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The agency advantage in a data-driven world

With seismic shifts in consumer behaviors and brand expectations, agencies are under intense pressure to find a winning formula for sustainable success. The good news is that leading marketers are partnering with agencies to achieve an edge. Microsoft Advertising teamed up with Advertiser Perceptions to glean insights from hundreds of marketers immersed in the quest for data-driven marketing excellence, focused on improving the customer experience (CX).
 
What we found is that leading marketers are leveraging agencies 2x as much as those marketers who are building their own capabilities.

This is no small matter considering that the advertising industry is experiencing extreme turbulence. Agencies face new competition and disintermediation from the likes of in-house agencies, traditional consulting firms, boutique agencies and super agencies. Of brands that are members of the Association of National Advertisers, 78 percent reported in 2018 that they have some form of in-house agency. While Liberty Mutual set up its own creative agency, Copper Giants, Accenture Interactive acquired Droga5. These are just a few of the industry shake-ups causing agencies to regroup.

Feeling the reverberations of the era of data and AI

The proliferation of consumer devices and the data generated from these devices is giving marketers greater insight into consumer behavior. Data and insights lie at the heart of business success today. Yet, many CMOs are hesitant to share one of their most valuable assets — consumer data — as regulations trigger concerns over privacy. In addition, there is also the potential of consumer backlash.
 
With that in mind, these CMOs are grappling with the best approach for turning their consumer data into a better customer experience — whether that means developing in-house capabilities or leveraging their agency partners.
 
With technology empowering consumers in unforeseen ways, the customer experience (CX) is more important than ever. In fact, CX is the new brand battleground for today’s marketers. And in the age of CX, it’s essential to gauge how well marketers understand and market to their customers’ decision journeys (CDJs) — the complete sum of experiences customers go through when interacting with a brand, from initial consideration through post-purchase. 

Through a combination of in-depth interviews followed by an online survey, Microsoft Advertising uncovered insights from marketing leaders who are excelling at their customer understanding and application of data and AI to improve marketing performance.
 
We focused on those two aspects, which add up to what we call the Customer Experience Quotient — CXQ.
 
We call marketers who are excellent at both understanding the CDJ and improving their marketing as a result High CXQ Performers. In our study, 20 percent of marketers in our study are high performers, while 80 percent of marketers are at various stages of their maturity on one or both of those aspects.

Tapping into the agency advantage

Marketers with a high CXQ develop an effective data strategy and activate it with AI technology. And they turn to their agency partners to enable this — at two times the rate of marketers with a low CXQ.  Just as important, 95 percent of leading marketers are giving their agencies significant access to first-party data, in support of activating their data strategies.
 
By partnering with agencies, these high CXQ marketers are seeing enviable results in the form of a competitive edge and a flywheel effect. The flywheel starts with better understanding the customer journey, which creates more touchpoints and opportunities for engagement. The higher number of touchpoints fuels the marketing flywheel — or virtuous circle — producing more data, which leads to greater personalization, engagement and ultimately, revenue and growth.
 
Your agency can join the ranks of those positioning their marketing clients for success in the era of data and AI. Download our eBook to learn more about the best practices of the leading marketers. Share the insights from our research with your clients so your agency can start helping the 80 percent of marketers who have the opportunity to improve their CXQ.