In China, marketers work with an average of 12 different agencies to address their marketing needs. The number of integrated marketing communications agencies is the highest (3.7), followed by activation agencies (3.1), media (1.8), PR (1.4) and other types of agencies (2.2).
The reliance on a diverse array of agencies is quite an increase from 2020, when brands engaged an average of 6.6 agencies, marking a 14% surge in agency engagements within just four years.
These findings are a part of Scopen and R3’s Agency Scope Study. Conducted between August and November 2023, the research provides an in-depth look at the current market dynamics in China. In its 10th edition, the study interviewed 323 top marketing professionals and analysed over 837 agency-client relationships across the country to draw trends from China’s competitive agency maze.
Scroll below for key findings.
Strategy over specialisation: A shift in preference
Agencies that can show a comprehensive, end-to-end integrated offering are in demand and have a competitive advantage. In 2024, 70% of marketers opt for specialised agencies, slightly down from 74% in 2022. Conversely, 26% now prioritise IMC agencies, up from 14% in 2022.
From retainer to project-based
Agency models aren’t the only things evolving; payment models are, too. Brand partnership with creative agencies now averages 2.7 years, down from 2.9 years in 2022, indicating a shift towards project-based engagements. Media agency relationships remain steady at 3.1 years.
The preference for project-based work continues to grow, with 61.9% of marketers engaging creative agencies on a project basis, up from 51.6% in 2022. For media agencies, 33.8% of marketers now prefer project-based remuneration, a significant increase from 21.1% in 2022.
The trend towards shorter engagements shifts towards flexibility and specificity in agency-client relationships. For adoption, agencies need to be agile and invest in project-focused talents who are capable of pivoting and delivering high-impact results in shorter time frames. This is both challenging and offers an opportunity for clients who are trying to consolidate their partnerships and for agencies that must consistently deliver immediate and impactful results in order to secure repeat business.
Fundamentals reign supreme: Local, global or awards irrelevant
When evaluating an ‘ideal’ integrated agency partner, brands prioritise creativity, innovation, market knowledge, a professional team, ROI, and strategic planning as fundamental and non-negotiable qualities. Agencies that excel in these areas and have a robust understanding of market dynamics are preferred over those that rely on traditional metrics like previous experience, integrated services, and cost-effectiveness.
Interestingly, for creative agencies, the homegrown has diminished. In fact, out of the least-valued attributes that marketers cite are being a local Chinese agency or a multinational agency and the awards and accolades won by the agency.
Creative partners are valued for the quality of their talent and their creativity and effectiveness meter. Internal processes and working methods that foster efficiency are noticed and meaningful to clients for satisfaction.
The essential traits of a media partner are negotiation capabilities, media planning, and strategic planning, which are the top qualities marketers seek. The study notes a growing emphasis on ROI and efficiency, indicating a demand for measurable and cost-effective outcomes. Aspects like media planning and research tools are becoming less important.
AI adoption is on the rise
The study affirmed what is widely known: the use of AI-generated content tools is mainstream. 38% of marketers have already incorporated tools like DALL-E, Midjourney, Stable Diffusion (58%), and ChatGPT (53%) into their processes. According to the study, the primary driver for this adoption is improved efficiency (89%).
However, as new tech takes hold, it also brings forth challenges, like the need for a different talent mix and the need to improve working processes. Those who can adapt by integrating these technologies into their workflows and upskilling their teams will be better positioned to leverage AI for enhanced productivity and creativity.
Heightened client expectations—implications for agencies
To cut through the clutter and the competitiveness of the Chinese ecosystem, agencies have to adapt, reskill and offer more value-added services, tailored solutions, and collaborations to help marketers navigate and stand out with their campaigns. Simply relying on traditional metrics or a good track record is no longer sufficient.
Creatives: more detractors than promoters
This is a concerning trend for creative agencies. In China, NPS, or the net promoter score for creative agencies, has dropped from -3.8% in 2022 to -9.8% in 2024. Simply put, it means the number of detractors exceeds the number of promoters, reflecting a decline in client satisfaction rates.
One underlying reason is the rapidly changing marketing landscape and the failure of many creative agencies to keep pace with evolving demands. Once again, adapting more quickly and innovating is imperative to win and retain clients.
The predisposition to switch integrated media agency partners is witnessing a spike. In 2024, nearly 16% of Chinese marketers are considering changing their IMC agencies, up from nearly 12% in 2022. Only 60% of respondents showed no intention of changing their IMC agencies, a decline from over 72% in 2022.
Media agencies face stagnant recommendations
It’s not a rosy scene for media agencies either. While the NPS has remained relatively stable (-14.5% in 2022 versus -14.4% in 2024), the overall satisfaction with media agency services has dipped, dropping from 62.9% in 2022 to 56.8% in 2024. This decline in satisfaction could be attributed to the inability of some media agencies to deliver on ROI and efficiency promises, which are paramount for clients.
However, there is a silver lining: the percentage of marketers considering switching media agencies has decreased from 12.7% in 2022 to 8.5% in 2024, indicating a slight improvement in agency-client relationships, possibly due to better planning and negotiation capabilities.
The proof is in the pudding
Luckin Coffee, Manner Coffee, and BMW are the three brands mentioned the most for their campaigns in the last two years.
Marketers in China are grappling with challenges such as brand positioning, proving ROI and shrinking budgets. Every dollar counts, and agencies that can effectively address these pain points by providing concrete metrics, audience engagement and demonstrable results will stand out in a saturated market. Retaining and winning accounts requires a nuanced understanding of the local market and the ability to deliver tailored, engaging solutions.
This is why digital platforms like Douyin (TikTok) are gaining ground and are seen as key partners in China. However, gaining relevance does not imply they can replace agencies in addressing strategic and creative challenges. The report underlines that agencies are crucial for providing strategic and creative consultancy, often working directly with marketers who engage digital platforms.
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