Research highlights gap in agency expectations

The report identifies a gap between the strategic support clients value and what they believe they currently receive

The IPA has published new research examining how brand leaders assess the value of agency partnerships, finding that while most clients see agencies as commercially important, many believe there is room for stronger strategic input.

Produced in collaboration with Tracksuit and launched at the IPA Business Growth Conference, the report, Bridging the gap: Redefining the value of agencies, is based on a survey of 200 senior client-side decision-makers with marketing budgets ranging from £1 million to £250 million, alongside 20 interviews with marketers, agency leaders and industry commentators.

Clients continue to value agency partnerships

The research found that nine in 10 respondents said their agencies are either central to their commercial success or make a meaningful contribution to business performance. A similar proportion expect their use of agencies to increase or remain unchanged over the next three years.

When asked which services they value most, respondents ranked quality of asset production highest at 83 per cent, followed by strategic brand expertise at 80 per cent and specialist channel knowledge at 79 per cent. Development of a core creative idea or platform ranked joint tenth at 74 per cent, reflecting the broader range of capabilities clients now expect from agency partners.

Strategic thinking emerges as the largest gap

Despite positive perceptions overall, the report identifies a gap between the strategic support clients value and what they believe they currently receive.

The largest gap relates to stretch and growth thinking. While 83 per cent of respondents described this as extremely or very valuable, only 48 per cent believed they receive it from agencies. A similar gap was identified around agencies challenging client briefs and assumptions, with 77 per cent valuing this capability compared with 43 per cent who felt they experienced it. Among C-suite, executive vice-president and vice-president respondents, the gap was even wider, with an 85 per cent to 37 per cent split.

AI and remuneration remain key issues

The report also highlights wider trends affecting agency relationships. Respondents cited cost, speed, control and integration as key reasons for increasing in-house capabilities over the past two years.

Two-thirds of respondents (66 per cent) agreed that current agency remuneration models undervalue agency work, while 54 per cent expressed interest in outcome-based pricing. The research also found that nine in 10 clients now regard AI capabilities as critical or very important when selecting creative and media agencies. In addition, 82 per cent agreed that agencies could do more to help ensure the customer perspective is represented at board level.

Report outlines recommendations

The report recommends that agencies strengthen how they communicate their value, place greater emphasis on creative expertise and strategic thinking, support board-level decision-making, and align remuneration more closely with the value they deliver.

Ed Palmer, director of value, IPA: "Agencies should take heart in the value marketers attach to the creativity, challenge and strategic rigour that agencies are uniquely placed to deliver. But there's work to be done to ensure that agencies deliver what clients truly value in them, and that that value is recognised and compensated accordingly. At the IPA we're committed to finding more ways to support agencies in doing this."

Talia Hickey, global head of agency partnerships, Tracksuit: "We've always believed agencies deliver enormous value for their clients. This research proves it, and then shows them how to deliver even more. The agency landscape has never been more diverse or dynamic, and that clarity is exactly what will help agencies step into their next chapter, bolder and more confident."

Marcos Angelides, chair of the IPA Commercial Leadership Group and managing director of L'Oréal Lab and head of AI operations at Publicis Media: "The research shows that clients continue to place enormous value in agency partnerships, but it also highlights a clear opportunity. Clients want agencies to push their thinking further, challenge assumptions and bring new perspectives to the table. To do that effectively, agencies need to combine creativity and expertise with robust data and insight that guarantees competitive advantage. Agency partners that do that will help clients make better business decisions, unlock growth opportunities, and prove marketing's contribution to commercial success."

The full report can be accessed here

www.ipa.co.uk

Follow Marketing Report on LinkedIn