Insourcing, offshoring and creative re-alignment: 10 things I learned about the future of B2B agencies
Is the UK B2B marketing agency sector on the cusp of an unprecedented transition? Joel Harrison investigates
For as long as we’ve published B2B Marketing agencies have been the barometer of health in the sector, and I see no sign of that changing any time soon. Put simply, if agencies are thriving, then the whole sector is thriving.
That’s certainly the case for B2B agencies at the beginning of 2019, according to our latest UK Agencies Benchmarking Report, with strong average growth in 2018, and a record 95 ranked in the table, plus another 100 who declined to give us their financials (to enable them to be listed). For context, the first time we ran our league table we struggled to find 20 agencies to rank.
Although the agency sector is in rude health, it’s also beginning a transition, probably as never before, in my time in the industry. There are a number of things driving this transition, and it will have a range of implications, which will manifest themselves in a variety of ways. Having interviewed the principals of the top five in our B2B Marketing Agencies League Table 2019, for an article in the B2B Marketing Agencies Benchmarking Report, here’s a brief snapshot of some of the key transitions that the B2B agency community is undergoing.
1. Traditional client/agency relationships are breaking down
We are seeing the emergence of new ways of working, more collaboration and integrated teams. The most obvious of these is the growth of the ‘agency inside’ model, but this trend is playing out a micro level too, with subtle shifts in the nuances of relationships with agencies of all shapes and sizes.
2. The stiffest competition is from insourcing, rather than other agencies
The availability and affordability of martech, plus the onus on inbound and ‘always-on’ marketing means clients are building up their internal marketing teams and hiring freelancers with renewed impetus and vigour, recognising the potential to rely less on agencies – or at least focus their involvement on very specialist areas.
3. It’s not just marketing teams who are agencies’ clients - or even their best clients
Increasingly B2B agencies are working with IT teams on digital projects, or sales teams on things like ABM. These different types of clients have different needs and expectations, and agencies will have to do as much to realign deliverables as to recognise this opportunity to succeed.
4. It’s not just about creative or ideas – increasingly it’s about resources and competencies, particularly around technology
Arguably the biggest skills gap that agencies can help clients with is around the use of martech, rather than access to creativity and creative thinking. Meeting this need has obvious and profound impacts on how agencies operate and are positioned.
5. Competition within the agency sector is growing too
Management consultancies are moving in at the top end, and production houses are trying to develop strategic offerings at the bottom end. There’s a squeezed middle where many agencies are operating, and that means they will have to work harder to prove the value that they offer.
6. Offshoring is becoming the future for commoditised service offerings, as never before
Doubtless we’ll see a repeat of the rapid growth that occurred in areas such as lead generation in regions of the world with lower cost bases than Europe and North America. As these firms proliferate they are likely to become more sophisticated and therefore more viable alternatives to close-to-home offerings.
7. Size or pedigree is no longer a guarantee of excellence, or even success
Small, nimble and niche agencies may find it easy to compete in this new world, rather than those seeking a broad level of competency.
8. Future opportunities may come from unlikely places
Arguably there is little or no net-new budget or business available to B2B agencies. Typically it’s just the same clients rotating around different agencies. Those agencies that are able to engage clients who have not used agencies before, offering them new and compelling offers or ways of working, will be well-placed to succeed.
9. A boost from Brexit?
However it plays out, Brexit could be an opportunity for agencies, particularly if they are offering new insight and/or ways working that shake up the status quo, and allow clients to be more innovative or dynamic in terms of how they address their challenges.
10. What even is an agency any more?
It’s becoming harder and harder to tell, and that trend will only accelerate. The historic categorisation of agencies as outsourced providers of creative services and strategic thinking is increasingly insufficient to define the nature of the relationship these organisations are having with B2B brands. Doubtless there will always be a need for third-party organisations who have knowledge and expertise of marketers’ challenges, but it's likely that they will take on many different forms in the future, with many specialisms, to accommodate the needs of this rapidly mutating and fragmenting market place.
You can read my full article on the future of B2B agencies, based on my interviews with the principals of top five in the league table, in our 2019 Agencies Benchmarking Report. Thanks to Raffaele Apostoliti of Expandi Group, Sam Crocker of Bray Leino, Olly Foot of MRM McCann, Sharon Whale of Oliver and Sam Williams-Thomas of Ogilvy for their contribution to both articles.
Who are the UK's top B2B marketing agencies? This year's league table features a record-breaking 95 agencies, and is chock-full of analysis, commentary and interviews.