How Social Media Boutiques are Winning Deals Over Traditional Digital Agencies

 

Social Media Agency Budgets: Boutiques versus Traditional Digital Agencies

 

Some insightful research from a research report by Altimeter Group, reported on Web Strategy by Jeremiah Owyang shows a pretty dramatic trend going on in the agency business right now. It appears boutique social media and content agencies are really taking some significant chunks of client’s business away from traditional digital shops. This is really no different than the general trend in the agency business as a whole, where clients shift entire budgets away from established agency players to smaller, more specialized practices.

At some point, the big shops become too lethargic and cumbersome to meet the increasingly specialized demands of clients in emerging communications channels and practices. Their staffs a bloated with overhead and people that provide the things clients don’t want to buy anymore. They are machines of marketing service. The big guys aren’t really market makers, after all, they’re market takers.

But, the problem is, success in the marketing services industry is shifting dramatically away from how well you are at being a bulk provider big, media-centric ideas and is now more about delivering innovative and compelling experiences that transcend communications channels. Marketing services is not so much a practice that starts with the client brief anymore…rather it starts by listening and observing your customers online behavior and interests, mining this for insights then creating your ideas and content based on what your audience tells you they’re already interested in. Marketing is now less about what you have to say and more about the user experience. And, it is a new breed of social boutique agencies that is winning over significant chunks of client business, away from more traditional digital agencies.

Altimeter identified why the smaller, more nimble firms are winning:

  • They put business goals first, tools and technologies second
  • They offer a specialized skill set in new media and social business traditional shops most likely don’t
  • They offer change management within  the corporations. Traditional agencies layer social on top of existing campaigns
  • They have a long-term or community-building vision versus a short-term,campaign-focused mentality
  • They roll up their sleeves to assist with deeper customer engagement instead of relying on traditional advertising (a top spend item in social programs)
  • Smaller, more agile teams with senior leadership that can respond and adapt to changes in the technology space
  • Fundamentally are geared to measure differently around engagement and what that means…not just to line and bottom line measures.

 

 

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Agencies, Do Your Clients Really Need You?


I’m seeing a lot of chatter lately about the relevancy of the 20th Century agency business model and the demise of the client-agency symbiotic relationship. This post from a London-based BBH Labs raises some provocative questions and proposed some intriguing alternatives to the future relationship between the two entities.

Digital technology, social networks and tools have fully empowered consumer to being content creators, critics, participants in the marketing enterprise. The behaviors technology and tools are enabling, along with the companion erosion of the MASS in mass media they cause, does call into question the whole value proposition of having an agency or 50 agencies (such as some clients have) handle work that the client should be doing.

It’s clear there’s much duplication of costs between firms handling different silos of a clients business….account people, creatives, overhead, profit….each firm has to have these to deliver client work and stay in business and yet, multiply these costs 10, 20, 50 times over and a huge portion of the client’s marketing budget is paying for outside staff and expertise that many are saying should now be residing inside the client’s organization.

Another post I ran across last week was even more dismal in it’s prediction of the agency’s future, as evident from the title: “RIP: 20th Century Agencies”. According to Forrester Research, the firm that provides ongoing tracking of 300,000 global consumer’s online behavior and participation with their Social Technographic Profiling tool, we’ve now entered an era of Adaptive Marketing. In this ear, marketers take advantage of media addressability and more effective data-driven decision making. Larry Flanagan, CMO for MasterCard put it this way: “We are moving form decades of push stategy to a more holistic 360 consumer strategy”.

Or, Trevor Edwards, head of global marketing at Nike said: “We’re not in the business of keeping media companies (or agencies) alive. We’re in the business of creating consumer connections”. And Nike has done this, building the largest community of runners in the world with Nike+…a product, a service, a community. Now, Nike doesn’t need to conduct focus groups with consumers or rely on the newest creative idea from it’s agency to breakthough to runners. It has over a million runners who use this connection, giving them unprecedented data on actual, instead of self-reported, consumer behavior. It can eavesdrop into conversations their hundreds of thousands of community members are having on a real time basis. And, it’s changed every aspect of their marketing…research and development, promotions, CRM, advocacy, customer service…you name it. As brands become media producers and publishers, creating their own content, connections and communities, the power of traditional mass media and the agencies that craft the mass marketing interruptions (ad units, PR, etc.) brands relied on so much in the past has to fade.

Agencies are struggling to adapt to this new age for many reasons, according to the post. Among the biggest challenges agencies face:

* They are focused on campaigns rather than experiences
* They’re good at talking but not at listening
* Agencies create media-centric ideas
* They treat customers as an audience instead of participants
* They are mostly “unbundled”, offering services in disparate skill sets
* They have trouble mastering many new specialties at once
* Agencies have moved down the value chain. Purchasing in now involved in agency selection and compensation and there’s little difference between agencies.
* Marketers don’t trust traditional agencies with digital and interactive agencies struggle for a seat at the strategic table.

So, what’s an agency to do to survive in this Brave New World? The path forward is simple but it’s not easy.

* Agencies must focus on developing big ideas that work across multiple communication channels and consumer touch points and they need to adopt a more iterative process for creating ideas.
* Agencies need to understand experiences that foster interactions drive marketing success from here on out. Media has now fragmented into distinct categories of paid, earned and owned and there has been a dramatic shift from viewing media as the foundation of campaigns to being seen as a catalyst of experiences.
* Agencies need to become more intelligent and adaptive…relying more on analytics to drive customer insights and developing a business and staffing model that gives clients access to the the talent that can do this and help solve their business and marketing challenges.

The big question that remains is: Can clients also make the adaptations they need to make? For all the talk about integration and holistic effort, the fact remains, clients still fund marketing activities based on legacy allocations of dollars in various “buckets” or slices of the marketing pie as well as managing this with internal staff in very defined silos tied to those buckets…above-the-line, CRM, digital, media buying, promotions, etc. It’s difficult to near impossible for an agency to provide an integrated idea to a client that isn’t integrated.

In fact, I don’t think the issue is integration, I think the real issue is orchestration. Some clients interpret integration in a very wooden, literal sense. To them, integration means: same thing everywhere. To me, this makes about as much sense as going to see a symphony concert where the conductor forces every musician to play every note in the same key at the same time. Where’s the artistry or beauty in that? Boring! And frankly, a lot of integrated marketing is executed in the same boring manner….same thing, everywhere. No wonder campaign results are so pitiful.

Rather, I propose the real secret to success in the new realities is orchestration…where there are levels of interest and discovery that the consumer uncovers at different touch points along their path to purchase. Yes, it all looks like it’s coming from the same company and yes, the message is consistent. In this sense it’s fully integrated. But the idea is orchestrated to reveal itself in delightful ways in social media, on mobile, in live experiences and at retail in ways that are unique, relevant and compelling for each channel or environment.

To pull this off, continuing with our orchestration analogy, it requires a beautiful piece of music (the strategic idea), skilled musicians (the client and agency stakeholders) and instruments (the tools and technologies) and a masterful conductor…but who is this? It’s that last individual that is the big question mark in today’s marketing organization. Are there people on the client side of the equation that can masterfully conduct?

Digital Marketing Driving Transformation in Global Marketing


Results from a recent Deloitte sponsored survey of CMO’s and senior level marketers portends great news for digital marketing practitioners and bad news for traditional “push” marketing types…within corporations and agencies alike.

Investing in digital demand generation and online relationship building ranks among the top initiatives being taken to maximize the impact and value of marketing in 2010, according to 46% of survey participants.

The digital revolution continues!

CMO COUNCIL :: Press Release.

Marketing Service Providers and Clients Must Change or Die

During Kodak CMO’ Jeffrey Heyzlett’s Houston Interactive Marketing Association luncheon presentation yesterday, it became clear to me there’s no going back to the Mad Men days. Kodak now is launching very successful products and marketing campaigns all without a dime of above the line media. They’ve gone from 3,100+ world wide agencies to less than 1,300…still a bunch, in my opinion. But, there are no more agencies of record. Jeff doesn’t tolerate people on his team who rely on agencies to do what they themselves should be doing. They’re eliminating duplication of effort and streamlining costs. Every body is clear about their job. Kodak spends way less on traditional advertising and marketing services costs are reduced and they get better returns. What’s not to love?

Well, traditional agencies, with their highly compensated CEO’s, cast of thousands…the butts in every seat strategy…and high overhead, can’t love this too much. They’re watching their demise in the form of the death of a thousand cuts.

Now, nobody is saying traditional advertising is going away tomorrow. But, it’s decline is inevitable.

This creates a wealth of opportunities for smaller, more nimble marketing services firms. New approaches and ideas.

More support for all this change comes from this week’s Ad Age.

As Shops Transform, Marketers Must Adapt Too – Advertising Age

Scorecard: Does Your Agency Fondle The Hammer?

Great post by Jeremiah Owyang on a scorecard tool your company can use to find the right agency partners and avoid the wrong ones that either chase after the shiny new toys on one hand, or are mired in the advertising industrial complex (and all it’s self-serving incentives) on the other.

Web Strategy by Jeremiah Owyang | Social Media, Web Marketing.

The Death of the Advertising Agency

Interesting to see how this comes out in the morning but having seen all the ads, the Doritos spots were among the best. Frito-Lay and these normal people are showing big ideas are not the exclusive domain of the professional ad guys.

Four Consumer-Created Doritos Ads Crash The Super Bowl, Now Face The Pros In Attempt To…

Omnicom loses another Pepsi digital account – iMediaConnection.com

BBDO, major, big time ad agency, not faring too well in the digital realities in today’s marketplace. Clients are voting with their wallets and all the prestige and awards in the world won’t matter.

Omnicom loses another Pepsi digital account – iMediaConnection.com.

A Great Image Search Resource for Vintage Ads

Nostalgic for the Mad Men age? Pine away no longer. Vintage Ad Browser is a great resource for snappy presentations. Or a good laugh.

Vintage Ad Browser.

Adland: When I Knew Advertising Had Completely Changed – Advertising Age – News

I’m gonna have to get this book. Pretty snappy writing. Even though I worked in media for the first 15 years of my career and a small agency for the last eight, I can related to the rock and a hard place he’s describing of the world changing around you and being asked by your largest, most important client to participate in a futile attempt to save the busineess…pitching in a review you know you’re going to lose.

Adland: When I Knew Advertising Had Completely Changed – Advertising Age – News.