Those that are in acquisition mode? They are looking for the areas that they need to strengthen. Usually, it’s in tech or data analytics. Definitely AI.
Marla Kaplowitz, president and CEO, 4A’s
Changes to the pitch process (maybe)
Last summer the 4A’s published its Cost of the Pitch report, which concluded that a pitch involving three agencies can cost upwards of $1 million, and identified common reasons clients initiate reviews. This year the 4A’s will expand its research and focus on “understanding the expected actions and behaviors that are associated with a commitment to a long-term relationship,” Kaplowitz said.
Peppered with questions about new compensation models, Kaplowitz and her team will soon release guidance for agencies that wish to understand their options.
“It’s really just making sure that people understand what are alternative compensation models beyond cost-plus or FTE models. This is going to be really important, especially with the acceleration of AI within our industry,” said Kaplowitz.
Adapt to AI, or risk losing relevance
Artificial intelligence will remain one of the most important industry trends, and agencies should not ignore it. “This is one of those adapt or become irrelevant moments, and so there will be a lot of bumps in the road,” Kaplowitz said, acknowledging that agency employees must find the right tools, determine how to use them and then push adoption inside their organizations.
The 4A’s recently published guidance for agencies on navigating the nuances of AI and its own “AI philosophy”—the 4A’s take on the technology and advice for those agencies just getting started. Its Agency Operations & Business Transformation Committee is also developing resources for agencies, covering how to adapt to an accelerated pace of change, and later scale that change across its practice areas.
TV spend dwindles while other privacy concerns mount
TV investments are shrinking, and that’s as the supply side is offering more measurement options and currencies. These developments, while theoretically helpful to determine return on ad spend, pose challenges for advertisers, according to Kaplowitz, and leave the industry in flux. The 4A’s predicts the TV ecosystem will encounter privacy issues, especially at the local TV level.
M&A continues, with a need for succession planning
This year, agency owners will think more about succession planning and how to manage it, according to Kaplowitz. They’ll consider if they should pass their companies on to someone else, transform their shop into an employee-owned shop or sell to a larger firm. Kaplowitz anticipates the industry’s many agency collectives, often considered “small holding companies” in their own right, will continue to acquire companies and expand.
