Recognising industry and market drivers for agency expansion

We carried out an in-depth research of our B2B agency partners and asked them to identify the most significant influences that drove them to consider expanding their business; we got a surprisingly wide variety of responses. However, perhaps we shouldn’t be that surprised, after all, our partners come from different parts of the world, with different cultures, economies and political challenges. However, when we then compared these influences with additional research data, we found two consistent and compelling factors.
 
So, let’s start with the predominant one – global and regional economies. These have a direct impact on client budgets. A recent B2B International survey conducted earlier this year, of large businesses in Europe and US, serving B2B markets reported a positive outlook with an increase in client budgets – 57% of survey respondents anticipate global marketing budget increases this year, compared with 38% last year who said they were expecting an increase. When client budgets increase, there’s an apparent expectation that agencies’ workloads and revenues will increase too, with the potential to necessitate growth and expansion. Of course, this isn’t always the case. With procurement being more and more involved in managing agency relationships, they are looking at larger agencies who can consolidate work and create cost savings. It also depends on how that budget is shared between a global HQ and the regional offices.
 
Globalisation and client brand consolidation will continue to be a huge factor in our partners’ expansion plans. Even in Tier 2 markets, where communications ‘export’ opportunity is low, but ‘import’ opportunity is much higher. Many global brands are headquartered in the Tier 1 markets and, therefore, establish their global brand presence and communications strategy at home base. In the past, Tier 2 markets were given far more autonomy in determining their own creative and communications approach. Over the past few years, our partners have seen a shift whereby the Tier 2 market has aligned more stringently to global standards and plans (either by will or by force). The expansion, in these cases, relies on the ability to execute global plans versus creating them. In the context of BBN, this presents an enormous opportunity in not only helping clients establish their brand presence at the home base level but by having the expertise and execution (‘feet on the ground’) to deliver and adapt campaigns in local markets. BBN provides that ‘larger organisation umbrella’ without interfering with their locally based offering.
However, do agencies need to be considering international expansion?
Well, according to over 50% of our partners, they say that more than 70% of their clients expected them to provide global support, even if a smaller percentage utilise that support. While 30% said around 40% of their clients expected some level of support outside their home country, but the demand has been increasing in the last few years, and they expect and want, that percentage to increase. 20% of our partners said, even where the expectation was lower than 30%; they are finding it increasingly a prerequisite on RFPs, even if there is no immediate requirement. Also, while in some countries like Japan, where they still have a very domestic-oriented business mindset with local perspectives, there is the desire to learn from global experience and case studies.
 
The second consistent industry driver is the expansion of technology used in B2B marketing and all the knock-on effects that come with it. Also, let’s not forget the new EU digital communication legislation, GDPR, which could see agencies needing to expand their expertise and increase the size of their technical teams to support their clients with the challenges this poses. At first, agencies saw GDPR as a potential threat to their livelihood, but it could end up being one of the most significant sources of increased workload for marketing agencies moving forward.
 
Other technology-based influences are the ‘Internet of Things’ (IoT) and of course the integration of artificial intelligence (AI) and machine learning into B2B marketing which will continue to increase this year. It is believed that AI will drive faster business decisions in marketing, e-commerce, product management, and other areas of the business by helping close the gap from insights to action, (if you understand how to use and exploit it).
 
Of course, there are also the underlying constants that agencies have to cope with on a daily basis. Client demand for new services and greater niche expertise will always be a driver for agencies to consider growth. Our partners have seen their businesses expanding on the back of trends toward thought leadership, content marketing, a focus on more customer engagement and in some cases combined with sustainability factors. It’s a continually evolving complex and sophisticated mix.
 
B2B marketers have instinctively known for some time that in today’s growing online marketing landscape it requires a solid brand. In general terms, B2B companies have never really invested in strong branding, but this is changing and will need them to invest in brand building much more. In the same B2B International survey, branding is revealed as the top strategy cited for growth in B2B businesses, and most company marketers acknowledge their brand deficiencies. 60% of the survey respondents say they are focusing on initiatives to grow their brands. However, although the importance of branding is recognised, many marketers are facing challenges in building their brands:
 
  • Only 41% of respondents say their organisation has a strong USP (unique selling proposition).
  • Only 43% perform well in assessing their brand health at regular intervals (e.g., measuring awareness, brand perceptions, brand performance).
 
These particular insights come as no real surprise for our BBN partners but do provide exciting opportunities. One of BBN’s strongest differentiators is our Brand Asset Management (BAM) toolkit, which has been developed and perfected by one of BBN’s expert development teams over many years. Such is the demand to embed this expertise in their agencies, we are now conducting the second masterclass for BAM in Milan this year, and since our last masterclass in 2016, we’ve seen numerous instances of cross-pollination of brand strategy skills among partners, whose clients are demanding a higher focus on their branding.

 

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