Ten years ago, digital agencies barely existed. Now the hipper parts of cities across the country are full of them. The amazing growth of the internet has created an ever-growing demand for digital marketing, which needs specialists who understand it and can help businesses to profit from it.
Witness, for example, the growing importance of viral marketing, as used by the likes of T-Mobile in their recent Royal Wedding spoof online video.
Consider also that an active presence on Facebook and Twitter has become a core part of many business’s marketing strategies. Indeed, new forms of digital marketing and new possibilities are evolving all the time.
So, one might think, the land is fertile for digital marketing agencies to grow, prosper and generally have a very good time indeed.
However, a recent survey suggests that the future for digital agencies might not be as clear as one would imagine. In “A Client’s Look Ahead at Agencies”, a research report by business development firm RSW/US, marketers express a less than positive view about digital-only agencies, with only a third of respondents appearing confident that digital agencies will survive as they are.
The future of digital marketing may be assured, but what about the future of the niche digital agency?
Nearly 70% of respondents in the RSW/US survey said that digital agencies needed to evolve and offer more traditional marketing services in order to remain relevant. That’s a change that needs to happen sooner, rather than later, according to the survey’s respondents: even now, when the digital landscape is booming, only 25% of respondents said they currently use an agency that is exclusively digital, social or SEO-focused.
By contrast, exactly half of those surveyed said they think full-service firms will win more digital business in the next three to five years, whilst half of those again think that digital firms will win other types of work.
There are two main things to think about here: what businesses want, and how agencies can deliver it within the context of a profitable business model.
Businesses want a one-stop shop. One relationship to manage, one agency that understands all of their needs and one agency that can produce work across the whole marketing mix in a cohesive and strategic manner.
However, agencies need to work in a cost-effective manner and it’s often not economical to offer the full marketing mix under one roof. Your clients might be delighted, but your accountant won’t be: the profit margins after producing so much work, if they exist at all, are slim.
There is a way for digital agencies to get around this. By performing strategic partnerships with specialists in other areas, they can still present their clients with a one-stop shop service, but without taking on the overhead of extra salaries and office space. It’s the reason so many agencies partner with Write My Site to create their clients’ blog and web copy (forgive the cheeky plug, we couldn’t resist!).
By working in close contact with specialists in niche service areas, agencies can work congruently across the marketing mix for a client. As far as the client is concerned they are still only dealing with one agency because all of the different elements are project managed by a single named contact.
By structuring their business models in this way, digital agencies can respond to the need to offer more than just one service and, in times when their very survival is in doubt, this could be the essential step they need to take in order to adapt to the modern marketplace and put themselves ahead of the competition.