The face of the industry is going to change and it changes for good. More complex market algorithms, a wider influence of technology and change in consumer behavior has forced the brands and their marketing teams to change tactics in the coming years in order to win clients.

The changing atmosphere around the agencies and marketer landscape has significantly impacted the way agencies now find new businesses. It has been proved time and again that referrals and networking no longer drive the success of the firm. Once the champion of marketing, referrals have dropped their market value over the years. it was a time when the industries used to work their contacts, and there was less of a need to actively and proactively search for new business. Agency principals would network, the Phone would ring with a new referral and the business would grow. But this is not the case anymore since the market evolved with the behavior of the user.

The trend has shifted to companies going after fewer Agency of Record (AOR) opportunities. The bigger companies have also come under the radar for using this opportunity. There are fewer marketers as big conglomerates have consolidated their business and cut down on the number of staff. In the year 2011, the number of agencies using referrals as a primary business source have fallen down to 71 percent from 94 percent in the year 2007.

Why the disbelief on Referrals?

As per the survey, a major belief of such decline in the referral marketing is because most of the companies have started using in-house agencies to manage their business. In-house agencies are the team which a company hires for focusing on the advertisement of their own product. This is the team which is responsible for handling the advertisement of the brand and they are owned and operated by the company itself. They work closely with the marketing team and come up with creative promotional campaigns for the brand.

It is better to have in-house agencies than to outsource the advertising network because of the two factors – a) they cost friendly for the companies as they are their own brand and b) the growth of social, digital and mobile marketing requires a quicker and nimbler response. More than 67% of the companies now have in-house agencies that look after their requirements. This trend is reaping benefits for the company and hence it is not going to reverse itself in a couple of years’ time.

With more agencies now operating inside the companies, there are fewer opportunities for marketers to be exposed to outside firms thereby reducing the number of potential referrals.

Growth in the Project Sampling

While the growth of in-house agency is worrying, the dynamics of project work versus retained work has also shaped some of the queries of the businesses. This year, 41 percent of the agencies state that most of the businesses they received were in the form of project work.  We suspect what is driving this growing trend to push out project work, versus assigning a single or a couple of AORs, is the fact that there are simply so many agencies knocking on the doors of marketers.

What should a standalone agency do?

Well, it is not end all for a standalone agency because there are potentially many unearthed methodologies they can adapt to win back their business but aggression will always be the key to the enhanced market. With referral marketing gone, there are some of the ways in which they can revive themselves:

• Be a PR firm and define your practice areas carefully.
• It is important to be relevant and thus be important for the business else why will they involve you?
• There should be politeness yet persistency in your approach to the business houses.
• Do not try to imitate others. Be yourself to win back customers to your business.