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Why agency account reviews are set to continue their rapid pace in 2022

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Based on a publication from Aaron Baar in Marketing Dive, Why agency account reviews are set to continue their rapid pace in 2022.

Por qué las reseñas de las cuentas de agencia continuarán con su ritmo acelerado en 2022

Last year was full of headline-grabbing account reviews and consolidations, as blue-chip brands such as Coca-Cola, Facebook/Meta and Unilever shifted billions of dollars in business to new agencies or consolidated accounts at existing roster agencies. As 2022 gets underway, there is no reason to think the pace will slow.

Already several big accounts — KFC, AB InBev, Audible, Volkswagen — launched reviews in 2021 that will be wrapped up in 2022. Most obviously, two years of responding to changing consumer priorities — more time at home, shifting personal values and greater use of digital technology — has led marketers to rethink the ways in which they connect with consumers.

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«Last year, we had about 15 blockbuster pitches; we should anticipate at least the same number this year,» said Jay Pattisall, principal analyst at Forrester.

A changed world

According to Forrester’s Pulse survey of CMOs last August, 51% of marketers said they planned to review their digital or experience agencies in the year ahead, and 41% said they would review their media business. Additionally, 44% of CMOs indicated they would move more work in-house.

For some marketers, the changes may simply mean adjusting their media models. For others, it can mean a wholesale change to the business model.

«It’s always difficult to forecast,» said Tom Browning, president at search consultancy JLB+ Partners. «But one thing we know is the world has changed, and with that change comes a change in the ways companies do business.»

As marketers continue to reevaluate their post-pandemic business models in the face of pandemic-related changes, some are realizing they may require more digital engagement and smarter, more efficient use of data. This is likely to lead to roster shakeups, said Michael Goldberg, principal at Rojek Consulting Group.

«The way marketers do business and the demand on their business has changed, and companies need to refresh how their accounts are being serviced,» Goldberg said. «Their needs are different now than they were a few years ago, and now it’s a question of having the right service to handle those new needs.»

Resolving a paradox

Forrester’s research indicates many marketers will be tasked with addressing two opposing business problems in 2022: attracting new customers and cutting marketing costs. For many, this has meant pivoting to e-commerce and trying to do more with less.

«[Customer acquisition and cutting costs] are two competing priorities that illustrate the growth vs. cost-reduction paradox facing many CMOs,» Pattisall said. «Resolving [that paradox] may have them reevaluating their partnerships.»

Marketers also will be looking at how recent business changes might affect their compensation models. For instance, increased remote work could yield lower overhead costs for agencies, which, in turn, could be passed on to clients and free up resources for additional business services.

«Agencies have typically billed approved travel and overhead back to clients,» Browning said. «With the lack of a need for more travel, it opens up the possibility for a broader area of partners and intellectual costs.»

Beyond the fundamental business changes, traditional contract cycles will account for a fair number of agency reviews in 2022, per Pattisall. Most marketer-agency contracts are between three and five years, he said. Like the U.S. Senate, where a third of its members are up for reelection every two years, the advertising industry can always count on a few large contract renegotiations to spur roster changes.

The ripple effects of the pandemic are likely to reverberate throughout the industry for some time. Even after many of the large, global businesses have reconsolidated their accounts, the lower tier of marketers — those who spend less than $100 million annually — have also rearranged their business priorities and may be looking for a change.

«There’s a growing list of companies who are spending $10, $25 or $50 million who are being underserviced by the large media companies,» Goldberg said. «They may be looking to shift back to mid-sized agencies.»

This article was originally published in Marketing Dive


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