Close-Up: Are clients leading the way on digital?
campaignlive.co.uk, Friday, 30 April 2010 12:00AM
Do agencies lack the digital expertise required by clients and risk being sidelined, John Tylee asks.
If the verdict of some of the world's top marketers is right, then those agencies that fail to leap aboard the digital juggernaut risk being rolled over by it.
According to the Chief Marketing Officer Council, whose 5,000 members control more than $150 billion-worth of annual adspend, many companies believe that, when it comes to online, viral and mobile marketing expertise, mainstream agencies just aren't up to it.
As a result, they are building their in-house capabilities or getting a new breed of consultancies to do it for them, freezing out their traditional agencies in the process.
Clients are increasingly spending their money on such things as e-mail CRM and marketing analytics," Donovan Neale-May, the CMO Council executive director, says: "These are not services traditional agencies can offer, so clients are assembling them internally."
Indeed, some have been building their in-house digital capabilities over several years. "We don't use our mainstream agencies for this because they aren't configured for it," the chief executive of a major UK advertiser says. "And this is the way things will stay unless those agencies acquire the expertise we require."
In some cases, this is with the help of consultancies such as Deloitte, Accenture and McKinsey that are moving in to fill the void they perceive that agencies have created.
Nick Turner, the director of marketing effectiveness practice at Deloitte, claims agencies are being squeezed out because they don't have relationships with people such as sales and customer service directors, who are likely to be involved in a client company's digital presence.
What's more, traditional agencies have neither the technical competence to crunch and interpret the huge amount of customer data that companies accumulate or to act on those results, he adds.
At the moment, this territory is being occupied by a plethora of specialist operations offering bewildered clients a route through the digital maze. Some offer consultancy services to companies mapping out their digital strategies, some offer the technological knowhow to make it work, while others take on the management of a client's entire digital offering.
At the same time, companies are being aided by the giant search engines such as Google and Yahoo!. They have accumulated a huge amount of data about consumer behaviour and about what people are looking for when they go online. "Everybody wants a piece of the pie," Neale-May says.
Does this all mean that mainstream agencies are gradually being sidelined? Not necessarily, Neale-May believes. But he warns: "They have to figure out how they fit into the evolving landscape."
For their part, leading agency figures believe there's no cause for panic. Digital communication can only survive on the strong creative ideas that agencies are best-equipped to provide, they claim. And they question whether so complex an operation can be successfully managed internally by clients.
"You need to have a successful blend of creative and technology," Luke Taylor, the LBi group chief executive, points out. "Will Accenture and others have a fully rounded offering? I don't think so."
Agencies must continue working at what they do best," Neale-May declares. "But they have to evolve to match the way the world is going and they have to be aware of the new digital opportunities to which they can apply their creative talents."
CLIENT - Keith Moor, director of brand and communication, Santander
"We employ our lead agency for what it does best, that's to produce the creative ideas that we, as clients, can't match. It's important that an agency's job is properly defined and we're fortunate that WCRS is part of The Engine Group, which is capable of handling a lot of our digital work.
"However, we also have an in-house digital capability. That's because millions of people visit our website each month, creating a database that is one of our biggest core strategic assets. That's not something we would want to hand over to anybody else."
MARKETING SPECIALIST - Donovan Neale-May, executive director, CMO Council
"This isn't a trend that's going to put traditional agencies out of business. But they have to figure out what their place is within an evolving communications landscape.
"The fact is that the economic situation is forcing companies to better understand the value of their existing customers, how to generate more revenue from them and how to reactivate business that's been dormant. This involves crunching lots of data and much of that is now taking place in-house.
"Clients will still need agencies and what's happening may give them opportunities to do exciting new things. But they may not be able to charge as much as they used to."
DIGITAL AGENCY HEAD - Luke Taylor, group chief executive, LBi
"There are a number of reasons why agencies shouldn't have to panic about this. For a start, any piece of communication needs to be driven by strong creative skillsets and that's something that will never be successfully integrated on the client side.
"Also, with any new transformational marketing idea, the creative process becomes more complex because it involves other disciplines, which makes it very difficult for the process to be internalised.
"Digital specialists have the ability to understand the technology and to harness it. And they can deliver solutions in a joined-up way that removes all the politics."
DIGITAL SPECIALIST - Nick Turner, director of marketing effectiveness practice, Deloitte
"There are a number of reasons why agencies don't deliver digitally for clients. For one thing, digital marketing may involve not just the marketing director but the sales and customer services directors as well. These are not people with whom agencies usually have relationships.
"For another, there's the question of technical implementation. Traditional agencies aren't well-established in this area so it makes sense for companies to outsource this work to specialists.
"There will always be a place for the kind of creativity only agencies can provide. The big question is whether those agencies can adapt to changing business models."
- Got a view? E-mail us at firstname.lastname@example.org.
This article was first published on campaignlive.co.uk
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