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News & Views

Fast Forward: The future of marketing services and technology

by Julianna Richter
Insights
|
17th October 2019
Fast Forward: The future of marketing services and technology, post image

Last week, Waypoint Partners U.S. hosted its first salon dinner for agency founders and business leaders at Freeman’s restaurant in New York City. Guests included a diverse composition of leaders from across creative, digital marketing, experiential and technology firms. Some were Founders, some lead more established companies and others are business leaders within larger organizations. But everyone had one thing in common–a shared passion and interest in marketing innovation and shared learning.

The event was the first in the Fast Forward dinner series that our U.S. Partners Brett Davis and Julianna Richter will be hosting in the coming year. We were inspired to start the dinner series to bring together a meeting of minds to share perspectives and exchange insights and ideas on different areas impacting their businesses.  Equally, we wanted to create an intimate forum where leaders could connect with each other and identify potential areas to collaborate.

For this first dinner, we focused on global marketing industry shifts, emerging technologies in demand and business trends impacting agencies of all sizes. To help inform the discussion we included a few industry thought leaders who are closely following these trends to enrich the conversation.

We began with a broad discussion of the unprecedented change and movement taking place across the marketing space. Whether it’s large-scale acquisitions, hybrid agency models, client in-housing or agencies reinventing themselves as DTC companies, the group agreed that there is tremendous disruption happening across the marketing services landscape. This disruption is only amplified by the emerging technologies being introduced on a daily basis that are directly (and rapidly) impacting how companies and brands communicate and cut through. And this is all underpinned by societal and generational changes; social movements and increased regulation; and the political uncertainty that is taking place across the globe.

Our first dinner topic centered on some of the emerging trends and technologies and how firms are harnessing these in their daily business. David Armano, a digital marketing industry thought-leader and frequent commentator, kicked this off by sharing some recent trends and what he is seeing as someone who straddles between the worlds of strategy and creativity.. He share insights on several emerging trends:

  • Artificial vs. Human Intelligence 
    with the increase of artificial intelligence across the marketing communications space, there is a growing tension between man and machine, as well as creativity and efficiency. Most companies are actively exploring ways to incorporate the new and vast intelligence to inform their strategic approach, and are experiencing the benefits of machine learning in areas like A/B testing of creative or distribution of content that can be done on an expedited basis.  One area that companies are exploring ways to program for and incorporate is the rise of “voice” including chatbots, Alexa.  Attendees were in agreement however that while AI is making the work better and approach smarter, it still requires the “human” intelligence element when it comes to creative expression and insights.
  • Frienemy or Foe
    Whether its publishers, media or tech platforms, companies are cooperating, collaborating and competing, and sometimes all of the above. This shift towards ‘coopitition’ has raised both opportunities for marketing services by creating new avenues for content creation and expanded distribution channels, but has also brought about new challenges when it comes to navigating the increasingly complex and overlapping dynamics in business.
  • Algorithms and Assimilation
    The internet of everything, everywhere has transformed how companies and brands must engage consumers.  This has created untold amount of opportunities across customer targeting, acquisition and conversion and driven a need and desire for personalized content that can be consumed in multiple ways. For many, it has also raised questions about the proliferation of algorithms in virtually all aspects of our lives, and concerns of data privacy and the long-term implications and impact on future generations.  There is a constant tension between the progress these new technologies offer and create, with the potentially negative impact they have and raises the question of how much is too much.

salon dinner

Over dinner the conversation shifted to the impact these new technologies and marketing shifts are having on the agency business including continued consolidation across the marketing services industry and what is driving acquisition. Brett Davis provided some context around the U.S. M&A market and the recent trends across the buyer networks. Acquisitions are no longer dominated by the big networks and holding companies – buyers are becoming more diverse in origin and now regularly include private equity groups, VCs  as well as newer networks of investors that are looking to build the NextGen holding company. These groups tend to look for specific capability and aim to create a roll up of ‘best in breed’ firms that can go to market individually and collectively. Larger company buyers are also looking for newer firms that will boost or add to their existing offer—whether it’s a new capability or service that will drive incremental value across their pre-existing client base, or a firm that offers a broader footprint and allows them to geographically expand.

Waypoint Partners shared other growing trends in M&A including:

  • Strong appetite for small acquisitions and large transformative deals – but increasingly a “no-man’s land” in the middle
  • More PE firms interested in the space – new entrants looking at marketing services and particularly businesses which are tech-enabled or IP driven
  • Capability valued over EBITDA – most buyers are looking for capability rather than bolting on financials (driven by the change in key buyers).
  • Preference for businesses that are growth-ready – there is an increased emphasis on firms with a clear growth strategy and avenues for business expansion.

There was alignment across the group that much of the change is being driven by clients who are shifting from retainer to project based work, and no longer requiring a full-service agency model. Instead, they are increasingly moving towards specialist agencies that can offer a more focused approach, streamlined team and agile experience overall.

This led naturally to the next topic which centered on talent and culture. With technologies evolving at such a rapid pace, the group considered the implications for skills and capabilities needed, and how new, often younger talent is best acquired (and retained). This raised important questions on whether it is better and faster to ‘build’ or ‘buy’ these new skillsets?  And what can firms in highly competitive and expensive markets like New York City or San Francisco do given the high salary demands and war for talent? There were many perspectives and learnings shared amongst the group, particularly given the different priorities of a younger workforce, such as flexible schedules, collaborative work environments and purpose driven clients.

M&A salon dinner NYC

As our dinner came to an end, there was unanimous agreement that change in marketing services and technology is happening faster than expected, and that companies of all sizes must adopt a Fast Forward mindset and embrace new ways to create, distribute, measure and grow. The insights shared, ideas exchanged, and candor provided on what is working (and what isn’t) was incredibly valuable, and the conversation has continued to evolve across the community.

We welcome ideas for future topics that would add value to these dinner discussions. Our goal is for attendees to take away relevant insights and to make new contacts for idea exchange or for business opportunity. If you would like to attend a future dinner, please send an enquiry to angela@waypoint-partners.com.

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