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A Look Into The Ad Tech Crystal Ball and The Future of the Mid-Market Agency

In June of this year, we released a comprehensive guide for mid-market agencies looking to thrive in 2019. This is the fourth article in our 5 part series that will detail the research results and our extrapolation of the key insights that continue to be relevant as 2019 wraps up and we head into 2020.

Many marketers and agencies are looking to the future and are unsure how the industry will unfold. With some insights from our Advertiser Perceptions Survey, we have determined some of the predictions and trends that will emerge in the upcoming years.

Marketers, especially mid-size brand marketers, believe that in the next 3 years, programmatic and creative services will be more important agency capabilities. Large brand marketers are twice as likely as mid-size brand marketers to emphasize ad tech and machine learning as differentiators—17% vs. 33%.

Both mid-market agencies and holding companies plan to invest significantly in data science and programmatic in the next 3 years—mid-market agencies being more likely to significantly invest in ad tech and machine learning, and native capabilities.

Marketers and agencies both envision a structure in which specialization and consolidation occur simultaneously, allowing for the retention of the independence and nimbleness of the smaller firms while drawing upon the talent, resources, and knowledge of a broader network of firms, all under the same roof.

For those readers who have been following this blog series, you might recognize that there is still a slight gap 3 years from now, between the capabilities mid-size brand marketers deem important and those where agencies are planning to invest significantly more. There is close alignment across several categories, with the exception of one anomaly: business intelligence.

What is “Business Intelligence”?

In our view, it answers the fundamental question “So what?”. A brand ran media, but has has that impacted its business? The business intelligence function helps interpret and make sense of the data, derive insights, and translate these insights to the brand into actionable strategies. Business intelligence is at the core of consulting firms’ offering which has lead to their quick market entry (for example, recent Accenture win of Kimberly-Clark away from WPP). There is a clear opportunity for mid-size agencies to double down on this function to deliver value to their brands.

Mid-market agencies are planning to invest 38% where the mid-size brand marketer rates business intelligence as the second most important capability at 68% and 57% for the large brand marketer. Could strengthening this capability pay off for the mid-market agency?

The future? It could be today’s reality

Creative talent and ad tech talent are high on the agency radar screen—likely not just 3 years from now but today. According to the ANA, the average agency turnover rate is about 30%—only the tourism industry has a higher turnover rate—and agencies are challenged to stem the flow. And 54% of former advertising employees said a major reason they changed career paths was because “they felt there was little opportunity for advancement”, according to research conducted by LinkedIn and 4As.

Couple that with employees craving career development and there might be an obvious answer to attracting and retaining talent so that as an agency your investments can pay off twice as fast. Although professional development can be hard, with no individual guarantees for a significant investment of time and resources, if you concentrate on the right areas—like creative services or data science—you could kill 2 birds with 1 stone.

In case you missed them, here is part 1, part 2, and part 3 of this 5 part series. Looking for the conclusion or other key takeaways?

Reach out to your StackAdapt representative to get your copy of the report, The New Programmatic Era: How Mid-Market Agencies can Thrive and the The Mid-Market Agency: A Blueprint for Growth.

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