Timothy A. Koonce: How On-Demand Work Is Killing The Agency Of Record

agency-of-record

By Brooke B. Sellas, {grow} Contributing Columnist

In the past, Agency of Record (AOR) was a very prestigious title. It meant a single agency was responsible for all of the marketing services a brand needed.

Today, the Agency of Record is a dying breed.

Marketing’s ever-growing list of needs combined with an “on-demand” economy is leaving brands reeling.

Does this mean AOR is dead? You decide.

The Past: Agency of Record

First, let’s define Agency of Record.

Wiki describes Agency of Record or AOR for marketing and advertising below.

“In the advertising and marketing industry, AOR stands for “Agency of Record.” In this context, an AOR is an agency that is authorized to purchase advertising time (for radio or television advertising) or space (for print or web advertising) on behalf of the company with which they have an agency contract.”

Historically, marketing was pretty straightforward. Brands hired agencies to take care of only a few things:

TV
Radio
Print
Direct Mail

This model worked well. It removed the need to manage multiple vendors and allowed for seamless communication.

And with better communication, things were more efficient. Trust was easier to build.

But if the Agency of Record model was so easy and made so much sense, why is it now in trouble?

The Present & Agency of Record

Enter digital media.

Suddenly, brands now have needs around

Email Marketing
Social Media Marketing
Content Marketing/Inbound Marketing
Digital Advertising
eCommerce

My last post on why marketing departments are overwhelmed pointed out that these tasks require a lot of specialization.

These sub-specialties are hard to hire for. Meaning this “on-demand” work often forces agencies to farm out work to subcontractors.

Likewise, it’s too costly for brands to keep each specialty in-house.

For example, a Social Media Marketing and Communications Manager can cost you upwards $97,855 a year in the U.S.

As a result, the Agency of Record model gave way to more project-based models.

Instead of one agency doing ALL THE THINGS, brands depend on a mix of different agencies to supply various specialized services.

What Does The Future Hold For AORs?

Interestingly enough, there’s a lot to unpack here.

First, a look into the AOR+ model.

Paul Schauder, VP Creative of LogMeIn said the below.

“For our industries and products, the learning curve is steep and constantly switching partners can cause delays in throughput and problems with brand constancy. Agencies are stronger at some things than others. But we haven’t abandoned the AOR relationship, we’ve just augmented it where we need to with specific talent for specific executions in our marketing mix. There is something special in working with a partner over the long-term because the shared experience eliminates wasted time.”

In Contrast, big brands like Frito-Lay, PepsiCo, and Constant Contact have cut the Agency of Record model at the knees. They’ve instead opted for a DIY model, where they use several different agencies to complete different tasks.

digital-agency-of-record-axelerant

[Image Source: Axelerant]

And THEN there’s the ultra-new “Voice Agency of Record.” (I know, I rolled my eyes too!)

While voice marketing is certainly important, I’m not sure it warrants this title. However, JPMorgan Chase bestowed this very title to VaynerMedia earlier this year.

It seems the term or title is in the eye of the brand.

Partnerships Are The Past, Present & Future

No matter how you spin it, partnerships will continue to be the driving force behind marketing.

Perhaps we will do away with the Agency of Record, or even a “lead” agency, and opt instead for equal partners each specializing in their own segment.

This is how we often work with clients and their other teams (like web/SEO or PR) — we call this a hybrid approach. No one agency takes the lead and instead we look to the client for direction.

In any case, as brands look to roll support into several agencies the landscape will likely change again and lead to new opportunities.

Can we say Agency of Record is dead? No. Is it threatened? Absolutely. But such is life in the digital world!

Curious, how does your brand operate when it comes to outsourcing? AOR? DIY? Let me know in the comments section below!

Brooke B. Sellas is the CEO & Founder of B Squared Media, an award-winning done-for-you social media management, and advertising agency. In 2018, she was named a Top 25 Brand Builder & Woman Entrepreneur in New Jersey. She’s also a blossoming blogger and a purveyor of psychographics. Brooke’s marketing mantra is “Think Conversation, Not Campaign” so be sure to give her a shout on Twitter!