The end of the digital agency as we know it
Just a few years ago the world was looking good for digital agencies. We were predicting the end of the mass media era. We claimed that everything was going to be social. We felt that traditional advertising was dumb; and activation, engagement and word-of-mouth were smart. And we divided the world into those who ‘get it’ and those who ‘still don’t get it’. Our own agency, at that time, was awarded Interactive Agency of the Year at the Dutch SpinAwards and we won both Cannes Lions and Webby awards. We all felt that digital was finally on the verge of a breakthrough.
Two years later, that breakthrough never really came about. We still have to work hard to sell ‘digital thinking’ to marketers and they still find it very hard to believe in the value of digital above traditional advertising. Somehow most digital agencies ended up competing with each other for the little budgets: Facebook activations, fan engagement, conversation management, etc. The number of digital agencies that made it to the list of top lead agencies is fairly low. And those who did, kind of transformed into a traditional advertising agency.
Somehow most digital agencies ended up competing with each other for the little budgets.
So the big question is: what went wrong? Why did the digital agencies not live up to their promise? I think there are four reasons:
1. Traditional agencies have embraced digital by now.
Most traditional advertising agencies now have digital natives in their creative department. So it’s not that difficult for them to come up with ideas that work in display advertising as well as in digital advertising. Furthermore, the main share of digital creative work is to extend the impact of the display campaign through Facebook activations. Plain and simple advertising, but now on Facebook.
2. Digital agencies are being disrupted by new players.
First there’s Google and Facebook with their market place models. Then there are the digital marketing agencies. There’s a lot of new school agencies that don’t claim to be creative, but turn out to do an amazing job in driving business growth through conversion optimisation, SEO, SEA, affiliate marketing. You know, the stuff you don’t see at award shows, but it’s the stuff that is highly performance and ROI driven. Marketers love it.
3. We are great in measuring the lack of impact we have.
Digital campaign agencies can measure everything, except the impact on the bottom line of our customers. Several marketers argue that it’s still much easier to predict the impact of a mass media campaign on sales performance, than to measure the impact of Facebook activation or a conversation marketing strategy. A campaign director at an FMCG company recently said to me: “The problem with digital agencies is that their work has no real impact on sales. I can’t see the impact of engaging 50.000 people through social media, but I do feel the impact of a national flight on TV.”
4. Since the success of Steven Van Belleghem’s book The Conversation Company, more and more brands are implementing their own conversation marketing teams.
Nike has done it. KLM has done it. Microsoft has done it (disclaimer: we actually helped them to set it up).
So being a creative digital agency is a dead alley. They’re not data driven enough to play the conversion game and they’re work is not impactful enough to be the lead brand agency.
So what’s the solution? Do digital agencies have a successful escape route out of this gridlock?
The solution for digital agencies is to stop talking about digital. As long as we talk about digital, we are fighting a battle for recognition we can never win. Calling yourself digital means you’ll be perceived in the mind of your customer as Yet Another Niche Agency. As long as we call ourselves digital, they will always need a display advertising agency, a media agency and a sales agency to complete the marketing mix.
Calling yourself digital means you’ll be perceived in the mind of your customer as Yet Another Niche Agency.
Some digital agencies have tried to escape this paradox by reframing their core proposition from ‘digital agency’ into ‘creative agency for the digital era’. They are placing their bets on the idea that having a digital DNA is the best asset for becoming the leading brand agency. To some extend this is a sound idea. There are however two fundamental problems with this line of thinking: 1) digital agencies lack experience in the traditional advertising game. 2) They are trading one battle field for another: advertising agencies in general are having a very hard time proving their relevance to marketers. In my opinion the ‘creative agency for the digital era’ route is not the best escape route from the digital agency trap.
I think the only way out for an agency with a digital mind-set, is to stay away from the medium debate online vs offline, social vs display and to start talking about the thing that goes beyond this debate. In the end, the job of every creative agency is to come up with ideas that influence choice and buying behaviour and ideas that transform audiences into customers. Our job is to embrace everything that improves the conversion ratios for our clients.
In the end, the job of every creative agency is to come up with ideas that influence choice and buying behaviour and ideas that transform audiences into customers.
Steve Blank, one of the biggest thinkers on start-ups has a beautiful and simple concept for this process. He calls it Customer Development. Customer Development is the method of developing a successful strategy through continuous experimenting, measuring, learning and adapting. The heart of this process is to discover where to find valuable customers, and how to convert them into buyers with the least amount of money and the highest possible ROI. In that order.
The cool thing with this way of thinking is that the core asset of an agency is no longer its creative ideas, but its creative experimenting. Our job is to come up with every possible idea that contributes to developing valuable customers for our clients. The biggest economic value we bring to the table is our understanding of how to influence behaviour and our creative method of continuously investing in ways to improve the marketing strategy. That’s why I think we should get rid of this ridiculous idea of separating strategy from creation. Instead of executing a given strategy through creative ideas, an agency needs to develop, grow and improve a marketing strategy through continuous experimentation.
Doesn’t that sound like an exciting idea for a new school of agencies?
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