Agency Landscape

Part
01
of two
Part
01

Advertising Agencies - Trends

We were unable to find any trends adopted by advertising agencies related to the growth and differentiation of their businesses. What we were able to find we some advertising trends like using micro-influencers and AI. We also include the future trend of voice search advertising as well as some other useful information.

METHODOLOGY

In our first strategy, we searched for any precompiled lists of trends related to advertising agencies and how they grow and differentiate their businesses. Some sites we visited were Forbes, Hoovers, and Entrepreneur. We found a few lists of trends related to artificial intelligence, social media marketing, and contextual advertising but nothing really gave insight on trends related to advertising agencies and how they are growing their businesses. However, we did note micro-advertising as being a usable trend due to its purpose being to grow their customer base and set their company apart from the rest by using the practically untapped micro-influencer market. Since this strategy was largely unsuccessful, we moved on to try to find market reports that detailed trends in the advertising agency industry.

For our next strategy, we reviewed market research reports (including paywalls) in hopes of directly identifying trends related to the growth of advertising agencies. Some websites we visited were IBIS World, Anything Research, Statista, and Plunkett Research. We found quantitative data like market growth for advertising agencies, total revenue, and annual growth rates. None of that information was usable to find trends related to growth in advertising agencies. Since we were unable to find any trends through the direct searching of market reports we focused on trying to locate the top 15 advertising agencies in hopes of identifying trends.

In our third strategy, we researched the top 15 advertising agencies in the US and used them as a basis to identify trends, we reviewed multiple press releases, blog posts, or publications published by advertising agencies looking for mentions of any trends related to growth. Some sites we reviewed were Vivial, Disruptive Advertising, and Kobe Digital. We found mentions of previous clients they worked with and the types of ads they designed for them, but nothing gave insight on any advertising trends related to growth.

As a last resort, in the hopes of findings case studies that talked about trends in advertising agencies and how they increase their business, we searched a number of case studies. Some sites we visited were 4As, Basic Agency, and AMP Agency. We found case studies talking about eCommerce, digital branding, and influencer campaigns but none of the data found led us to identifying trends related to advertising agencies and the growth of their businesses.

Since we were unable to find any trends directly related to advertising agencies and the growth of their businesses, we expanded our research to include advertising trends. The trends listed below have been taken from articles published by Forbes, Ad Age, and Entrepreneur.

ADVERTISING TRENDS

MICRO-INFLUENCERS

Influencers help to grow brands and build brand awareness. Most companies invest in mid to high-level influencers which usually comes with pretty high costs. Companies are beginning to use more relatable micro-influencers who don’t have as many followers or as much engagement as other influencers.

ARTIFICIAL INTELLIGENCE (AI) IN ADVERTISING

This trend has “seen huge growth in targeting advertising”. AI and machine learning have helped to “eliminate the guesswork” when it comes to targeted advertising. It's also a powerful tool for improving and facilitating campaigns to gain new customers and with great cost-effectiveness.

VOICE SEARCH ADVERTISING (EMERGING TREND)

This type of advertising is directed to homes with Amazon and Google voice devices. It's hard to pinpoint this market because it's hard to know exactly how many of these devices are being used by consumers, but the advertising opportunity is a little too good to pass up. In the future, we can see partnerships with brands that will “allow for organic use of the devices” as well as direct call to action ads.

OTHER USEFUL INFORMATION

  • There has been a growth of 35 percent between 2017 and 2018 in Over-the-top (OTT) ad views.
  • Some trends that are predicted in the advertising industry are TV networks using the word Attribution, voice control takeover, big brands getting heavy into direct-to-consumer, tech improvements in the food industry, and production companies will have big offerings.
Part
02
of two
Part
02

Fastest Growing Advertising Agencies

The fastest growing advertising agencies include DDB, Wieden & Kennedy (W&K), and Goodby, Silverstein & Partners (GS&P). W&K signed 19 United States clients in the year 2017. Also, the GS&P office in San Francisco employed 150 people in the year 2018.

ADVERTISING IN GENERAL

The projected percentage change in employment in the United States' advertising sector is 10%.

Advertising agencies

DDB

The Chicago office of DDB advertising agency won a 10-year contract to lead the marketing and advertising of the United States Army. The contract was worth $4 billion. The agency's Chicago office is expected to add 200 employees to the then existing 350 employees, because of the contract. The Chief Executive Officer of DDB, Wendy Clark, stated the need for advertisers to be flexible to adopt the changing needs of customers. DDB uses a new operating model named DDB Flex, which according to Wendy Clark it is the key to winning McDonald's, as a major client. DDB's clients include Johnson & Johnson and Volkswagen.

GOODBY, SILVERSTEIN & PARTNERS (GS&P)

One of the founding partners, Jeff Goodby, asked if there is any other company that has grown by over 20% in the year 2018. GS&P clients include Pepsi, Liberty Mutual, and BMW. GS&P is responsible for creating Pepsi's Super Bowl advertisement that featured a rap lip-sync between celebrities, including Morgan Freeman and Peter Dinklage. GS&P ended up getting more work assignments from Pepsi after the Super Bowl. The advertising agency used humor and the element of surprise for its BMW advertisement. It featured funny voice-overs and big cars for the Los Angeles Auto Show. GS&P San Francisco employed 150 people in 2018. This brought the number of employees to 440. The Vice President of marketing at BMW in North America, Trudy Hardy, observed that the GS&P members are insightful, humble, have chemistry, and camaraderie.

WIEDEN & KENNEDY (W&K)

W&K signed 19 United States clients in 2017, including the Atlantic, AirBnB, and Fox Sports among others. The agency witnesses a $35 million revenue increase. W&K develops over 300 pieces of content for its big clients, KFC and Old Spice. The company uses the "branded everything" strategy, which entails inserting the brand into pop-culture via non-traditional media. This includes using comic books and other forums. W&K has developed adverts that cover social issues like "Save the EPA" Easter egg hidden in Portugal's rock band track, and a video on racial stereotypes for the Atlantic. The leadership team of W&K grew from 9 stakeholders to 24 stakeholders, in 2016. W&K has offices in Oregon, Portland, and New York, in the United States.

Triangulation

For DDB Chicago, when they acquired the contract from the U.S. Army, their employee headcount was about 350. From the contract, they are expected to grow by about 200, which translates to a growth of about 200 / 350 * 100= 57%.
For GS&P San Francisco, they hired 150 additional employees in 2018, resulting in 440 total employees, which means they had 440 - 150 = 290 employees prior to the hiring. This translates to a growth of about 150 / 290 * 100 = 52%.
For W&K, I assumed their sudden increase in leadership headcount, from 9 to 24 stakeholders, translates to company growth; more leaders are required to manage more people. The change in leadership headcount is (24 - 9) / 9 * 100= 167%.
Sources
Sources

From Part 02
Quotes
  • "Advertising today needs to adapt to be wherever consumers are, she said. Clark said focusing on building bespoke approaches for clients is the best way for agencies to survive. At a time when people are tuning out advertising and agencies are facing competition from all sides, agencies have to adapt to stay relevant. "
  • "Clark discussed the agency's answer to this change, creating bespoke models like DDB Flex, the agency's new operating model that creates integrated, cross-agency teams based on clients' needs and that helped the agency win McDonald's."
Quotes
  • "“A lot of the best advertising acknowledges the deception—and not even deception so much as saccharine baloney” often involved in promoting brands and products, Goodby says. "
  • "“Who else grew more than 20 percent this year?” asks Goodby, who is co-chairman and partner."