New research from Funnel spells out the

mounting hazards facing marketing agencies,

plus hidden opportunities to turn disruption
into innovation and growth.

Agency
Acceleration
Agency Acceleration | Funnel.io
| Funnel.io 1
Table of contents
1. The optimism gap

2. Agency report card

3. Next-horizon measurement

4. A golden opportunity

5. Vision 2030

Agency Acceleration | Funnel.io 2

 About the research
Funnel surveyed 327 in-house marketing pro-
fessionals and agency leaders globally. We also
interviewed nearly a dozen agency leaders from
high-performing, data-savvy shops in the U.S.
and Europe. Our goal was to understand the
unique challenges facing agencies, as well as how
high-performing agency teams are innovating and
out-competing the market. The research was
managed by a third-party partner, Ravn Research,
and sponsored by Funnel.

Agency Acceleration | Funnel.io 3

The optimism gap
Marketers signal they may replace their agencies with AI-driven tech,
but agencies appear unconcerned.

Marketing agencies face a serious

triple threat:

1. Pressure from regulators and Big Tech: Cross- 3. Changing perceptions about ‘value’: AI and auto-
device and web tracking was always a contentious mation tools are being used by marketers and
issue in marketing. With new and continued pressure agencies alike to augment human work in areas like
from regulatory bodies and Big Tech — such as the SEO, video editing, content generation, campaign
sunsetting of third-party cookies and iOS updates that optimization and targeting. In the short term, these
emphasize user privacy — companies now face even changes are driving workflow efficiencies, but in the
greater challenges in profiling individual consumers long term, these tools may erode some revenue
and assigning objective value to paid media channels. sources for agencies and destabilize the marketer/
All of this will have lasting effects on marketers’ long- agency relationship.
term strategic goals.
Funnel surveyed both in-house marketers and agency
2. A shortage of advanced analytics skills: Companies professionals to find out what the future holds for the
like Meta will struggle to effectively target users due to modern marketing agency in the face of these critical
data loss, limiting agencies’ ability to attribute objec- pressures. How can these agencies continue to provide
tive success (e.g., post-click attribution). These chang- value and even thrive?
es will push agencies toward more statistical methods,
like marketing mix modeling (MMM), which require
data skills many agencies do not currently possess.
These methods may also be too advanced for many
agency clients to understand and invest in.

How do agencies prove their value?

“Everyone says, ‘We’re data-driven.’ They believe that just because they’re
downloading some data, sticking it in Excel and making pivot tables that
makes them data-driven. But a lot of marketing spend is like handing out free
pizza vouchers to people who are already in a queue for a pizza place. Sure,
they have a one hundred percent conversion rate, but it’s because people
would’ve come there anyway.”

Julian Modiano
Co-Founder & CEO
Acuto

Agency Acceleration | The optimism gap | Funnel.io 4

 Are agencies overconfident Despite these negative signals from in-house
marketers, agencies do not yet appear to be alarmed.
about the future? In fact, most are predicting rising fortunes. Financial
condition, they say, is on the upswing. Two in three
Two AI story arcs agency professionals expect their financial condition
Hearing in-house marketers and agencies describe the will improve over the next 12 months. And agency
future, one wonders if they’re talking about the same professionals largely believe AI will have a net positive
industry. impact on their business.

A significant share of in-house marketers say AI will The vast majority of agencies we surveyed do not view
invariably affect their agency relationships. In fact, “in-housing” (i.e., marketers bringing agency work
43% say AI will make their company less dependent on back in-house) as a near and present danger. Just 23%
agencies — roughly 6x the rate of those who say they view in-housing as a major or extreme threat.
will be more dependent on agencies due to AI.
If nothing else, this gulf between marketers and
This outlook may already be affecting spending. Three agencies points to a tremendous amount of optimism
in four in-house marketers report that outsourcing about how AI will wind its way through the stages of
rates at their company are projected to remain flat or the customer journey and the connected parts of
fall during the next 12 months. marketing operations.

Agencies say...
Agencies say... Marketers say...
Marketers say...
Agencies say... Marketers say...

In-housing is a major AI will make our company

or extreme threat less dependent on agencies

In-housing is a major AI will make our

In-housing company less
or extremeisthreat
a major AI will make
dependent
our
on agencies
or extreme threat company less
dependent on agencies

Outsourcing rates for

Our agency’s financial
the next 12 months at
condition will improve
our company will remain
over the next 12 months
flat or fall

Our agency’s financial Outsourcing rates for

the next 12 months
Outsourcing at
rates for
Our agency’s
condition will financial
improve our
thecompany will remain
next 12 months at
over the next 12improve
condition will months flat or fall
our company will remain
over the next 12 months flat or fall
Agency Acceleration | The optimism gap | Funnel.io 5
The agency report card
How do marketers feel about their agency relationships?
There’s lots of room for improvement.

The future of marketing depends on more Is the marketer/agency relationship ready for this type
sophisticated measurement models and massive of high-trust, collaborative partnership? We asked
amounts of data spread across the customer journey. marketers how their agencies perform across eight key
If agencies are going to prove and deliver value, they dimensions. The results are sobering.
must be trusted to work with client data — a lot of
client data. And agencies must be trusted to deliver
insights and results in areas their clients may not fully
understand.

Do you agree or disagree with the following statements

about your agency?

Shares honest feedback; sets realistic expectations 1% 7% 34% 41% 17%

Reports performance on a regular basis;

is accountable
3% 12% 32% 36% 17%

Scales marketing efforts up/down

as needed to save money
5% 17% 38% 28% 12%

Focuses on measurable outcomes;

results driven
7% 7% 42% 36% 11%

Offers new perspectives

and innovative ideas
23% 31% 36% 10%

Invested in the long-term

growth/success of our company 4% 17% 39% 30% 10%

Understands my company’s business

and customers 3% 14% 31% 46% 6%

Delivers solutions that address

my company’s unique challenges
19% 36% 39% 6%

Strongly disagree Disagree Neutral Agree Strongly agree

Agency Acceleration | The agency report card | Funnel.io 6

For example, only 40% of marketers say their agencies In a world in which many marketers do not fully
are invested in the long-term growth and success of understand how or why a particular ad platform or
their company. And just 47% say their agencies focus model is recommending a specific action, it’s
on measurable outcomes/results. Agencies scored downright critical that marketers trust their
slightly higher marks for sharing honest feedback and collaborators — whether those are tech companies or
setting realistic expectations. marketing agencies hired to navigate decision making.

More than half of in-house marketers don’t trust their Building this trust, say many agency leaders we
agency partnerships, particularly when it comes to interviewed, is rooted in sharing knowledge. As
controlling costs and delivering tailored, innovative Benjamin Keller, chapter lead data and business
solutions. These results are particularly troubling given intelligence at Sunlab, explains, “Our agency is in the
that marketers may be questioning their agency spend business of making sense of data analysis, AI, machine
due to AI, or at least wondering whether some portion learning, language models, etc. What can be difficult is
of agency work can be brought in-house. presenting it in a way that clients can understand and
synthesize.”
Marketers who answered the survey shared some of
their frustrations with agency relationships: Keller says agencies must understand their clients’
goals (marketing and underlying business goals) to
“[Our agencies] lack understanding or interest in our collaborate effectively. Keller continues: “It’s critical to
products, market conditions and internal processes. ask, ‘Why do they want to know this information? How
They only think in terms of their channels or can the business use these insights?’ If we can answer
technical tools and are not interested in the larger these questions with our analysis, it’s easier to tell a
strategic context.” simple, highly relevant story with data.”

“Prices are high, results are mixed at best, and the

agency team seems to learn nothing over time. We’re
just replaying the same tactics over and over again.”

How do agencies earn trust and credibility?

“To build a trusting relationship with clients, you need to

share knowledge — what lies behind the numbers. When
you share insights, they can better understand the context
we’re working within and become true partners.”

Andrea Vit
CEO & Founder
Storeis

Agency Acceleration | The agency report card | Funnel.io 7

Next-horizon measurement
Performance marketing is undergoing a profound methodological change.
Many in the industry are not ready for it.

Most marketers measure online performance using mix. Marketers that hire agencies that provide these
last-click attribution — giving credit to the final types of advanced methodologies need to buy into this
touchpoint the user engaged with before converting. approach long term — understanding that
This model has always been less than ideal: multiple engagements cannot remain static.
channels could take credit for the same conversion,
and attribution tools like Google Analytics were limited The key to using these types of marketing performance
in certain channels and often biased toward search. measurements successfully is not to pick just one, but
to use multiple methods like multi-touch attribution,
Still, the model had a place in marketing. To quote marketing mix modeling and incrementality testing in
the old phrase, “all models are wrong, but some are concert — a practice that is sometimes called
useful.” triangulation. By combining these, the field of
marketing is slowly moving away from the attempt at
Now, last-click attribution is slowly being eroded by determinism and toward probabilism.
data limitations brought on by regulation and Big Tech.
Marketing is evolving to focus on more advanced forms Approximately 60% of marketers say they’re using
of analytics — models that do not rely on third-party some kind of data analytics to measure performance,
data to measure the return on marketing investments. but very few are using the most advanced probabilistic
These include: forms — such as MMM (26%), incrementality testing
(26%) and predictive analytics (15%).
Marketing mix modeling (MMM): Using statistical
models to measure the impact of various marketing And few marketers (15%) say they have plans to
activities on business outcomes, such as sales and outsource additional advanced analytics services in
ROI. the coming 12-18 months.

Incrementality testing: Estimating the additional

impact of a specific campaign or activity by
comparing the results of a test group exposed to
the campaign with a control group that was not.

To be fair, some marketing teams simply do not (and

will not soon) have the budget and/or access to
sufficient data to make these models work. But for
those that do, high performance will be based on
artfully using these models to estimate the impact of
different marketing activities on business outcomes —
and constantly iterating and optimizing the marketing

Agency Acceleration | Next-horizon measurement | Funnel.io 8

 How should agencies react
to pricing pressures?

“We’ve broadened our services to include strategy and manage

the entire marketing mix, not just individual platforms like Google
Ads. We’re also investing in and experimenting with AI to enhance
our offerings and improve internal efficiency.”

Andreas Kraus
Founder and Managing Director
Sunlab

Agency Acceleration | Next-horizon measurement | Funnel.io 9

Triangulating: Combining advanced measurement
methods in marketing
Methodology Data level Advantages Disadvantages
Data-driven multi-touch User-level and micro-level Suitable for daily marketing Does not account for marketing
attribution (MTA) tracking optimization channels and activities that are
not trackable (e.g., offline
(E.g., user-ID timestamp, Insights into user journeys and campaigns, Facebook views)
campaign-click combination) impacts of individual touchpoints

Marketing mix modeling (MMM) Aggregated time-series data, Holistic big-picture view Not as granular as MTA.
macro-level
Evaluation of offline campaigns No consideration of touchpoint
(E.g., channel ad spend, daily and non-trackable channels sequence
impressions or conversions)
Required data is always Longer update cycle (e.g., data
available about print campaigns only up-
dated weekly)

Incrementality testing, Micro user-level split or Insights into causal relationships Snapshot view only
randomized controlled macro-level geographic split between marketing activities if
trials (RCT) applied correctly Not suitable for daily marketing
(E.g., number of conversions and control
users in test vs. control group per The gold standard for
period) determining incrementality Danger of misuse through
overlapping test groups or
too many tests at once

Opportunity costs (e.g., control

group misses out on positive
campaign impacts)

Outside A/B testing and optimization, few marketers

do advanced analytics in-house

A/B and multivariate testing 55%

Ad platform optimization 42%

Attribution modeling 31%

Data mining 27%

Does your marketing Marketing mix modeling 26%
team do any of these Incrementality testing 26%
things in-house? Statistical modeling 22%

Predictive analytics 15%

Sentiment analysis 13%

None of the above 26%

0 10 20 30 40 50 60

Agency Acceleration | Next-horizon measurement | Funnel.io 10

 Just over 1 in 3 marketers handles
advanced analytics in-house

Neither / No advanced analytics at this time 36%

In-house 36%

Collaboratively 20%

Outsourced to an agency partner 4%

Unsure 4%

0 5 10 15 20 25 30 35 40

Do you do advanced marketing

analytics in-house or do you
outsource it to an agency partner?

Few marketers have definite plans

to outsource advanced analytics

Unsure 37% Yes 15%

Do you plan to outsource any

advanced analytics responsibilities
in the coming 12-18 months? No 48%

Agency Acceleration | Next-horizon measurement | Funnel.io 11

 What are among the challenges
marketers face today?
“There’s a lot of pressure to prove the value of awareness dollars and
their impact on performance media. And there is an impatience as
always with awareness media among performance media teams,
because clients expect a one-to-one relationship with cause and
effect like they get with performance marketing.”

Susan Cunningham
Executive Director, Managing Partner,
Marketing Intelligence & Data Science
Wavemaker

Agency Acceleration | Next-horizon measurement | Funnel.io 12

A golden opportunity:
Advanced analytics requires niche expertise. This may be the agency world’s
moment to shine.

Up until now, advanced analytics — such as While SaaS, AI and machine learning have become
probabilistic models — were out of reach for most more prevalent in marketing measurement, they’ve
marketing teams, and even for many agencies, due to also made advanced analytics cheaper, more scalable
cost and complexity. For example, marketing mix and more accessible to a wider range of players.
modeling requires:
Even so, many in-house marketing teams will need
• Collecting data scattered across tens to thousands help from agency partners to pull these strategies off.
of ad accounts, and retrieving the data in the correct That’s because even well-resourced marketing teams
format and on an automated schedule. may not have the budget to pay for a full-time
statistician or advanced technologist. Agencies,
• Building models that require specialized expertise on the other hand, can spread the costs of these
in statistics, econometrics and marketing analytics. domain experts across multiple clients.
These skills are expensive and hard to find.
It’s no wonder most agencies (66%) believe that
• Regularly updating and recalibrating models to offering advanced analytics is a major opportunity
account for changes in the market, consumer for their organization.
behavior and business strategies.

2 in 3 agency professionals believe Many marketing teams have no clear

advancedanalytics is a ‘critical’ or direction for a cookieless future
‘major’ opportunity

23% 43% 24% 8% 2% 22% 32% 37% 9%

0 20 40 60 80 100
0 20 40 60 80 100

Yes, clear Yes, but not No roadmap Unsure

Critical Major Moderate Minor Unsure
documented clear /
opportunity opportunity opportunity opportunity
roadmap documented

Do you think offering advanced analytics is a major or Does your marketing team have a clear roadmap to
minor opportunity for agencies to grow / survive? adapt to a “cookieless” future?

Agency Acceleration | A golden opportunity | Funnel.io 13

 What factors will boost agencies
in the new digital landscape?

“When you sign a retainer with our agency, you’re getting access to five or
six domain experts in tagging, data engineering, reporting, analytics and
data science. We can bring all those things to bear for a much, much more
compressed cost than you would have to pay to hire six different people.
That’s because we can share resources across accounts. We help clients
go from zero to 60 really quickly.”

Andrew Ford
Vice President of Data Strategy and Analytics
Wpromote

Agency Acceleration | A golden opportunity | Funnel.io 14

Agencies as knowledgeable guides

Funnel’s research shows that most in-house marketers Marketers also admit they are uncertain about how to
are not prepared for a cookieless future (i.e., a future in act on “black box” findings — meaning they know both
which advanced analytics is necessary). the data inputs and outputs, but they don’t understand
how the model arrives at its conclusions and
Of those surveyed, 69% say they have no clear, recommendations. Just 12% say they have an “expert”
documented roadmap to adapt to the deprecation of understanding of advanced analytics, and another 36%
third-party cookies. And even among those who say say their knowledge is “strong.”
they have plans in place, fewer than one in three are
using next-generation tactics like leveraging zero-party Agencies — with all their experience across their client
data or taking advantage of AI and machine learning base and ability to hire highly specific expertise
for advanced analytics. — can offer in-house marketers contextual insights to
“decode” the black box. They can interpret data,
explain the methodologies behind their
recommendations and essentially guide their
clients through a complex marketing landscape.

What steps is your marketing team taking

to adapt to a cookieless future?

Leveraging first-party data

80%

Server-side analytics

48%

Adopting privacy-focused technologies

43%

Diversifying marketing strategies

35%

Leveraging zero-party data

31%

Using ML and AI for advanced data analysis and predictions

31%

Contextual advertising
26%

Collaborating with cookieless platforms

20%

Investing in customer education & trust

15%

Second-party data partnerships

11%

0 10 20 30 40 50 60 70 80

Agency Acceleration | A golden opportunity | Funnel.io 15

Vision 2030
What steps can agencies take to remain competitive — and even innovative
— in the face of so many industry changes?

1. Deliver truly ‘client-first’ 2. Solve the IT/legal roadblock

engagements
Many agencies tell us that convincing marketers to act
To become true collaborators, agencies must dive is not the challenge; it’s convincing in-house IT and
deep to understand each customer’s needs, legal teams that sharing data with agencies is smart
challenges and opportunities — no more rinse- and secure — with the proper guardrails in place.
and-repeat engagements.
Just 28% of marketers say they would not share deeper
To do this effectively, agencies may need to require access to data with agency partners.
that clients give them proper onboarding and access,
including sufficient budget to investigate the client’s Getting in-house legal and IT to sign on, however, is
business goals and competitive environment, as well more challenging. Agencies report significant friction
as access to a wide set of client data to fuel advanced with these organizational gatekeepers:
analytics. • Just 22% say it’s easy to get buy-in from
clients’ IT departments
• And 17% say the same about getting
buy-in from legal

Agency Acceleration | Vision 2030 | Funnel.io 16

71%: Marketers who Agencies must develop clear and compelling
education and content to overcome these
say the relationship significant hurdles — including convincing
in-house marketers why they should allow third
between marketing parties (i.e., agencies) access to their internal
data. These educational and consultative
and IT is ‘not very approaches to selling help cement relationships
and build trust with clients.
collaborative’

Marketers say getting buy-in from IT and legal is a challenge

4% 13% 27% 22% 18% 16%

0 20 40 60 80 100

Very easy Easy Easy Difficult Very difficult Unsure /

to get buy-in to get buy-in Not applicable
from IT from IT

Getting buy-in from the IT team to give access to company data

1% 6% 29% 27% 19% 18%

0 20 40 60 80 100

Very easy Easy Easy Difficult Very difficult Unsure /

to get buy-in to get buy-in Not applicable
from legal from legal

Getting buy-in from the legal team to give access to company data

Agency Acceleration | Vision 2030 | Funnel.io 17

 How can agencies help clients navigate
the regulatory landscape?

“We work with giant corporations in tech and entertainment, among other
verticals. These big companies have a number of legal entities within their
structures that may not be very familiar with the digital advertising space.
They are, however, extremely concerned with privacy and data gaps, as we
are. As an agency, often we take on the role of facilitator — helping these
parties speak to one another.

Susan Cunningham
Executive Director, Managing Partner,
Marketing Intelligence & Data Science
Wavemaker

How do you build a high-value, consultative

relationship with clients?

“We take a collaborative approach, showing our clients a picture of all

the ways we can leverage their data and boost performance. Even clients
that are very restrictive still appreciate understanding the full breadth of
what is possible — and over time we can connect more and more dots as
the relationship grows.”

Andreas Kraus
Founder and Managing Director
Sunlab

Agency Acceleration | Vision 2030 | Funnel.io 18

3. Partner for operational excellence Automation is another important piece of the puzzle.
Agencies have extensive experience leveraging
On the agency report card, one of the areas where automation for themselves and their client base —
agencies scored lowest was related to cost efficiency. and can help marketers pivot to focus on high-value
Marketers do not believe agencies have their best activities and away from low-value activities, such as
interests in mind. And agencies report price pressures highly manual reporting. This is where agencies’
— two sides of the same coin. deep-bench experts come into play, offering clients
access to technical know-how at much lower costs
Agencies need to prove their value by helping to than hiring in-house.
position the agency as a strategic partner — flipping
the script from “cost” to “investment.” Agencies that
can demonstrate deep knowledge of advanced
marketing and analysis techniques can justify a larger
profit margin compared to their peers. This goes for
media buying, creative, digital, SEO… any agency.

Funnel’s research shows that mediocre agency work

is on the chopping block. AI tools are a growing threat
to agencies’ services and profit margins unless those
agencies can find ways to deliver expertise and
insights that marketers can’t otherwise hire in-house.

Winning agencies will deftly balance highly

sophisticated technical skills with the ability to act as
knowledgeable guides in an industry increasingly
dominated by AI and analytics. If agencies and
marketing clients can challenge one another — to
experiment, iterate and generate value — they can
both come out ahead.

Agency Acceleration | Vision 2030 | Funnel.io

Funnel.io 19
 How do you build a high-value,
consultative relationship with
clients?

“We team up with in-house marketing teams

to explain advanced analytics to the IT team
or the legal team. We want them to
understand why we need access to data,
the insights we can offer, decisions we can
help them make — and then we settle on a
middle ground that keeps everybody happy.”

Will AI threaten agency revenues?

“AI is a potential threat both to agencies

and internal marketing teams… and many
positions outside of those two. Whether
you’re sitting in-house somewhere or you’re
at an agency, you need to take that threat
and make it into a positive by embracing the
technology and increasing your output as a
result of it.”

Luke Gracie
Senior Vice President, Client Services
WebMechanix

Agency Acceleration | Vision 2030 | Funnel.io 20

Agency Acceleration | Vision 2030 | Funnel.io 21
 We surveyed 327 in-house marketers and agency
professionals in April 2024; they represented a wide
range of countries, company sizes, industries and
Demographics roles. We also interviewed 10 agency leaders to get a
nuanced look at how agencies are evolving, and the
In this third annual study, we examined the attitudes of opportunities and challenges that lie ahead.
in-house marketers and agency partners: How do both
feel about the future of their industry? Is AI driving The quantitative and qualitative research was
significant price pressures? Are marketers embracing conducted by Ravn Research, an independent
advanced analytics — and will they look to agency research firm. If you have questions about the research
partners for support? And what can agencies do to or want to learn more, contact [email protected].
earn their clients’ trust and collaboration?

Agency Acceleration | Demographics | Funnel.io 22

 Other 7%

Australasia North America

7% 26%

Region

57% Europe

Consultant/other C-level or
10% VP-level executive
Individual
contributor 30%
13%

Seniority

27% Manager 20% Director

Agency Acceleration | Demographics

Funnel.io | Funnel.io 23
 Enterprise (1,000+)
Micro (<10)
13%
Large (250-999) 21%
10%

Number of
employees

25% 31%
Mid (50-249) Small (10-49)

Types of agencies marketers work with

Performance / online marketing 59%

Creative / brand marketing 50%
SEO 45%
Social media marketing 38%
Above-the-line advertising 32%
Public relations 27%
Web design 27%
Account-based marketing 15%
Traditional / integrated 15%
Other 4%

0 10 20 30 40 50 60

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Agency Acceleration | Demographics | Funnel.io 24
Contact us
Do you have questions for our sales team?
Email: [email protected]

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Write to us at: [email protected]

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