticipated using AI to reduce their dependence on marketing agencies. Despite this, agency executives are nonetheless upbeat, with two-thirds anticipating financial growth in the upcoming year given AI’s automation prowess. However, some marketers have also voiced worries about trust, primarily due to their discontent with cost management and the absence of creative solutions from their agency partners. Moreover, 75% of businesses intend to maintain or lower their outsourcing fees, indicating a possible shakeup to the conventional client-marketing agency relationship.
Agencies can take advantage of this shift in the market by providing advanced analytics solutions, particularly with the phasing out of third-party cookies. The report also emphasizes the significance of techniques such as multi-touch attribution, incrementality testing, and marketing mix modeling that can help marketing agencies add value to clients. Another advantage that marketing agencies have despite the dominance of AI is that most agencies (66%) believe their clients don’t possess roadmaps to track performances, where they can step in to deliver advanced analytics.
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The marketing industry is at a turning point, and this report highlights the changing relationship between businesses and marketing agencies. While agencies are using AI and sophisticated analytics in-house to tackle new market challenges, AI will affect their role, and repositioning themselves as useful strategic partners will be key. As Con Cirillo, the Head of Marketing, United States, at Funnel puts it, “This report comes at a critical crossroads for the industry.”
Conclusion
Marketing agencies have an unrealized potential to dominate the market and provide clients with more value by utilizing advanced analytics. Yet, rebuilding trust when clients are looking to replace human work with AI can be complex and challenging. The pressure from Big Tech and the shortage of AI-savvy workers will further complicate matters for marketing agencies. In the end, automation and artificial intelligence will redefine the marketing environment, but not at the cost of replacing agency-client relationships.
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