A new report by Funnel and Ravn Research has revealed less than a quarter of marketing agencies are concerned about the rise of AI and the trend towards in-housing. Yet 43% of marketers are claiming AI will make their company less dependent on agencies.

The new report found the ratio of marketers who believe their companies will be less reliant on agencies thanks to AI is six times higher than those claiming they will be more dependent on agencies due to AI.

The report also suggests a strained relationship between marketers and agencies, with over two-thirds of marketers lacking a clear roadmap to adapt to the deprecation of third-party cookies.

The report identifies a triple threat facing marketing agencies: Pressure from regulators and Big Tech, shortages of advanced analytical skills, and changing perceptions about the value of agencies.

The report also indicates a general mistrust in agencies from clients, with more than half of in-house marketers not trusting their agency partnerships. Three-quarters of in-house marketers predict that their company’s outsourcing rates to agencies will either fall or remain flat over the next year. Only 40% of marketers believe their agencies are invested in the long-term growth and success of their company.

Marketers did note, however, that agencies were better at sharing honest feedback and setting realistic expectations.

Despite these challenges, two-thirds of agency professionals expect their financial condition to improve over the next year, with AI having a net positive impact on their business. Less than a quarter view increased in-housing of marketing functions, partially resulting from AI adoption, as a major threat to their business.

"This report comes at a critical crossroads for the industry," said Con Cirillo, Head of Marketing, United States, at Funnel. "With AI on the rise, cross-device and web tracking falling and marketing teams reassessing their budgets, it is important to examine the relationship between in-house marketers and agency partners. We have unearthed significant findings alongside Ravn Research, particularly concerning confidence in agencies and emerging technologies, as well as a lack of preparedness for advanced analytics among marketing teams. Both sides need to innovate and thankfully there are higher quality tools available than ever to achieve this."

Where there is a major opportunity for agencies according to the report, is in offering advanced analytics. While 60% of marketers are already using some form of data analytics to measure performance, few are using advanced forms such as Marketing Mix Modelling (26%) and incrementality testing (26%). Only 15% of marketers have plans to outsource additional advanced analytics services in the coming 12-18 months.

This new approach for agencies is one embraced by Benjamin Keller, Chapter Lead Data and Business Intelligence at Sunlab.

"Our agency is in the business of making sense of data analysis, AI, machine learning, language models, and more," he said. "What can be difficult is presenting it in a way that clients can understand and synthesise."

The report was based on qual and quant surveys of 327 in-house marketing professionals and marketing agency leaders across Europe and the US.