There is no reason for an agency of record.
With the possible exception of a media agency, the agency of record status is of no benefit to marketers. A little historical context is useful to understand the situation. Back when ad agencies did everything for their clients, including buying their media space, the agency of record designation had a legal and business purpose. It meant that a newspaper, magazine, or TV station knew that an agency was authorized to make purchases on behalf of its client. It was in keeping with the technical definition of agent in commercial law: someone authorized to negotiate and enter contracts with a third-party on behalf of the principal. An agent provided clients the convenience of not having to deal directly with hundreds of media contracts associated with a large marketing campaign. For large marketers making frequent purchases of many types of media, this role still makes sense for their chosen media agency.
But after media agencies spun off into standalone entities, the other types of agencies worked to hold on to this title. There were now creative agencies of record, promotional agencies of record, or interactive agencies of record. These designation exist to this day, but solely for the benefit of the agencies. They are the basis for long-term contracts and associated retainers that make holding companies more attractive to their investors. In short, they provide the assurance of a more reliable revenue stream, and create a barrier to entry to competing agencies. It is a sort of corporate engagement ring jammed onto the finger of a client to ward away other suitors.
But there’s no reason for marketers to wear that ring. These agencies don’t play the business role of agent. As with production for example, pre-production estimate approvals and other mechanisms effectively make marketers a first-party to any contracts or external agreements. In fact, an agency of record can be a detriment to marketers because it hampers their ability to seek out ideas from whoever they like. Forrester just predicted the demise of the interactive agency of record, but why stop there? It’s true that marketers may prefer the convenience of working on an ongoing basis with a single organization that understands their business and their way of working. There may also be some efficiencies in having multiple projects run through a single provider. Some marketers may find their agencies so valuable that they want to ensure they have a long-term relationship. But that should be a matter of choice and not a contractual obligation. Most marketers have to earn their customers loyalty every day. So should their agencies.
The Ryan Report 