Creative agencies are adding more to clients’ business growth, study shows

By far the hardest question for marketers to answer in the  latest Agency Scope South Africa study relates to how much their agency has contributed to the growth of their business, says Johanna McDowell, Independent Agency Search and Selection Company (IAS) and Scopen partner.

It is one of the last questions in the study and has marketers scratching their heads in view of the difficulty of considering the sheer number of factors that contribute to business growth.

“Agency contribution to growth is clearly not just about the advertising or the return on investment, which would be too simplistic,” says McDowell. “Larger marketers, in particular, understand the number of factors that may account for business growth, including product, price and distributions.”

In some instances, marketers don’t or can’t answer, but those who do respond have enabled Agency Scope to determine that creative agencies contribute just slightly under 30% to their client’s business growth, while media agencies are contributing just under 34%, she says, adding that the answer to this question is also a factor in determining the net promoter score the agency achieves.

According to Scopen co-founder and global CEO César Vacchiano, comparing South African contributing agencies to their global counterparts is important in terms of setting benchmarks and the trends that drive them.

“The global average for creative agencies in the Scopen markets is 32%, while the media agency average is 33%. Of the two, media agencies would be the easier to track, because they have more data that can prove business growth and they share their various analyses with their clients,” says Vacchiano.

The stats show overall improvement. In 2021, the average contribution made by creative agencies to clients’ business growth was 26%, up by 4% in 2023. Media agencies have maintained their 34% contribution from 2021 to 2023.

Advertising spend has declined from 4.2% in 2021 to 3.5% in 2023. What this decline reveals, says Vacchiano, is that budgets are having to work a lot harder.

“Kudos to advertising agencies, however, as marketers are attributing an even higher percentage of their growth to their agencies, despite these lower budgets. Marketers know that to maintain a contribution to business growth according to what the client sees is good; but to be able to have increased it like creative agencies have done is excellent.”

The data underscores marketers’ suggestions that creative agencies’ role in cutting through the clutter and producing workable strategies is vital, says Vacchiano, adding that clearly this is being recognised across the board, particularly in relation to business growth.

“To affect business growth at the same level with less money for two consecutive years indicates that creativity is key,” says McDowell, noting that this s not just creativity in terms of ideas, but also media strategising and the creative implementation of financial spend across the various platforms and in a variety of ways to reach target audiences.

“In the final analysis,” says Vacchiano, “creativity in every sense of the word has taken a vital leap to the way in which marketers and agencies conduct business with a steady eye on growth.”

The big take-out: Despite advertising spend declining from 4.2% in 2021 to 3.5% in 2023, marketers are attributing an even higher percentage of their growth to their agencies.