An Agency of Record is a go-to provider of all services and offers everything under one roof. They’re popular because they give brands a single point of contact – an efficient way of working which allows them to build a stronger relationship with the agency. But the rise of smaller, specialised agencies poses a threat. They are leaders in their market and often undercut bigger agency prices.
Is there room for both AOR and SME agencies in today’s market? Our Sales and Marketing Director David Schulhof takes a look at the competition.
AOR vs. SME
AOR is a term that’s being heard less and less, which is great for smaller agencies. It used to be impossible for creative and super talented smaller/boutique agencies to work on sizeable projects, competing with bigger rival brands.
Procurement policies, expansive scopes complete with lengthy RFI processes favoured the big boys and gave the rest of us little chance.
But in the past 18 months, from my own experience, it feels like a shift has occurred, with brands of all shapes and sizes seeking more agile support with defined briefs and goals – perfect for an SME agency.
And let’s be clear, an SME agency can be anything from a one-man consultant to a 150 person agency – so still an agency of significant size and scalability.
A shift in how big brands work?
A great article by Erin Lyons from Marketing Week shared some stats to support this shift, with 66% of business leaders expecting to use SME sized agencies instead of their AOR. Coupling this with the fact that over the next five years, 78% will place more value on specialised expertise over general jack-of-all-trade offerings, now really is the time for SME agencies to shine. As an owner of an SME agency this is a trend that we’re excited to see, and one that follows up my recent post about the surprise I receive from brands that we not only accept but are keen to work on a project basis.
It seems that bigger agencies are trying to ring fence their preferred AOR model, and would rather walk away from a client or project. Is this a survival tactic or an inability/unwillingness of these larger agencies to adapt to changing client needs?
The end of the Agency Of Record?
I would be naïve to think that the big agencies don’t have an important role to play. As they do. Big brands will still have an AOR, but rather than turning to them for everything they will turn to a network of smaller, more agile and specialist agencies on specific projects.
With all the sad stories about high street heavyweights like Maplin and Toys R Us struggling – will the brands that survive and continue to grow be the ones that have single AOR models or those with a network of specialist agencies and resources?
I’m sure over the next 12 months we will see some interesting data on this.
My conclusion is summed up perfectly in another article from Colm Hebblethwaite from Marketing Tech – which states that AOR still have an important role to play for business leaders, but the pie is being eaten in to by the savvy boutique agencies that can offer better value for money and bespoke services.
Get in touch to find out more about the benefits of a specialised SME approach for your brand.