Are Online Agencies Capitalizing on Market Opportunity?

It’s dot-com days all over again. Predictions of Internet spending soar while actual figures surpass expectations. We’re seeing budgets in the millions shift from TV to Web. Yet at the end of 2006, a study commissioned by Sapient found that more than half of chief marketing officers (CMOs) believe traditional, large advertising agencies are ill-suited to meet online marketing needs and only one in 10 CMOs expected to partner with traditional agencies for their online marketing, expressing concern that traditional advertising firms have difficulty thinking beyond traditional print and TV media models.

In February 2007, Forrester issued a report, “Help Wanted: 21st Century Agency,” which concluded that “agencies struggle to help clients capitalize on emerging channels and technologies. In the meantime, marketers are diffusing agency power by turning to a portfolio of players in search of specialized expertise. As marketers select new agency partners, they must revise their evaluation criteria to build an integrated marketing team.”

A March 2007 study by the Chief Marketing Officer Council, found that 54 percent of the 350 top marketers surveyed planned to drop one of their agencies this year. The study concluded that “marketing is undergoing substantial changes due to a mandate for CMOs to improve the relevance, accountability, and performance of their organizations.”

In the face of this huge market opportunity, how do our interactive agency report cards fare? Have we been capitalizing upon this new demand for our services, or is it time we re-evaluate our own marketing strategies?

If you place faith in yet another study, released in July 2007 by a somewhat dubious group that still makes an interesting point: Online marketers aren’t doing a good job of marketing themselves online. While I may speculate about the study’s credibility, I agree, in a general sense with its conclusion. As a collective, we, as online agencies aren’t doing as much as we can or should be doing to market ourselves online. Why is that?

Perhaps it’s the typical cobbler’s kids syndrome: too much work; not enough resources and time to tend to one’s own home while we’re servicing our ever-more important clients? Or, perhaps we’re focusing too much attention on traditional channels. Trade show exhibit halls seem plenty full these days and trade publications seem chock full of print advertising. Or, perhaps we’re just a little too full of ourselves, thinking our slick Web sites need to speak to our creative talent, search engine rankings be damned?

Maybe this rationalization works for some of you, but let’s put ourselves in our prospective client’s shoes for a few minutes. According to the Forrester report, 70 percent of CMOs are going outside their agency of record (AOR) for interactive/digital work, over 60 percent for creative work and PR, and just under 60 percent for direct marketing. Since the time that this report was issued, with the growing interest in social media (the manifestation of online PR), I’d venture a guess that even more than 60 percent are seeking PR assistance outside their AOR…and that this work is also being given to interactive agencies with these kinds of capabilities. How do you prove your capabilities if you’re not out there demonstrating your own online marketing skills?

The Forrester report also alludes to something others have non-scientifically made a case for: CMOs don’t trust their agencies to do what’s best for them. Yikes! In our competitive quest for growth and hip-ness, are we gaining attorney-like reputations?

To better meet client expectations, Forrester suggests agencies deploy a “media-agnostic, customer-centric approach” so marketers can “select agencies that employ an approach to campaign planning that favors no particular media, but takes a customer-centric approach” and that “agencies that do this well anticipate interactions through the entire purchase funnel and build relationships, starting with awareness and closing the loop with loyalty.” Hear, hear, I say.

If clients want media agnostic approaches and a portfolio of players, why aren’t more specialized agencies doing a better job of partnering, bringing to the client best of breed players? Isn’t sacrificing a chunk of revenue worth presenting an overall stronger value proposition to go to market with?

We must do a better job of practicing what we preach. Our marketing strategies should take full advantage of our own medium. Live and breathe this stuff because if you don’t, you’ll end up with the same fate the traditional agencies are currently facing.

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