According to South African marketers, creative and media agencies contribute an average of 17% to their overall business growth. In other words, nearly one fifth of the growth of client companies is attributed to the work of their agencies.
South Africa’s market has lost perception of contribution to business growth when one compares the figures from 2016 (31.45%) which are down to almost half in 2017 (17.31%). This can be attributed to two factors firstly the size of our sample – in 2016 we only managed to interview 70 marketers however, those marketers were in the top 100 advertising spenders.
In 2017 we had a much bigger sample – more than 200 marketers – we believe the sample size related to the amount they spend, affected these results. Secondly, the slowing economy in the past few years particularly over the last twelve months has contributed to the decline in confidence.
In terms of media agencies’ contribution, South African media agencies are third after Colombia (31%), Mexico (29%) and Argentina (25%), the average of all the countries analysed is 25%.
The data in each country is different and cannot be purely compared. At the highest level of contribution, we see Brazil – the only market where creative and media agencies exist as one (they work as a single integrated full-service agency). In Brazil, agencies’ contribution to marketers’ business growth exceeds 50% as the reality is that media agencies do not exist and creative agencies (well agencies) solve media needs for clients integrated in their offering.
Cesar Vacchiano, global CEO of SCOPEN, says it is complicated for marketers to respond to how much their agencies contribute to their business growth because they do not measure it, they really can’t, but they do have a certain perception and even if it has decreased (due to the difficult times the country was living when the fieldwork was conducted) it is a higher number than in other markets.
It is quite interesting to see how figures are higher in new companies (telecoms, coms, start-ups) or certain sectors (automotive, banking, finance) because they try to analyse more and use as many indicators as they can. Some marketers recognise that agencies are the partners that help them grow the most, mainly those companies that use agencies to help them in their business and digital transformation.
These statistics are opinion based which further highlights the increasing need for agencies to assist marketers demonstrate return on investment (ROI). It may well be that agencies are contributing a greater percentage to the marketers’ business growth than the marketer thinks they are however, what would help the marketer is if the agencies are more accurate and provide more robust figures.
There has been a lot of change in the past 18 months, with the economy slowly recovering we will notice that marketers will gradually become more positive as the year goes on and in the 2019 study, which starts in July next year, we can expect to see a considerable improvement in the percentage stats that can go up to the late twenties.
A meaningful partnership where an agency can prove that they are making a significant contribution won’t only improve these statistics but can also, transform the relationship and help the marketer fight the battle to get more budget from the business that they are in.
SCOPEN Africa was launched in South Africa in 2016 in partnership with the Independent Agency Search & Selection Company.
Johanna McDowell is managing director of the Independent Agency Search & Selection Company (IAS) and partner and director of SCOPEN Africa.