If you’re interested in the world of marketing, at some point or another; you’re going to want to learn who the biggest players in the game are. Naturally, your first stop will be doing a quick Internet search. However, that’s when you’ll encounter some interesting results – that will leave you wondering about the difference between a marketing agency and a marketing firm.
So, what are these puzzling results?
And what’s the difference between the two kinds of marketing companies?
We’ll explore everything in detail below!
Agencies And Consultancies
Once you look for the biggest companies in the marketing business, you’ll find a couple of names on that list – like Deloitte Digital, PwC, Accenture Interactive, etc.
However, these aren’t strictly traditional marketing agencies.
And yet, they obviously take in a huge amount of revenue for the provision of marketing practices and services; while also managing to dominate the top list above more specified marketing agencies.
This is a shift that’s been going on for the past decade – so why is it happening, and what are the market conditions facilitating it?
In order to answer this question, we’ll have to explore the definitions of marketing firms and marketing agencies more closely.
If you take a look at a traditional agency and their marketing management, you’ll find that their business model is crystal clear; they connect talented, creative people, with clients who have specific marketing-related issues.
Also, remember this, as it will be crucial for later on – in this case, the client company knows what their marketing problem is (or at least, they believe they do).
They’ve got a strategy, model and framework that they want to implement.
What they want from the agency is a supplement or complete replacement of the in-house marketing team of the client.
When a marketing agency does work for a client, they most often do so with project management oversight from the client, as well as careful directions.
Most typically, the marketing agency will have a direct relationship with the CMO – chief marketing officer – of the client.
Now that we’ve established what a marketing agency does – we’ll take a closer look at the business model of a marketing consultancy; also colloquially known as a “marketing firm”.
In this scenario, the marketing firm isn’t hired to execute a specific solution to a defined problem.
Instead, the client does not believe they have the solution for a marketing problem, and they want to consult the expertise of the marketing firm in order to find a solution.
Interestingly enough, marketing agencies are often caught up in this process as well – as the solution is regularly to outsource the task the in-house marketing team hasn’t been able to complete to an external marketing agency.
However, in this case, the consultancy firm is there to recommend and guide this course of action.
Plus, they may provide additional solutions to parts of the problem that the client is not even aware of; like providing PLM for industry leaders, devising a completely new marketing strategy, or changing the focus of the existing one through new models and frameworks.
Additionally, while the marketing consultancy will cooperate with the client’s CMO, they will also look beyond this office, and take the bigger picture of the client’s business into consideration as well.
They will have information about sales, finance, operation, etc. and use these to craft the best possible strategy.
The Brass Tacks
This is why the marketing consultancies have become top earners among more creatively and tightly focused marketing firms; their marketing services have a bigger scope, demand more resources – and thus reap bigger fees.
Plus, they frequently use the creative services of smaller marketing agencies and even acquire them outright.
To recapitulate – the marketing agencies solve the specific problems by executing client-provided solutions.
On the other hand, marketing firms are there to provide the solution and the means of solving it as well – which may include another marketing agency.
The Shifting Tides
Seeing as this trend of large marketing consultancies taking in a large chunk of the revenue is a recent tendency, developing over the past decade or so; how are agencies reacting to this “turf invasion?”
Many of them are doing absolutely nothing, especially the mid-level, and smaller marketing agencies.
After all, they frequently get hired by the larger consultancies for specific creative tasks, so their existence isn’t really in question – and they still net quite a tidy profit.
Interestingly enough, the largest marketing agencies are the ones who are in the most danger.
Such huge, corporate agencies have the biggest risk of their business being run over by behemoth consultancies, as their biggest clients move their business to them.
So, the word of the day is – adaptation.
Big traditional agencies are currently focused on building out consultancies.
Their recent focus is making a culture that’s still got a creative drive, but it’s also focused on a data-driven approach.
In other words, the agencies have noticed that the strategic, bird’s-eye view is where consultancies are beating them; which is what they’re trying to become better at.
Naturally, this kind of shift is easier said than done; especially at that kind of scale.
Ultimately, the biggest take-away from this is the fact that the traditional business model of a marketing agency is undergoing huge changes.
And the largest ones that will come out on top and survive will, ironically, probably end up looking like the consulting firms they’re competing against at the moment.
If there’s one thing certain in this business – it’s constant change.
Shristi is the Chief Content Officer at Raletta. She enjoys writing about food, fitness, finance and everything in between.