In this op-ed, NP Digital APAC managing director, Dan Kalinski, makes the case that while consolidation and cost-cutting are becoming the norm, agencies need to avoid a race to the bottom. Instead, he argues for long-term partnership thinking, thoughtful strategy, and not losing sight of what really delivers value for brands.
We are currently experiencing seismic shifts across the marketing and media landscape. How effectiveness is defined and delivered by agencies and the very way we do business is being upended. Tighter client budgets and shifting expectations, spurred by the rapid rise of AI and continued economic uncertainty, mean the goalposts have been moved. And one thing’s certain – they’ll continue to move.
Genuine growth has become harder to achieve. Brands are finding it more difficult to generate meaningful returns from their marketing investments, thanks in part to slower-than-expected post-COVID realignment, coupled with algorithm changes and disruption across platforms. These pressures are challenging the core of traditional agency business models.
In response, many large agency networks are seeking safety through consolidation. This often involves reducing teams and relying more heavily on automated tools to complete campaigns. I am increasingly hearing of frustration from clients and industry peers, as agencies lean into technology without maintaining the level of client service that underpins strong business partnerships.
There are other worrying trends emerging. Clients are discussing agencies that offer digital media services for free, recouping the lost margin through deals with traditional media suppliers. Channel-based planning is directly eroding clients’ ROAS, as the media mix is dictated by the financial targets of the media agency, rather than audience insights. When services are used as leverage, often in desperation to retain contracts, it devalues collective work and starts a race to the bottom. This approach diminishes all agencies’ value in the eyes of clients.
In some cases, businesses are so focused on protecting the bottom line, that strategic, longer-term thinking is being abandoned. I believe agencies that employ a knee-jerk response to problem solving are abdicating their responsibility to deliver what is best for the client.
Yet, amid this disruption, what brands really need is still evident. Strong partnerships are built on dedicated support, clearly defined business goals and thoughtful strategic direction.
I believe the most successful agencies are those investing in deeper partnerships. In many cases, this means going above and beyond to ensure outcomes are delivered. A bit of old-fashioned over-servicing, sometimes, is the answer.
The question is how to find the right balance. Something many agencies are grappling with currently is how to use new technology without becoming beholden to it. AI certainly has an important role to play. Used judiciously, it allows teams to focus energy on higher-value tasks. But automation needs to support, rather than replace, human-led service.
Equally, because we’re now able to cut out more labour-intensive tasks, doing business face-to-face has never been more important. In an increasingly digital working environment, it allows us to forge deeper connections and properly understand client needs. It’s how we create genuine partnerships, not just transactional relationships.
The industry is clearly now at a crossroads. To be successful from here, we need to harness the power of technology, but also understand its limitations. Brands seeking agency partners should prioritise those focused on delivering sustainable growth, strategic clarity, creativity, and consistency, rather than outsourcing services or offering shortcuts.
Growth might seem harder to come by at present, but one thing is clear. The best partners are those who zero in on what your business really needs and are not afraid to overinvest in their relationships. Short-term pain is probably inevitable for many agencies right now, but long-term gain is the reward for those who refuse to waver on their service offering.
