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What positions, within large advertising agencies, have buying power for research and analytic tools?
Hello! Thanks for your question about the positions within large advertising agencies that buy research and analytical tools. The most useful sources I found to answer your question are InsiderMonkey.com (to identify the top ad agencies by revenue) and Salesforce.com (regarding industry trends). The short version is that advertising agencies typically place responsibility for conducting research and analytics (and thus buying power) under the offices of their CEOs of Marketing and Research, though the titles vary by company. The large companies do not make their budgets public thereby limiting our ability to provide significant insight into how the marketing divisions are structured and funded. Below you will find a deep dive of my findings.
METHODOLOGY AND FINDINGS
In researching this issue, we first identified the largest advertising agencies in the U.S. by revenue. From there we looked at industry websites in order to obtain a consensus of the positions within advertising agencies that are responsible for research and analytical development. With that information in mind, we next reviewed the websites of the top four companies in the U.S. and identified the top positions that are responsible for research and analysis within each company. We concluded our research by attempting to identify the budgets of each company to report on the specifics of how each company budgets for research and analysis. Unfortunately, the companies do not publicly report their budgets, which left us with looking at trends within the industry itself in hopes that this would be of benefit.
THE TOP FOUR ADVERTISING COMPANIES
To reach a conclusion about the top four companies we reviewed multiple business sites, including, but not limited to, Insidermonkey.com, Adbrands.net, Adage.com and Prweek.com. From the above sites the conclusion is that the four largest agencies in the U.S. by revenue are (in descending order of size) Omnicom, Interpublic (IPG), Epsilon and Accenture. The most recent revenue for each company is $8.53 billion for Omnicom, $4.48 billion for Interpublic Group, $2.05 billion for Epsilon and $1.23 billion for Accenture. There is a bit of discrepancy in the results for Omnicom and Interpublic with Adage.com reporting that their revenue is $15.3 billion and $7.5 billion respectively. Nevertheless, the top four companies in the U.S. remain the same.
THE POSITIONS RESPONSIBLE FOR RESEARCH AND ANALYSIS
Not surprisingly, the companies do not have the same name for their people who are in charge of research and analysis within their organizations. Neither do the companies specify who has buying power, although it can be assumed that the CEO's have buying power within their own divisions. Some companies assign multiple titles associated with this task. From our research, we concluded that the titles are typically along the line of Director of Business Intelligence at Omnicom, Head of Marketing Science at EMEA, Associate Director of Marketing Science at Omnicom, Associate Director of Reporting & Analytics at IPG Mediabrands (Cadreon is a subsidiary of IPG) and Chief Data & Marketing Technology Officer at IPG Mediabrands.
THE LEADING POSITIONS WITHIN EACH COMPANY
Each of the top four companies have a Chief Executive Officer who oversees their marketing division. Some companies have more than one CEO and their responsibilities appear to complement each other. The leading positions within each company are:
1. Omnicom
Chief Analytics Officer: According to the company website, this individual " is responsible for keeping Omnicom’s agencies on the cutting edge of advanced marketing…"
2. Interpublic (IPG)
Interpublic has two executive officers fulfilling the duties of marketing research. The first is the Executive Vice President/Chief Financial Officer who has "direct management responsibility for all areas of Global Finance, Information Technology and Investor Relations." The second, and more directly responsible position is held by the Chief Data and Marketing Technology Officer. The latter position is a new position within Interpublic and it is clear that Interpublic, by creating this position, is significantly invested in expanding its research and analysis capabilities.
3. Epsilon
Epsilon tasks its President, Technology Practice with the job of leading "a team that combines data, predictive analytics, innovative creative and best-in-class technology to deliver digital marketing solutions that drive dramatic, measurable results for [its] clients."
4. Accenture
Like IPG, Accenture divides its responsibilities in this field among multiple senior level employees. It's Chief Executive--Accenture Strategy is responsible for overseeing the manner in which business operations and technology merge. The Chief Technology & Innovation Officer oversees the company's technology strategy. Meanwhile, the Chief Executive--Accenture Operations focuses on the company's clients, including its cloud operations.
BUDGET ALLOCATIONS
We researched each of the above-four companies in an effort to evaluate how each of them budgets for research and analysis. As expected, each of them file detailed annual reports. But none of the current annual reports disclose any information about the internal budget operations for each company. The annual reports may be found at: Omnicom, annual report for 2015, IPG, annual report for 2015, Epsilon, annual report for 2015, and Accenture, annual report for 2015. We were also unable to locate details of the companies' budgeting elsewhere.
Given the dearth of information made public by the companies, we looked at industry trends. What we found was that when it comes to non-advertising agency budgets, major companies are spending an increased percentage (33%) of their overall budgets on marketing technology. 80% of them have a high-level position dedicated to overseeing marketing technology. In a survey conducted by LNA and reported by Adage, there was a decrease in traditional advertising expenditures, however, the largest advertisers are moving towards digital marketing, because it is seen as more cost-effective. In a 2013 article that signaled a sign of things to come, Gartner reported that digital advertising is demanding an ever-increasing slice of companies' operating budgets.
The above general industry trends are also seen in the advertising agencies. As we pointed out above, Interpublic now has a senior level employee in charge of the research and analytical division of its company. In interviews conducted by the American Marketing Association, industry leaders clearly signaled that today's marketing will need to increasingly target individual consumers and in order to do that significant research and analytical tools will be required. Chron.com concurs that the trend is toward fully exploiting new technology through things such as QR Codes, Co-Branding, online Content Marketing and Online Advertising.
Salesforce.com reports that digital advertising in the advertising industry is expected to grow at a CAGR of 12.1% from 2014 to 2019. Mobile and programmatic advertising are both rapidly growing. And, perhaps most important, the industry is seeing that there is an increasing need to reach the consumer over multiple platforms. With this in mind, it is logical to assume that the operating budgets of the top advertising companies would be growing in order to facilitate their ability to successfully penetrate the market. Unfortunately, however, they are not reporting the exact data to verify that expectation.
CONCLUSION
To wrap it up, the top four companies are Omnicom, Interpublic (IPG), Epsilon and Accenture. The companies typically place responsibility in research and analysis in the hands of the marketing executives, however, they do not report their budgets for marketing research and analysis and thus we are unable to provide you with that data.
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