What’s The Status Of The AOR Model?

A new wide-ranging study surveyed chief marketing officers on their challenges and solutions, using the long-standing Agency of Record (AOR) model. Some key findings:

 •  Nearly half (46%) of CMOs surveyed still use an AOR model. But only 14% say they are very satisfied with their current model, while 30% say they are dissatisfied.

•  The most common reasons for dissatisfaction with the AOR model is a lack of innovation (55%) and narrow capabilities (35%).

•  More than half (58%) use small- and mid-size agencies frequently. Respondents say they would use a smaller agency primarily because they offer a more personalized service and better specialist knowledge.

•   One of the biggest challenges in changing agencies, selected by 33% of respondents, is the time it takes to find and vet them.

These are among the findings of the study that surveyed 106 CMOs from a range of primarily global business-to-consumer and business-to-business brands to examine the current state of shifting agency partnerships. The research also included in-depth interviews with the CMOs of Georgia-Pacific, Kelly Services, Keds, Diageo, Bayer, and HP. The interview findings were used to produce the new CMO Club Solution Guide: ‘Developing a Modern Agency Ecosystem’.

The market is ripe for disruption with CMOs diversifying their stream of providers. A quarter (25%) supplement their AOR with independent agencies and 24% use multiple independent agencies, eschewing the AOR altogether. A further 27% use a single holding company and select multiple agencies from that company.

The main reason CMOs currently use or would potentially use small or mid-size agencies is for a better personalized service, selected by 44% of respondents. Forty percent said more specialized knowledge, 38% said increased value, 38% said more creativity, and 24% said local market knowledge.

However, changing agencies can be a time consuming and difficult process for many. When asked the things they find most challenging when changing agencies, 53% said investigating in educating new agencies, and 34% said finding and vetting agencies is time consuming.

The study was conducted by Globality and The CMO Club. Here are a couple of comments from their key executives:

Yuval Atsmon, SVP of Advisory Services at Globality, based in Menlo Park, CA, said: “Reports of the death of the old AOR model have been exaggerated, but not greatly. Amid growing levels of dissatisfaction, and a yearning for more creativity and innovation and a more personalized experience, CMOs are increasingly looking to work with independent, small and mid-size agencies. However, adding a new agency is not always easy. There’s a demand from CMOs for easier ways to source and vet new agencies. The good news is new technologies such as artificial intelligence matching exist that can connect CMOs with the agencies that are right for them.”

Pete Krainik, Founder & CEO of The CMO Club, the world’s largest organization of senior marketing executives, said,  “Better personalized service, creativity and innovation are top of mind in what CMOs are searching for in working with an agency. This customized, curated CMO Club Solution Guide provides senior marketers with proven and specific solutions gained from challenges other CMOs have faced to help other marketers to find their best agency.”