The new agency landscape is more competitive than ever. Once powerhouses, large, traditional, full-service agencies are facing competition from smaller, tech-focused players offering pre-packaged approaches at a fraction of the cost. The model is no longer telling a 30-second story for a TV ad, it requires tech-savvy and know-how. Larger agencies have noticed this: After Omnicom and Publicis called off their merger, Publicis acquired technology services and web development firm Sapient Corp. for $3.7 million.  Furthermore, the industry is consolidating and becoming fragmented at the same time as traditional agencies rush to provide additional digital services and smaller agencies crop up after developing expertise in a particular digital area.

What this means for brands: Choosing an agency has gotten more complicated as they must choose an agency for specific needs instead of a “superior” agency. For example, brand agencies (50 to 500 people) can provide creative direction and strategy guidance but will come short in technological capabilities. They can create small and focused digital campaigns but are likely unable to manage moderately sized digital projects on multiple platforms. Brand agencies rosters of top-notch creative talent are valuable for brands with a need to build or overhaul their creative assets.

However, for brands that do not need that creative strategizing, effective digital campaigns using the newest tools is key. If these agencies do not do traditional advertising (billboards, television) specialty agencies may be best suited to their needs. These agencies are nimble and focused, and fill in the gaps missed by traditional agencies – i.e. SEO/SEM, social media strategy and management, digital analytics. They can also offer platform-specific technology services such as CMS or e-commerce packages.

Advertising agency fees account for $50 million of brand budgets (not including media spend), making partnership choices difficult. For more on how to choose an agency partners, download L2’s Insight Report on Marketing Agencies.

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