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Digital Agencies Have Reached an Inflection Point
Posted on February 26th 2014
Agencies Must Get Faster, More Responsive and Increase Differentiation
The death of the digital agency has perhaps been announced prematurely, but where there is smoke there is fire, and if you are in the business of serving up brands with the traditional full suite of agency services, you may be on a short leash.
If the business were to defect, where would it go?
In a recent study by the association of national advertisers 60% of the Fortune 500 companies are currently considering moving away from some, if not all, of their traditional agency work in favor of bringing it in house (Read: DIY).
While there is much speculation as to the cause of these companies considering such a monumental shift away from their agencies, I actually think the desire to shift may be rooted in something quite simple.
Most Agencies Really Aren’t Digital
Having spent the past few years working with a wide variety of marketing, communications and public relations firms, I have had the ability to observe how most agencies have made the migration to digital.
While there are exceptions to every rule, as a whole, many agencies’ digital strategies seem to be nothing more than penning the word digital on their various collateral and then passing it off as a strategy. To some extent is was business as usual as I could just hear the agency in their planning for the migration…
“Okay, let’s keep doing everything the same except once we do it let’s Tweet about it. Oh and put it on Facebook too!”
In reality, the ability to successfully provide a company a full complement of digital services reaches far beyond just including core terminology such as SEO, social media and content marketing in a proposal. To be successful, agencies need to understand the entire eco-system that is digital and further they must have the proper talent in-house to deliver a strategy that will succeed and/or the execution required to yield results.
The rapid evolution of the digital space creates so much downward pressure on agencies that even attempting to hire the right talent to fill the gaps is becoming increasingly difficult. Even a student just leaving college now with a degree in marketing will not be up to speed on the shifts that are taking place on almost a daily basis in the digital marketing realm.
Think SEO for example. If you spent the past 4 years studying SEO you would have had to re-learn many of the best practices on almost a yearly basis as Google continued to update its approach to search. With its most recent change (Hummingbird) it pretty much threw out everything that SEO experts had been preaching, as social signals became the largest influencers of search rank. This is a little bit like the shift that computer science saw in the last 10 years.
I regularly engage with agencies that claim to be “digital” that are surprised when I tell them about changes like those made upon the release of Hummingbird. However, if you are the brains and the brawn behind a brand this is completely unacceptable.
Inflection Point: Time To Walk The Walk
I think the reason that agencies were able to get away with the half-ass approach to digital for so long was rooted in the slow speed by which many larger companies move. While they may have seen the digital revolution coming, they were hardly ready to embrace it. In fact, their budget that had been copied and pasted from the year before (since 1996) still had earmarks for traditional advertising, print marketing, public relations and communications. I suppose the best course of action was not to rock the boat.
So when the agencies came around and said “We’ve gone digital” the brands were sufficiently impressed by taking their strategy and publishing it online. Better than nothing, right?
In the past 3 or 4 years, digital penetration has become too great for even big brands to table any longer. They are now looking for more innovative, faster and more specialized work from their agencies. They are looking for their agencies to guide them from publishing traditional marketing online to a point where they are driving meaningful social engagement, building relationships with online influencers and embracing the shift toward brands acting as media outlets.
If you consider the fact that more than 80% of people start their information searches online, digital marketing is an imperative and just checking the boxes is no longer good enough…
Perhaps the biggest challenge that I see as it pertains to the success or failure of agencies trying to make the digital migration is a lack of intimate knowledge as to how successful online marketing works. Many of the account leads within agencies have no real experience building relationships in the digital sphere. And while it may not seem like a requirement, how the heck are agencies supposed to help brands develop meaningful relationships with their audience if those in charge of the effort have never done it themselves?
With digital marketing being so dependent on human-to-human engagement, perhaps the biggest need for brands are agencies whose account leadership have the hands-on experience of building a meaningful digital community.
This isn’t to suggest that they need to all be widely published authors or most followed people on social networks, but to some extent they need to show an ability to build relationships, move content and drive some sort of meaningful conversion.
The Future For Agencies Lies In Speed and Differentiation
For the most part, the companies that need agency support the most are those that require creativity and execution to happen in short order.
Large companies are filled with bureaucracy and they can rarely be opportunistic without cutting through an endless mass of red tape.
For agencies that truly wish to be full service in the digital economy, they are going to need to show the ability to change and adapt at breakneck speed to the shifts in social media, SEO and content marketing. They will need to show proficiency in utilizing all the tools on all of the platforms to bring the brands they represent closer to the consumer. In essence having their digital experience align closely with the customer journey.
I asked Kevin Green, an agency executive from Racepoint Global if he believed that the agency had reached an inflection point with a relative expectation of being met with contention. Instead he said this:
“From my perspective, large organizations are bringing digital in house because of the rapidly increasing importance on the customer experience. Agencies are slow and they don’t fully understand every consumer touch point like an internal team would. CVS just pulled all of their digital work in house. Why would this happen? In short, because they are a complex retail/healthcare organization and the vision for the brand requires complete dedication and immersion not only in the brand, but the business objectives. Agencies have struggled with being true business consultants and living and breathing the customer journey. As a result, I expect to see consultant firms like McKinsey and Boston Consulting Group start acquiring the talent needed to provide end-to-end solutions.”
The good news is the end isn’t here for agencies, in fact I think it is really just the beginning. However, one thing is for certain, the way it has been done is no longer good enough. Agencies must evolve in order for brands to continue using them as a significant part of their strategy. For those that put their money where their mouth is and start building organizations that can truly walk the walk, the potential is almost unlimited as being found, seen and heard online will only get harder as information continues to be generated at an unprecedented pace.