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One in three marketers to axe agencies as Dentsu Aegis accuses brands of ‘letting the tail wag the dog’

One in three marketers will reduce the numbers of agencies they work with over the next two to three years with more than half set to bring more functions in house, a study has found.

The Dentsu Aegis CMO Survey, which quizzed 1000 marketing leaders from around the world, also found that a data breach is the key concern for brands while, on a positive note, 60% of marketers expect their budgets to rise in the next 12 months.

But there are sizeable geographic differences with only 35% of Japanese marketers confident of a budget increase, way below the 75% in China who expect to have more money to spend.

The findings emerged as senior Dentsu Aegis executive Nigel Morris accused brands of letting the “tail wag the dog” such is their obsession with digital channels.

Asked how their approach to partners and suppliers will change over the next 24-36 months, more than half those questioned (54%) said they would invest more in digital media platforms.

Writing in the report, Morris, Dentsu’s chief strategy and innovation officer, said: “While the fundamental principals of marketing have not changed, in terms of the tools and capabilities with which brands can execute their strategies we’ve seen huge disruption,” he wrote in the report. “The speed of growth and the variety of new channels through which brands can engage consumers is astonishing. But many brands are guilty of letting the tail wag the dog, allowing a short term preoccupation with digital detract from long-term brand building.

“As with any innovation, these tools need to be considered in the context of a brand’s long-term strategy and as part of an integrated marketing mix that address all phases of the consumer lifecycle.”

Of concern to agencies will be the 52% who said they will bring more marketing capabilities in-house and the 33% who said they will whittle down the number of external agencies they work with.

DAN regarded the figure as positive given the “scare stories about the demise of the traditional marketing agency”, but acknowledged it illustrated the challenges facing brands.

“This trend, coupled with the popularity of in-house marketing capabilities, does speak to the pressures facing brands and the need to demonstrate effectiveness of marketing spend,” it said

Meanwhile, significant numbers of marketers in Asia Pacific – 63% in Australia, 53% in China and 47% in Japan – believe data protection legislation will make it harder to forge relationships with consumers.

Globally, increasing levels of competition was the major worry for marketers (56%) in building relationships, while 46% cited a concern that consumers were intolerant of advertising.

However, data – and the ability to target “real people” – was regarded as the major opportunity for marketers with eight out of 10 recognising its importance to “effective customer engagement”.

Arvind Sethumadhavan, chief strategy and innovation officer at DAN Asia Pacific, identified a “clear shift” as marketers adapt to a digital economy led by customer demand and a desire for an improved customer experience.

“CMOs are aware of the need to embrace digital transformation that orientates around a deep understanding of customers to deliver business growth,” he said. “In Asia Pacific we particularly see the opportunity for marketers to leverage data to secure long-term customer relationships.

“The diversity of this region is another factor that increases the need for Asia Pacific CMOs to ensure they are able to deliver consistent brand narrative targeting real people. This has strong potential to transform marketing’s role as the architect of a businesses long term vision.”

Morris said the “terabytes of data” flowing to marketers opened the door for revenue growth but also placed fresh demands on marketing departments.

Not only did it place pressure on marketers to handle such data responsibly, but it cranked up the need to develop skills to separate data from insight.

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