In the past 4 years, the total spend on advertising in the U.S. has increased 30-40%, and is projected to top $421Bn in 2024. Casting their massive shadow over this spend are the ‘Big 5’ agencies (Publicis, WPP, Omnicom, IPG, Dentsu), combining to control 30-40% of the advertising market. Yet, there are over 10,000 agencies in the U.S. So for every Publicis or Dentsu, there are thousands of smaller agencies most folks have never heard of. These firms are often doing great work, they know their clients inside and out, provide great strategy, great customer service, great marketing programs and many are growing.
Digital advertising is growing much faster than other types of spend, around 10-15% annually, while other media types are growing slowly or even declining. Media channels like Facebook, Google, Programmatic, and CTV are far outpacing the growth in other media. To some extent, this should not impact the core value proposition of agencies, large or small. Digital advertising still requires great strategy, compelling creative, and a deep understanding of the consumer, things most agencies pride themselves on doing well.
But the successful execution of digital advertising requires a different set of capabilities. Effective digital marketing starts with data, and not just a list or basic demographics, but all types of data, from many different sources. Wrangling this data requires a set of specialized technologies. Translating the data into actionable decisions requires complex analytics and A.I. Executing campaigns requires specialized tools and skills. And measuring the impact of campaigns requires expertise in how the various platforms work, as well as tools to bring insights together. To make things more challenging, much of the digital advertising space is controlled by walled garden media providers (Meta, Google, et al) who actively work to reduce transparency in order to protect their own margins.
If you are a huge mega-agency or holding company, you spend a lot of money buying companies that specialize in the data and technology needed for digital media. This is why Publicis bought Epsilon and Dentsu bought Merkle, for instance. But what if you do not have a few billion to spend on M&A?
You can assemble a media Frankenstein by working with various partners and licensing various tools, but that requires specialized expertise and a lot of investment. And many of us have found this model is prone to finger pointing, as each partner blames the other when something goes wrong or campaigns do not perform.
Alternatively, and often the most common approach is to just ignore the problem. Hire a couple of people with a few years of experience, and have them run campaigns using basic tools provided by Meta, Google, and the other media giants. This checks the digital box and provides commoditized table stakes results for clients. But this approach ignores a vast set of powerful tools that really make digital advertising perform - the tools in which large agencies have invested so deeply, and a key reason large agencies have enjoyed such dominance.
The final option is to find a single partner who can provide an end-to-end digital marketing solution. Not just an outsourcer who does the same manual work more cheaply offshore. Not a media channel who wants to keep all of your spend in one place. The key is finding a partner that has made real investments in data, technology, and artificial intelligence, and has operations that can scale as you grow. In order to achieve outsized growth, smaller agencies need a partner who can do for them what Epsilon does for Publicis or Merkle does for Dentsu. This makes it possible for smaller agencies to focus on what they do best - support their clients, provide great strategy, craft great stories, deliver impactful programs - without the distraction and cost of navigating the digital media technology arms race.
This is exactly what we set out to do when we built ActivImpact. We empower small and mid sized agencies, and the brands they serve, with the same cutting edge digital marketing capabilities used by the world’s largest agencies. We made the investment in people, data, technology, and operations so that our clients can focus on their business. Think of ActivImpact as your secret weapon to level the playing field, helping you maintain the intimacy and appeal of your specific agency culture and value proposition to clients, but leverage all the same advanced capabilities typically reserved for the Big 5.