China Marketers Think More Long Term with Agencies

New Study Shows Market is Maturing, Following Trends in US, UK

PR Newswire

SHANGHAI, March 31, 2014 /PRNewswire/ --

  • Agency relationships are getting longer, now 3.2 years
  • Project-based assignments on decline
  • Perception of Advertising and Media Agencies' Digital Capability is improving
  • Procurement and Media Audits are now recognized as important
  • Digital now taking 18% of total marketing budget

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Sabrina Lee, GM of R3 China

According to a new study, China marketers are becoming a more mature group. "More relationships are becoming fee-based and annual, and more are being linked to performance incentives," said Sabrina Lee, GM of R3 China.  

China marketers are also doing more with less agencies.  "Based on our analysis of more than 944 relationships, the average company now uses 8 agencies on average to execute their marketing work, down from 14 in 2012," she added. 

R3 recently met with more than 400 senior decision makers in China to understand the process, perception and performance of the agencies they work with.  This was the fifth time this study has been done, and the report covers more than 250 multinational and local agencies in China.

Longer Relationships, Less Project Based

According to the study, the average relationship across creative, media, digital and marketing services relationships increased by 15% to 3.2 years.  "28% fewer marketers are paying their agencies on a project fee or commission, so agencies are able to better contribute the right resources behind Brand Building and more upstream strategy," says Ms Lee.

That said, Chinese agency relationships are still the world's shortest behind 6.1 years in the UK and 6.6 years in Brazil. "There's a lot of pressure on marketers and agencies for results, so changing agencies is sometimes to be expected," she added.

Procurement and Media Audits are now recognized as important

Procurement's role in the agency selection process has become more ingrained, with 64% of companies getting them involved, an increase over 2012 and 2010.  More importantly, marketers have accepted the need to work collaboratively with procurement teams to resolve agency compensation, with 46% doing so now, a massive increase from the past.  "Procurement now has a strong seat at the table in China, and the best agencies are helping educate and work with them for mutual benefit," said Ms Lee.

Likewise, media and financial audits, once very new to China, are now highly used by respondents.  In a separate part of the study talking to thirty of China's procurement leaders, 93% of them mentioned the need for ongoing media audits of their agencies and 63% mentioned they would be conducting financial audits.  "The government's drive for transparency and austerity is also being felt by the marketing sector -- with more and more companies adopting Best Practice to have independent specialists help validate their performance," added Ms Lee.

Digital now taking 18% of total marketing budget

In another sign of market maturity, digital is taking an increasingly large share of the marketing budget now at 18% , up 35% from two years ago.   "With the explosion in social and mobile over recent years, there's been a major investment in bought, owned and earned online," said Ms Lee.  "Many marketers have also taken the last two years to review and appoint specialist agencies to help them in the process," she added.

Coca-Cola, JiaDuoBao, Nike lead on peer votes

All marketers were also asked to vote on best campaigns and most respected marketing companies in China -- with beverage players Coca-Cola and JiaDuoBao leading the way, followed by Nike, BMW and Wrigley.  "Coke has pushed hard to be a leader in digital and integration, and its clear other marketers are noticing," added Ms Lee.  "And what JiaDuoBao did in rebranding and with Voice of China is one for the marketing textbooks," she added.

About the Study

In-depth, Face to Face Study, covering 425 senior marketers and 944 agency relationships

The China Agency Scope is now in its fifth wave, with previous research conducted in 2006, 2008, 2010 and 2012. The Study aim is to understand the latest marketer-agency engagement trends, and perception and performance of creative, media and marketing services agencies in China.

In-depth face-to-face interviews were conducted with senior Chinese marketing decision makers from China's top marketing companies, providing comprehensive data and insights to help agency networks and marketers forecast and benchmark their businesses. The study is conducted every two years in China, making it the most robust independent tracking measure of Chinese agencies and their client relationships.

About R3

R3 is a global marketing consultancy with our heart in Asia.  We focus on improving the effectiveness and efficiency of marketers and their agencies.  Founded in 2002, it works with eight of the world's top twenty global marketers. For more information, visit, write to or call +8621 5271 6505 (China) or +1 646 416 8088 (US)  

About GC

GC was founded in 1990 in Madrid, Spain and now operates throughout Europe and Latin America in client-agency consulting, agency pitch management and agency image research.  Outside of Europe, this agency image research has been completed in China, Mexico, Brazil, Argentina, Singapore and India. For more information, visit or write to

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