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Home Marketing B2B Marketing

AOR model declared ‘dead’ as brand needs diversify beyond creative, media

February 25, 2023
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  • New business wins increased 11% for creative and media agencies globally in 2022, but the value of new business decreased by 35%, according to a new report from consultancy R3 shared with Marketing Dive.
  • In the U.S., the value of new business decreased by 42%. While IPG’s R/GA, Publicis Groupe’s Leo Burnett and WPP’s VMLY&R led the ranks of U.S. creative agencies during the last month of the year, independents OKRP, Barkley and Zambezi joined the top 10 as CMOs sought “bold ideas that maximize value.”
  • Globally, the shifts in new pitch wins and business value suggest that brands are looking to diversify services beyond traditional creative and media into e-commerce, data and performance marketing — areas that agency holding companies have invested heavily in.

The latest R3 New Business League report proclaims that “the AOR is dead” as creative and media are winning more pitches but for smaller values than in previous years. In addition, large advertisers are consolidating their marketing with ad holding groups that offer integrated services that are diversified beyond traditional creative and media.

“The future is in eCommerce, Data and Performance Marketing and agencies need to sell more advanced solutions to clients,” Greg Paull, principal at R3, said in the report. “The biggest moves in 2022 have all been focused on the ability to serve the convergence of media, commerce, entertainment, and shopping.”

Publicis Groupe topped R3’s holding group ranking for the year with almost twice the estimated media revenue as second-place WPP, which was followed by Omnicom, IPG and Havas. Publicis’ data-driven “Power of One” approach and integration with its Sapient and Epsilon acquisitions have been attractive to marketers. In December, Publicis subsidiaries Starcom and Zenith topped R3’s media agency rankings.

R3 attributed the decreased business value in the U.S. to economic uncertainty. Despite its restructuring, IPG’s R/GA still won 53 pitches, besting Leo Burnett’s 15 and VML&R’s 28. OKRP, Barkley and Zambezi bested more established agencies by winning pitches for Burger King, Red Lobster and Under Armour, respectively. 

“Looking beyond the top three agencies on the Creative leaderboard, the rise of new guard independent agencies in the US suggests that CMOs are looking for bold ideas that maximize value,” Paull said in the report. 

The need to maximize value was felt most acutely by QSR brands, five of which — Burger King, KFC, Jack in the Box, Dunkin’ and Costa — found new agency partners.

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