Navigating the ‘Game of Local Ad Agencies’

Written by Corey Elliott, Borrell Associate

There are as many different kinds of local ad agencies out there as there are Game of Thrones characters. And like a lot of characters on that show, understanding their internal drivers can be confusing and possibly lead to being mauled by a dragon later.

Over 580 local ad agencies recently responded to a survey that was designed to better understand how they make marketing choices for their clients. We were surprised by a couple of items.

First of all, over half of the agencies surveyed consider local media companies to be their biggest competitor. Only 9% claimed other ad agencies were there No. 1 competitor.

This could be interpreted as proof positive that many local media companies are now being perceived as more than an advertising vehicle. In fact, about two-thirds of local media companies now offer an array of agency-type services ranging from media production to creative services to digital media management.

Then again … the optional open-ended statements attached to this question in the survey are dominated by voices who wanted to make sure we understood they saw media companies as partners or peers, not competitors.

The relationship can get complicated fast as evidenced by one agency respondent who wrote the following in response to whether they saw a local media company as a competitor:

“Not as much a competitor since we are an agency and we place TV and radio with local media companies.  Only a competitor when we try to get them [local advertisers] to not use them [the local media company] for digital and going after clients they have and we do not.”

That delineation of non-digital and digital is important. For many agencies, it seems they understand non-digital ad opportunities are very much the bailiwick of the appropriate local media companies, but there is no clear owner of digital. This could explain some of the tug of war that happens between media companies and agencies when one considers that 89% of local agencies typically use a mixture of non-digital and digital ad formats.

Also, 55% of agencies claim they get the best performance from a mix of “mostly traditional, with some digital.” When combined with the 32% who say “mostly digital media, with some traditional”, nearly nine out of ten agencies agree that a mix of media produces the best results.

This is also reflected in some of the responses to the traditional vs digital question:

“It all works better when it works together! Depending on what we are marketing and who we are marketing to the mix changes slightly.”

But of course, some local agencies cannot help but mention what truly makes a campaign great:

“As a media planner & buyer, I believe traditional mixed with digital works the best, but many of our clients have been led to believe that they need digital only and getting them to do any traditional media can be difficult now, but it works best for the client when we prevail with our recommendations.”

Good for them.

But can we consider all of this further? Can we understand these motivations and perceptions to truly get to what they think of individual types of media?

Sort of.

You would think that if local agencies are clear to tell us that effectiveness is campaign dependent and that the most effective campaigns utilize a combination of media, we should expect to see similar scoring of individual media types when scored on ROI.

Well, it doesn’t quite work out like that. And this could give us a deeper dive into the motivations of a local ad agency.

Local ad agencies were asked four questions about basic media types. These can be shown in a single graph for each media – and can reveal deep seated opinions.

The four percentages represent:

% who claim to use the media

% who rate the media a 4 or 5 for branding performance

% who rate the media a 4 or 5 for generating direct sales

% who rate the media a 4 or 5 for ROI

The one media used by the most agencies, scored high in every other fashion. Social media:

In other words, 80% of local ad agencies use social media for their client campaigns, 53% rate it a 4 or 5 (out of 5) for branding, 37% rate it 4 or 5 for direct sales, and 51% rate it 4 or 5 for general ROI.

Social media shared some high scores with Broadcast TV – but TV scored more favorably when it came to branding effectiveness. In fact, it was #1 amongst all media.

Things seem like they get a tad gloomier as we look at other media. Radio, for instance, is used by 76% of ad agencies, but does not score very high in the other measurements. But that’s not the media with the biggest disparity.

Newspaper is the one media that has the largest gap between the % of agencies who use it, and the % of agencies who give it a 4 or 5 on effectiveness.

To be fair, this could mean that ad agencies, though they don’t score some individual media as high in effectiveness, understand they are MORE effective when used in conjunction with other media. After all, they were rating each of these media types on their own. After all, we did learn they feel a combination is best.

Or they really do hate them.

It’s a complex land they inhabit – and I suppose the only thing we know for sure is that Winter is coming.