A new report from Funnel, a marketing intelligence platform, and market insights company Ravn Research has shed light on the evolving relationship between marketing agencies and their in-house counterparts. The findings reveal that agencies are facing significant challenges, including the rise of artificial intelligence (AI), shifting perceptions, and external regulatory pressures.
The report, based on insights from 327 in-house marketing professionals and agency leaders, highlights three key issues confronting agencies. These include the increasing influence of AI, a shortage of advanced analytical skills, and growing doubts about the overall value of traditional agencies in today’s rapidly changing landscape.
AI’s Growing Role
The rise of AI is a central theme in the report, as in-house marketers express concerns about how it will impact their reliance on agencies. Notably, 43% of those surveyed believe AI will make their company less dependent on external partners.
Despite these concerns, the report suggests that marketing agencies remain optimistic. Around two-thirds of agency professionals expect their financial prospects to improve, largely viewing AI as a net positive for their business. Many agencies believe that AI will enhance their ability to deliver value-added services rather than replace human expertise.
Mistrust in Agency-Client Relationships
However, the report also highlights a significant issue in the form of mistrust. Many in-house marketers are frustrated with what they perceive as outdated and repetitive processes, leading to strained relationships with agencies. More than half of the marketers surveyed expressed a lack of confidence in their agency partners, particularly when it comes to managing costs and delivering tailored solutions.
Furthermore, 75% of in-house professionals anticipate that their reliance on agencies will remain flat or decrease over the next year. Only 40% of marketers believe their agency is invested in the long-term growth of their business, while less than half feel agencies are effectively communicating measurable outcomes.
Opportunities in Advanced Analytics
One area of potential growth for agencies, according to the report, lies in advanced analytics. As traditional methods like last-click attribution become less viable due to regulatory changes, there is a greater need for sophisticated measurement techniques. Many agencies see this as an opportunity to step in and provide the necessary expertise that in-house teams often lack.
Although 60% of marketers are already using data analytics to measure performance, only a small fraction is employing advanced techniques such as marketing mix modelling (MMM) and incrementality testing. This creates a gap in the market for agencies to offer more complex, data-driven solutions.
Con Cirillo, Head of Marketing at Funnel in the United States, remarked: “With AI on the rise and marketing teams re-evaluating their budgets, it’s essential to examine the evolving relationship between in-house marketers and agencies. The report underscores the need for both sides to innovate and collaborate more closely.”
The report, which also includes contributions from Clare McDermott, Founder of Ravn Research, highlights the importance of trust and transparency in overcoming the challenges facing the marketing industry today.
