Part 2 – Agency Scope China: Short term performance prevents development of deep relationships

Source: © 123rf 123rf In China the average length of relationships that marketers have with their current creative agencies has shortened to 2.7 years

This is according to the recently finished Agency Scope Study by Scopen, in collaboration with global independent consultancy R3.

The Study found that client-agency relationships in China tend to be of shorter tenure and more project-based.

This is a challenge for clients trying to consolidate their partnerships as well as for agencies seeking to secure and drive growth.

On the other hand, if we talk about Media agencies, the average duration of relationships with their clients in 2024 is 3.1 years, with no variation compared to 2022.

No replacement for the fundamentals

Creativity, Innovation, Knowledge (market, clients, brands, trends), Good Professional Team, ROI, and Strategic Planning are the fundamental pillars on which day-to-day work is built.

They are also ‘determinant or important’ factors in agency selection.

When marketing professionals are asked to indicate spontaneously the most important qualities when defining their ´ideal´ Integrated agency they mention all of the above Creativity, Innovation, Knowledge (market, client, brand), Good Professional team and Strategic Planning.

If we compare the last two editions of the study, we notice that Creativity/Innovation, Knowledge (market, client, brand) and Internal Processes / Working Methods grow in importance while other characteristics like Agencies previous experience and expertise, Integrated Services offering, Value for money/Reasonable Fee, cost or Research, Data, Tools decrease.

When asked to indicate the most important qualities when defining their 'ideal´ media agency, the top three characteristics that appear are:

• Negotiation capabilities (good prices in media)
  
• Media Planning
  
• Strategic Planning

When comparing the last two editions of the study, we notice that aspects such as Media Planning or Research, Data, Tools are decreasing in importance, while there is a growing emphasis on ROI (Efficiency/Effectiveness).

Selection processes

The three key aspects when selecting creative agencies based on their level of importance are:

• The agency’s team
  
• The creativity of the agency
  
• Effectiveness / ROI

Meanwhile, the least valued attributes are a:

• Local Chinese agency
  
• Multinational agency
  
• The Awards won by the agency

Conversely, the three key aspects when selecting media agencies based on their level of importance are:

• Media Planning
  
• Negotiation Skills
  
• Agency team

The least valued attributes are a:

• Multinational agency
  
• The focus on Sustainability and DE&I - Diversity, Equity & Inclusion policies
  
• The Awards won by the agency.

Part 1: Agency Scope China: A greater value on strategy

12 Aug 2024

If we compare data for 2024 vs. 2022, we find that all criteria prompted have increased their number of mentions.

This effect may be due to the time at which we compared the two studies, the first during the Covid-19 pandemic and the second one in different circumstances.

On the other hand, marketers in 2024 have more criteria to consider when selecting Media agencies due to the evolution of the industry and rise of the number of agencies in the market.

More project-based work

More than half of marketers have a relationship model with their current creative agencies based on Projects (61.9%), and other clients work on a Framework Contract (38.1%).

Project Based (65.3%), Annual Retainer (32.4%), and Commission (2.3%) are the three main remuneration models used by marketers to remunerate their agencies.

Compared with the last edition, there are more marketers that work with agencies based on Project-based remuneration (65.3% in 2024 vs. 51.6% in 2022).

Only 6.3% of agencies receive a bonus-based remuneration (12.0% in 2020).

If we focus on media agencies, Annual Retainer (51.1%), Project Based (33.8%), and Commission (15.1%) are the three main remuneration models.

Currently, there are more marketers that work with agencies based on project-based remuneration (33.8% in 2024 vs. 21.1% in 2022). 20.0% of agencies get a bonus-incentive payment at the end of the year (26.2% in 2020).

Agency Scope China

This China Marketing Trends Study follows over six months of in-depth interviews with more than 300 market leaders and senior marketing professionals.

Agency Scope China 2023/24 is the 10th edition of the study in the country. It is also conducted in 10 other markets, enabling the inclusion of global benchmarks in some key criteria. In this edition, 323 professionals from 242 different companies were interviewed, and 837 client-agency relationships were analysed.

The fieldwork took place between August and November 2023.