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The Evolution of the Digital Agency: Integrated vs. Pure Play (Part II)

  |  September 8, 2011   |  Comments   |  

My views on how traditional ad agencies and digital shops can collaborate in the digital ecosystem, what's yours?

I've discussed in an earlier column how digital shops are vying to become full-service agencies while traditional shops are yearning to become more digitally integrated. Here I'll share the key differences between these two agency models; from their capabilities, structure to client relationships, and also articulate my point of view of how they could co-exist and collaborate within the same digital ecosystem.

Traditional Advertising Agencies

The model most ad agencies have now are the "I have digital capabilities" to those who say that they are integrated through the line and able to develop 360o communications.

Make no doubt about it; ad agencies do communication very well. They have the high level client relationship to move things forward and usually have access to a brand's product development cycles and are deeply involved in a client's marketing strategy and processes. As Bob Greenberg, CEO of R/GA once said, "Traditional shops are able to leverage their more senior client relationships to win digital assignments even while they lack true capabilities (in resources, structure and processes)".

In order to be truly digital, traditional ad agency structures of account management, creative, and planning all need to be infused with a new cast of talent such as Interactive Art Directors, User Experience Designers, Digital Planners/Strategists, CRM Specialists, Technical Directors (or a hybrid type "Creative Technologist"), and digital producers/project managers. Most integrated agencies have some of these parts in place but not all.

From a resourcing perspective, digital as a function is hugely broad – Social Media, Search, UX, Information Architecture, CRM, Mobile, the list goes on. No agency no matter how large or global is able to innovate fast enough to have the resources and competencies to do all this. The best agencies foster great partnerships internally with their overseas counterparts and also with external partners and suppliers to ensure that they are able to deliver services beyond their core competencies. At the heart of this structure requires a team of dedicated and competent project managers or digital producers that are able to manage these relationships well.

From a structural standpoint, some agencies also have dual P/L lines for reporting traditional and digital revenue, which cumulates to a situation where the lonely task of growing digital revenue gets left to the head of digital while the rest of the agency focuses on the status quo. This affects the digital pipeline and type of work which then impacts the ability to put together the necessary (and right) resources to support digital growth within the business.

Digital Pure Play Agencies

Pure play digital shops are technically very savvy and able to adapt quickly to digital trends and changes in technology and platforms. However, they are rarely able to play a key role in true communication and strategy. Instead they are very executional and focused on project delivery and creation of digital assets. This confines their role within the realms of digital campaign development and website revamps.

Most of the time, these agencies are limited by their ability to drive digital thinking at a strategic level or at the campaign ideation stage (which may be left to the incumbent creative agency on record). One of the key aspects of digital (and how it is fundamentally different from traditional communications) is the intricate level of dependencies it has on the client side. These extend beyond the marketing department and into areas such as technology/technical infrastructure, information security, product development and process improvements. That is probably one of the key reasons why digital agencies who work with big organisations without access to C-level executives will have trouble pushing great digital ideas through.

In addition, another issue that most small digital shops face is the ability to hire, develop, and retain talent. This is a function of both the type of work as well as salary. A true digital evangelist needs constant challenges and has the desire to be at the forefront of digital. Without which, when lured by the prospect of more interesting/creative work with bigger blue chip clients and a larger pay check, will end up defecting over to larger digital or integrated agencies.

Playing Together

True communications requires an integrated approach. Consumers don't draw the line between traditional and digital mediums and neither should brands and agencies. I believe each model has it merits and the best way to deploy them is dependent on the client marketer and the structure of the client's business.

Think of it this way: If the client has within its ranks a dedicated digital specialist or digitally savvy marketer, then this person would be able to direct strategy and play a more intimate role in the development of digital initiatives and assets. In this case, they may then choose to work with a variety of specialised digital shops for their web production, search, social media, and digital campaign needs while keeping the central role of creative and strategy management within the organisation.

Conversely, if the client does not fully understand how to leverage on digital to drive their business or is using digital as a hygiene factor (i.e., we need to be there because everyone else is or because our competitors are also online), then there will always be a need to involve some level of digital planning that goes well beyond just producing digital assets and launching social media campaigns.

The truth is; most clients may still be in later phase without realising it. (The litmus test? Clients who say that their digital campaign objective is to increase Facebook 'Likes'.)

In this aspect, because of a close working knowledge of the brand and business, integrated ad agencies can add value by offering strategic consulting – from digital thought leadership to the development of a brand's overall digital strategy and roadmap (which could involve multiple aspects such as social media, search, and mobile, etc.).

One of the key roadblocks with this is that many clients do not fully understand the true cost of digital. Many expect it to amount to loose change within the overall marketing budget. This makes it difficult for ad agencies to be able to deliver on strategic thinking and great creative work because of the high cost of talent and resources within this space.

Perhaps one of the things ad agencies can do to alleviate this is to deconstruct digital (and its complications) for senior clients by showing how it can work to drive business results (directly and indirectly). This can be done through one or two day client workshop session. The other client approach to go around the issue of cost is to have a lead creative agency drive strategic thinking and creative work in an integrated way and also a list of smaller digital production shops to create on-going assets and deliverables.

Ad agencies that want to own the entire value chain will need to either partner with these production shops, acquire them, or start up their own in-house production hubs.

Let me end with a small disclaimer: in writing this piece, the intention was to put forth a personal point of view on the different competencies integrated and pure play digital agencies provide to clients. Hopefully, this will allow all parties to find an optimal and complementary way to co-exist and work with each other.

Whether you are a client-side marketer or a digital evangelist within a traditional/pure-play agency, how are you currently working with your counterparts within this space? I would love to hear your thoughts.

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ABOUT THE AUTHOR

Vincent Teo

Vincent is the co-founder and partner at C//IQUE, a product development studio and incubator that focuses on developing digital products and services that disrupt traditional business models and empower consumers. He has over a decade of experience both on the client and agency side, most recently as a digital planning director at BBDO/Proximity and lead digital strategist at Publicis. Prior to that, he started-up and managed the Hong Kong office of Splash Interactive Group and built the online business at Citibank and HSBC. Connect with him on Twitter @intersphere.

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