The Next Era for Advertising Agencies (Buckle up)

It’s hard to believe it’s been five years since March 2020 flipped everything on its head. Back then, we were all trying to make sense of it all and the implications for our business. One thing I called early, was the extreme acceleration of all things digital. And it happened really fast.
(If you want a throwback, here’s the piece I wrote at the time: Lessons from the New Normal.)

Now, everyone is in. I see grandmothers scrolling TikTok at the airport, parents FaceTiming kids, dads posting on Instagram, and who doesn’t order online now? We’re all-in with both feet. 

And while the digital surge reshaped consumer behavior, the business side of our industry is undergoing its own transformation. The recent Omnicom acquisition of IPG, arguably one of the biggest consolidations our industry has ever seen, reflects just how rapidly things are changing. And just as we’re processing what this means, AI continues to accelerate change even further. Some call it a revolution. Others call it a threat. I see it as both a challenge and an opportunity depending on how fast we adapt. Everybody I speak with, every panel I take part in, every trendsetter claims to know the answer, but the truth is no one knows exactly where this is headed. But one thing’s for sure, change isn’t slowing down anytime soon.

From where I sit running an agency and serving a variety of clients and industries across the country, here’s what I think will define the next era for agencies and what we can’t afford to ignore. Maybe in another five years we can look back and see how much of this comes to fruition, but I can assure you the changes will come much faster than that. 

1. Talent: Our Greatest Asset

Having great talent has always been the heartbeat of everything we do. There’s a saying that all our assets go down in the elevator at night (for those in the office). And one of my favorites is “Hire the best people, you win. Don’t and you lose.” It’s that simple right? But it’s also one of our biggest challenges. Competition for great people can be fierce not only from other agencies, but now from tech companies, brands and consultancies that can often outspend us. And now with remote work, they don’t even have to be in your same city. (Although that can work both ways.)

But ultimately, our charge should be offering more than just a paycheck. Flexibility, trust, purpose and opportunities to grow matter just as much and sometimes maybe more. Agency life can be demanding, so if we want to continue attracting and retaining talent, we must invest in them. Some may need more flexible hours, or remote options, others value training or recognition. Others may seek a shift in roles. And everyone deserves transparency. The key is understanding these motivations on an individual level and what you can offer that’s unique to them, and to your own culture. And when you hire toward that culture, it also makes leaving a whole lot harder. Which I’ll tout as something we take pride in which has resulted in an average turnover rate of only 9% in an industry that typically exceeds 30%. Yes, it can be difficult, it takes time, but it’s doable. And as an industry, it’s something we’re able to be more flexible with, and much better at, versus the others we compete with.  

2. The Rise of In-House

As AI becomes more ingrained in how we work, more clients may look inward toward building their own teams to save money and gain more control over their marketing operations.  The obvious downside is less reliance on agencies. The ones that will survive (and thrive) in the next era will be the ones who operate as true strategic partners, those that have a seat at the planning table. And if you’re an integrated agency, which the majority of independents are, you already understand the need to lead as a consultant to their business and industry. If you’re still stuck in order taking mode, unfortunately your days are probably numbered.

3. The Economy Isn’t Making It Easier

Budgets are tight. Clients are cautious. Everyone wants more for less. Has this really changed over the past decade? No, but it may get worse. Clients are becoming more risk adverse and continue to be under tremendous cost pressures. Speed to market continues to take precedence more than ever before. And this pressure trickles down to us with shrinking margins and stretching our teams thin. It’s not fun, but it’s the reality. The key is being smart with resources, transparent about the value we bring, and relentlessly focused on business results that win for our clients. Because when they win, we ultimately do too. It’s that simple.

4. The Fragmented Media Landscape

I hear from our Data Analytics and Performance Media teams about the constant drumbeat of new platforms, channels and algorithms being introduced. And it’s not slowing down anytime soon. The landscape keeps fracturing and that complexity means it requires us to intelligently and constantly expand our expertise and investment to effectively reach diverse and harder to reach audiences. 

But what it does mean is opportunity and it bodes well for those who can connect the dots. Performance, ROI and accountability is expected. And yes, automation will eventually take on more tasks (media buying, content generation, analysis to name a few), but that only frees us up to do more thinking, strategic planning, and problem solving in helping us lead our clients. It’s this expertise and creativity I would argue is our true super power asset and a key deliverable our clients expect, and what makes our business so fun.

5. Data Privacy 

Between the European Union leading the drive for privacy law, and state level privacy laws-  there’s a new one every day to keep track of- and less third party acceptance of cookies, agencies are being forced to rethink how we measure and target our audiences. But our Director of Marketing Intelligence and Innovation states that it isn’t necessarily bad news. It’s a move forward toward something better using first party data and finding new ways to prove effectiveness. This will be a big challenge, but a must in our on-going need to prove ROI.

6. ROI and Transparency

Clients don’t just want to feel progress, they need to see it. That means clear attribution, hard numbers and data backed proof that our work works. When they answer to their boss (or their board), demonstrable outcomes are expected. Always remember that marketing is a revenue generator and when your clients can prove their success internally using your work, you’ve done your job.

We’ve invested heavily in data measurement and analytics, because it is a key way on how you earn this trust and generate wins for your clients. As I’ve mentioned in my previous piece ‘the new normal,’ our target audiences are like pin balls rapidly traveling different directions on their path to purchase. And the opportunity to engage, track and measure has become more complicated than ever. But data and technology enable us to do so. And that’s powerful stuff.

7. Balancing Short-term Performance and Brand

In this short attention span world we live in, short-term results seem to be the new addictive elixir. We get our fix by living quarter by quarter, chasing next quarter’s results. It’s tempting to chase these immediate wins for the next meeting, the next report, the next earnings call. And yes, the clicks, conversions and dashboards are all very important. But I am a firm believer that brand still matters. Maybe more than ever. But you can balance both, and the ones that do it, will prove out to be the real winners over time. Performance drives the now, but having a strong brand will drive the next. Period. That’s where the magic happens. And it’s our job as agencies to help our clients recognize the value and achieve this balance to build something sustainable for the long run.

8. AI (Of Course)

And finally, I saved this for last because it’s the biggest and the impact is changing everything we do. From how we complete conference recaps, strategy briefs, create, ideate, report and so much more. Things that used to take hours now take us minutes. It’s not a replacement for creativity, it’s a force multiplier.

At Gatesman, we’re all in on embracing AI. We’ve built an internal AI committee, an agency-wide “emerging trends/news” channel, and we’re constantly testing new AI tools and proactively sharing them in lunch and learns. It requires an on-going and continuous dialogue with our team, updates and training on the latest and greatest. And not being afraid to test and try things out as new tools become available. (Of course this all comes with the caveat of strict adherence to your clients and your own data and privacy policies.) It reminds me of the dot.com days when it was wide open field running while trying to figure out where it lead, and what it would ultimately mean? We’re all in the same boat here. And the only way forward is to lean in hard. So get on your running shoes and go.

Ok, now what?

All these things are challenging. And may seem daunting. And many are being felt across a lot of industries. But I honestly feel there’s never been a more exciting time to be in ours. Especially as an independent agency. We have more tools, more talent, more creative potential and more ability to prove our value than ever before. We can literally dream about anything and bring it to life smarter, faster and with more impact and measurement than any generation of marketers could have before us.

I’m an ardent believer that if you’re not moving forward fast, you’re managing decline. As I tell my team, bring your zing! Embrace the now. The next era for agencies is nothing to fear, it’s something we can create. And the time to embrace that opportunity is here.

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