Survey: C-Suite Executives Dissatisfied with Current Ad Agency Model

The advertising industry is in the middle of an unprecedented change. As Adweek, Ad Age and others have noted, an exceptional amount of agency business, totaling $25 billion, is up for review.

While some chalk this up to basic restlessness, others have said there are just six specific reasons to call a media pitch including: performance issues, change in strategy, acquisitions and mergers, and competitive conflicts. What’s really happening?

To find out, we reached out to C-level executives at Fortune 500 companies for their take on the issue. While the majority of executives we asked said they were opening their media to pitches because of reasons related to performance, drilling down into the reason why is more nuanced. But, 85% of responses fell into these two categories: – macro and micro economic factors or dissatisfaction with the current agency model.

This chart shows the reasons listed under each category and percent of respondents indicating each.

Macro and Micro Economic responses/# of responders
Slow economic growth means taking share, driving the need for near-term performance/6 – 11%
Continuing influence of procurement function, driving cost control/5 – 9%
Belief that agencies will extract “undue value”/3 – 5%
Average four year term for CMOs leads to near-term performance necessity/3 – 5%
CFO influence is increasing, demanding measurable near-term performance/3 – 5%


Seeking better agency models/current metrics/# of responders
Dramatic changes in social, programmatic, data and mobile technologies allow “marketing campaigns” to move faster than agency models; losing confidence in agency business models/10 – 18%
Decline in value of Nielsen metrics/network audience (US)/6 – 11%
The growing importance of social and digital performance metrics/6 – 11%
Social/digital targeting model programs still nascent; looking to identify best practices./5 – 9%

The most popular response was that the current agency model doesn’t keep pace with the speed of change at companies. It’s an issue that agencies must resolve long-term, but in the near-term, even brands that are performing well are subject to the macro and microeconomic factors cited above.

Here, agencies will have to strengthen their skills in two key areas: not only delivering accurate, insightful campaigns faster, but selling their ability to deliver on that promise. The pitching resources of agencies will be severely tested.

While the relationship model practiced by the best agencies will remain important, established practices and models across virtually all agency functions are under attack. Those that perform measurably well across newer marketing practices will have a distinct advantage.