Technology | Media | Telecommunications

Wednesday, April 21, 2010

How Advertising Agencies are Failing their Clients

Sixty-five percent of marketers worldwide believe that advertising agencies are still not results-driven. According to the latest market study by The Fournaise Marketing Group, ad agencies are not doing enough to deliver better results for their clients.

In their 2010 Global Marketing Pulse report, they compiled insights from close to 1,000 marketers around the world on several aspects of their marketing ROI -- from the increased pressure for results they get from top management, to the effectiveness of marketing strategies they implement, and their overall expectations of ad agencies.

Fournaise reports that marketer perception of agencies not being result-driven is a truly global trend. As an example, it's true for 70 percent of marketers in developed economies such as the U.S., Western Europe and Australia -- where the fight for the customer wallet is tremendous.

It's also now exceeded 50 percent in developing regions such as North Asia, Southeast Asia and India -- where the ever-increasing sophistication of customers makes each sale even more difficult.

They also found that marketers around the world classify ad agencies into three groups:

1) the Result-Drivers who truly believe that the primary purpose of a campaign is to deliver the bottom line results of their clients, and do whatever they can to attain that objective (35 percent).

2) the Result-Pretenders who claim they believe in making campaigns that deliver results, but are internally not prepared to put in place the relevant systems and processes to do so (43 percent).

3) the Dreamers who still live in legacy "Adland" (22 percent).

Fournaise further identified three of the major weaknesses that marketers believe the majority of non results-oriented ad agencies have in common:

1) Their customer insights expertise and knowledge is not deep enough (74 percent). They don't know enough about and don't spend enough time and money investing in better knowing their client's target audience. They still rely too much on gut-feeling, and often end up developing strategies and/or campaigns that have little impact.

2) They are too ad award-driven and see campaigns as a way to boost their creative portfolio instead of boosting the P&L of their clients (71 percent). This in turn often leads them to be creatively inflexible.

3) Because they usually don't have systematic tracking mechanisms in place to measure the effectiveness of the all-media campaigns deployed, they don't know enough about what worked (and why) and what did not, and have difficulties fine-tuning their strategies and campaigns accordingly to boost their ROI (70 percent).