Digital Agencies Report 2010—Why Digital Shops Aren't Growing Fast Enough.

Digital Agency Report 2010—Why Digital Shops Aren't Growing Fast Enough.

Recently, someone I respect a lot asked me to give my thoughts on the current state of digital shops and digital advertising agencies. So, today I have prepared this conversation and light survival guide for any small digital shop owners and planners out there. Please feel free to adopt it, abandon it, or pass it along to someone who might like it.

Some quick validation on the subject:
I have worked with a ton of digital shops-more than 30 different shops around the US and even in other countries for the last 6 years. I can honestly say that a lot has changed, yet digital agency's position at the brand table is still the same. It's still very low. I usually don't refer to my experience or personal expertise for any reason when writing this daily blog, but some of you who might have just stumbled upon this article, perhaps you'll feel better knowing that my comments are somewhat validated.

I'm giving some of my honest, personal, and professional insights into what the problem is and how digital shops can evolve. Why? Because they have to. (especially if they want to be considered digital 'agencies')

The reality is that digital shops still aren't evolving fast enough. Here are some of the reasons why:

    1. Digital Shops are low on brand knowledge and experience.  

    2. Client decision makers and organizations are (still) fragmented.
        *brand and digital groups are on different pages.
         (Coming in through the digital door isn't always a good thing if you want to be perceived as an agency.)

    3. Digital shops lack important agency resources.

The situation today is different but it's not much better than it was five years ago. A lot of small digital shops around five years ago we're absorbed, bought, then lost within larger organizations. The larger digital shops (not naming names) over the last couple of years have been trying and to lure traditional creatives to their cool digital agency of the future-but the creatives they gather are usually: young ad school kids, too old or too traditionally experienced (out of touch), Mid-Level career defects looking to stay alive today, or big agency creatives looking to make bank (because they know the digital shops want them). My advice for all digital shops is BEWARE. Don't make the mistake that a lot of the shops are making by hiring traditional creatives before you develop traditional agency resources first. You don't all of a sudden become an advertising agency because you hired a copywriter from an ad agency. You need to make your organization think advertising and branding first—not technology.


What's stopping your digital agency's growth
A lot of traditional shops lack their chance at the brand level simply by not having brand-level work to keep new bodies people occupied (chicken or the egg?). Almost none of the digital shops have true, solid brand planning divisions or even a media planning departments. Not having these even for a 'real' agency will keep your hands far, far away from the real campaign dollars and more importantly, the control you need to execute your compete campaign vision. Another issue regarding media is that digital shops have been pitching viral and social media as a "low investment" media opportunities for many years now. Would you trust an agency who's only ever produced banners and websites to do your branding?, calculate your campaign's reach and exposure?, increase the recall of your brad's new tagline? I didn't think so.

Observing the behaviors of most digital shops shows us where they are comfortable being and more importantly, what clients are comfortable with allowing them to 'do'. Not surprisingly, most digital shops usually opt for what they can tactfully do and have done before: emails, website, rich media, mobile apps, etc. They don't approach things as brand problems to solve, they think of conversion numbers over perception. And when you factor in all of the overage of digital marketing 'opportunity seekers' willing to sell clients the latest, the magical, or cutting edge-it's a big mix of uncertainty for digital agencies. Uncertainty isn't a word that clients use to describe their traditional agency, after all they've been doing that they do since the first ad was made.

Does your digital agency's have a bad habit that's preventing your organization from growing?

Your digital agency + the brand table
In order to get to get your digital agency a seat at the brand table, you must first be in the business of brand positioning, advertising, and media planning/strategy—you can't fake it. Digital know-how will only get you so far and it usually leads to project work, but it won't fix the problem of not having access to the table where the real brand decision makers sit. My guess is that by the time the digital budgets reach 50% over the next 5 years, most good traditional agencies will have finally figured out how to manage and integrate digital successfully. So if your in the business of being a digital agency I'd pick up the pace and get there first before the real agencies finally get it right.


*Please note that the brand cow is not an exact visual depiction or representational of any specific data, but rather a visual metaphor for the overall brand situation for most digital agencies today.

Comments

[charles ferrare]

Excellent article. But, let me remind you that they may never get to the table on their own. It may take the final collapse of traditional media for that to happen and a generational change.

Direct mail/direct response never got to the table. Cable TV is just now getting to the table and it has been around for 30 years and PR never got to the table.