Is This the End of the Agency Ad Model?

According to Troy Young, global president of Hearst Magazines Digital Media, the traditional model of agency marketing is perilously close to extinction. In order to survive the change, agencies like his have to do a much better job of providing premium results to their clients.

Young recently spoke to Fipp’s Jessica Patterson about why he believes the industrial marketing model is on its way out, and he pointed out three specific trends that indicate some big changes are on the horizon.

Trend #1 – The Shrinking Middle

The rise of direct-to-consumer brands like Dollar ShaveClub and Birchbox are fundamentally altering the consumer supply chain – and that’s having a direct impact on the traditional media agency model.

“Instead of a three-month process with agencies, marketers are becoming closer to the mechanics of media buying,” Patterson explains.  “Companies are now looking for the fastest path to a closed-loop solution. Logging into Google and setting up a campaign may be more efficient.”

This is putting the squeeze on creative and media companies who used to be the bridge between the brand and the consumer, Young explains. 

“I think, increasingly, marketers are becoming accustomed to managing the control systems of advertising themselves,” Young said. “The distance that was created between marketers and marketing action, which used to be that space was filled with creative and media companies, that distance is shortening.”

Trend #2 – Need to Know

As marketers work more closely on their own campaigns, their need for audience data increases exponentially. 

“They want to know a lot more about our audiences and how and why they’re relevant to them,” Young said. “And that’s really the data challenge. They want to understand more about the shoe buyers or the beauty buyers, they want us to provide as much data as we can, about their shopping preferences and how their preferences, broadly, are changing. So, what we need to become, as a company, much smarter about every aspect of our audiences and what they’re doing on our properties and beyond.”

Trend #3 – Trust is Everything

As brands go direct and learn how to leverage audience data, there’s one more factor making a huge impact. With consumers increasingly skeptical of programmatic ad placements and wary of algorithms, trust becomes more important than ever for media companies.

“So much of what people buy from premium brands like ours is the associative relationship between their brand and ours in an environment that provides the right context for their products, because that storytelling aspect is really important to them,” Young said. “They’re trying to create an understanding of their brand, such that it cannot be seen in environments where it will be compromised because ultimately that will reduce the value of their brands.”

Ultimately he believes this trend is a positive for companies that “create professional, in-depth well-researched journalism and have established media brands,” as Patterson explains.

“We need to help clients sell. We need to help them understand what sells, who buys, and why,” Young asserts. “It means that we will work more closely with clients to help them achieve tangible results. It means that we need to help clients understand what works much sooner.”

The industry seems to be slowly coming out of its digital daze as brands demands solutions that work to engage and build brand trust, something that can’t be done on digital alone. From where we sit, it’s a welcome sight.