US Study Finds Digital Revolution Could Signal Problems For Agencies
Changing consumer habits in the US, driven by the shift from analogue to digital media, are revolutionising the ad industry, which could spell bad news for agencies, according to a new study by Accenture.
According to 70 industry leaders surveyed by Accenture, agencies have the most to lose in the new order, even more than broadcasters. When asked who would fare worst in the transition to digital advertising, just over 40% said agencies, compared to just over 30% who said broadcasters.
Cable operators were third with 10%, whilst no respondents chose search companies or digital ad specialists.
The challenge agencies face stems from the rise of performance-based advertising and the technology tools needed to execute highly targeted campaigns, rather than mass-media pushes fuelled by a singular “big idea”, according to Charlie Symmons, senior manager in Accenture’s media and entertainment practice.
“It used to be content was king; now it’s very much context is king,” he said.
For that reason, Accenture sees a threat to agencies from technology companies, which can provide the tools that allow clients to better know their customers. This could displace agencies’ value to their clients, the report warns.
Accenture interviewed 70 advertising decision makers around the world from February through April this year. Respondents included executives from agencies, media companies and technology providers.
The consulting firm found 50% of respondents believe digital media would be the primary form of content and advertising delivery in the next five years. Over 80% think it will happen within a decade.
With that shift to digital, the survey found that advertising is undergoing a fundamental shift to become more accountable, Nearly four-fifths of respondents expect advertising will become more performance based, while 87% believe analytics will play a critical role.
Yet traditional advertisers are pessimistic that they have a good grasp of the tools needed to operate in this landscape. Over 70% said the industry is not technologically prepared for the resulting changes in performance measurement.
While ad agencies were not expected to gain from these shifts, 46% thought search companies and 19% said digital ad specialists had the most to gain.
Accenture: www.accenture.com