Marketing agencies gain momentum headed out of recession
Industry in transitionCreative agencies continue to transition more toward digital channels to ensure future revenues, reducing reliance particularly on direct mail and other print products. Horvath says that where direct mail made up 60% of its business five years ago, it's now closer to 15%. "The drop has been consistently happening," he says. "It's quite a dramatic change."
"A second trend is clients moving from TV and broadcast to two-way communication and using digital platforms," says Daniel Morel, CEO and president of Wunderman. "That will go on for years, and that helped us in 2010, when we saw an acceleration of it."
While direct marketing firms with creative services at their core understood this transition earlier, the last year demonstrated that marketing services firms are headed in the same direction. Merkle, at one time a traditional database/CRM firm, created a social marketing practice and acquired a search firm in the last year. Infogroup, once the list and database gorilla of direct marketing, is in the midst of a company rebranding that highlights its integrated offerings, and Epsilon, better known for its loyalty and data management, acquired one of the industry's largest independent creative firms, Aspen Marketing Services. Acxiom has been busy snatching up digital firms overseas in places like Brazil and New Zealand.
"Everybody is headed to the middle," says Kuenne, who acquired two firms last year. "The offline agencies are saying, 'I better pick up interactive, data and CRM,' and the interactive, data and CRM agencies of size are saying, 'I better pick up the other side.' I think this blurring will continue."
The Direct Marketing Standings 2011 show the extent of this "blurring" where the definition of direct marketing can now be applied to a number of agencies and firms.
Consolidation among agencies can benefit some. "During periods of recession, clients tend to concentrate their investment with the largest player," asserts Morel, whose firm has half of its revenues concentrated in the US. "They don't have time to guess around with secondary agencies and small groups."
Consumers' growing attachment to connected devices and conducting life on the go via mobile will continue to fuel marketers' — and thus agencies' — priorities into the next year as well. "Clients are saying, I need a standard way that my brands show up across these connected devices, smartphones and tablets," says Kuenne.
"There will be a lot of ground lost and gained by agencies," adds Horvath. "I think there are going to be some big winners and losers."