2011 Agency Predictions

Over the past couple of years, we’ve seen some dramatic shifts in the agency landscape. In what Forrester has dubbed “The Great Race For Relevancy,” virtually every type of agency is now competing with each other like never before. Social media has become the great land grab and just about all agencies are claiming to be “digital” in some ways. We don’t expect the agency landscape to shake out and make sense in 2011. In fact, we expect more dramatic shifts. Here are some agency predictions for this year:

  • Agencies continue to hire and develop talent outside of their heritage. In 2010 some interactive agencies like Razorfish and EVB began hiring “earned media specialists,” while some PR agencies like Waggener Edstrom and The Horn Group built out interactive creative services. Meanwhile, some agencies with traditional creative heritages like Weiden + Kennedy were pioneers in developing content that is truly agnostic to digital and traditional channels while also interactive (see Nike and P&G’s Old Spice). Expect to see these trends become mainstream in 2011.
  • Media planning and buying agencies begin to broaden their horizons. While other  agencies have been making fundamental changes to adapt to the ever-changing digital environment, media planning and buying agencies are still very much focused on paid media (and are still compensated on volume of spend). While some have been successful at integrating online and offline media teams, 2011 will open the window for dramatic change. These agencies will begin to take advantage of new digital media tools (e.g., DSPs, RTBs, exchanges, etc.), the growth of connected TVs, and analytics platforms to move beyond just planning and buying advertising to expanding communication planning services that make them key strategic advisors to their clients. Look for agencies like Starcom Mediavest (with help from the Publicis Vivaki group) to pioneer this space, while those agencies that fail to evolve will become less relevant.
  • Agencies mature with social media. Certainly the great majority of marketers have a long way to go in figuring out how to integrate social media into the organization. But overall we’re seeing marketers mature in this space, and their agencies are maturing as well. While many different types of agencies are still battling for the overall strategy, many are now falling into place in their core skill sets: PR agencies tend to manage word-of-mouth and crises, interactive agencies tend to build strategy and applications, traditional creative and media agencies leverage social to complement campaigns, etc. Expect this trend to continue as marketers continue to mature.
  • Mobile (along with tablets) becomes the next big land grab. With the massive growth of smartphones and tablets and the continued focus on emerging markets like India that have high penetration of mobile ownership, agencies are already fighting for mobile work. With their technology know-how, interactive agencies are in the best position to help marketers navigate The Splinternet, but considering the opportunity in this space, you can expect all agencies to have some form of mobile expertise in 2011 and beyond.
  • A whole new crop of specialists appear . . . again. Technology is moving so fast that new shiny objects are being created almost every day. 2010 was the year of social media boutiques like Big Fuel, Ant’s Eye View, and Powered (recently acquired by the Dachis Group). New types of agencies (or non-agencies) are constantly popping up. 2011 will spawn new types of agencies in the emerging space. Consider Breakfast, an agency consisting of what you might consider inventors that focuses on futuristic experiences, or Zugara, a firm that specializes in augmented reality. And many of these agencies will be scooped up by the big holding companies looking to fill out their skill sets. (Speaking of acquisitions, let’s not forget that some big digital agencies like AKQA, Rosetta, and IMC2 are still independent and will become increasingly attractive to the holding companies looking to expand their digital portfolios in a highly competitive environment).
  • Everyone continues to (pretty much) fail at analytics. Analytics positions are hot at agencies right now. Every type of agency is trying to improve their capabilities. But the truth is that marketers themselves are still very much fragmented in their approach, and until that is sorted out, the great majority of agencies will be stuck managing the data in their corner of the world. Expect improvement, especially with real-time metrics, but agencies will continue to struggle to tell the full story through analytics in 2011.
  • Technology innovation becomes the new creative. Agencies are often hired based on their ability to generate “ideas” (though I would argue it is only one of many reasons they’re hired). This won’t change moving forward, but the way those ideas are manifested is changing dramatically. And while you don’t need to be an engineer to come up with ideas in the digital age, it helps dramatically when the agency has the ability to understand what can and cannot be built. That’s why agencies like SapientNitro are succeeding in expanding their business model -- because they can balance the head in the clouds ideas with the feet on the ground know-how.

So what does this mean to you as an interactive marketer? Well first you can expect more agency confusion as it will continue to be difficult to determine which agencies excel at the many different digital services. However, it also opens doors to working with new types of agencies. For instance, interactive marketers have always been more comfortable with building and buying media (i.e., owned and paid), and if your interactive agency isn’t up to speed with earned media, then you have the opportunity to work more closely with the PR agency to learn new skills. To succeed in this environment, you should commit to your agency relationships (i.e., don’t hire them to be strategic and then treat them like vendors or vice versa), set clear roles with the agencies, and constantly evaluate your agency performance and knowledge.

Comments

I am interested in knowing

I am interested in knowing more about your point: "Everyone continues to (pretty much) fail at analytics"

When an advertiser/marketer sets up budget and objectives, he also expects detailed reporting back from agencies. By saying 'fragmented in their approach' do you mean marketers do not have definite ways to understand the data and build knowledge on? or they lack robust tools to collect all data from various agencies and build knowledge-base for analytics?

From what i know, marketers heavily rely on agencies for all campaign related reporting and do not import those data to build knowledge-base. If marketers start collecting data from agencies and systematically integrate with internal systems it may yield to complete view of their campaigns over Brand's lifetime even if they switch agencies.

Thank you
Kiran
http://datagrains.blogspot.com

Reporting is not analytics

Thanks for the comment Kiran. I don't equate reports with analytics. Analytics requires some analysis and while a few agencies do excel at providing some of the "why", most agencies are simply passing along the "what". Virtually anyone can download and format a spreadsheet downloaded from Omniture, DART, DDS, etc. and then add an executive summary. The real challenge most agencies face is that they don't have access of the data to tell the full picture and and most of them have never had advanced analytics teams (and they're not usually paid more for it, meaning it takes away from the already shrinking margin).

Advertiser does not get complete picture

If engaged agencies are not able provide campaign data to Advertiser, then there is no much analysis can be done at Advertiser's end. This is also inhibitor to Advertisers in long run as they are not having visibility into campaign details over the years to find patterns and improvise on effectiveness etc.

However, for those few Advertisers who manage to get much data, can then collect and organize them across multiple brand campaigns and start analyzing for deriving intelligence. I believe analysis should be Advertiser's objective as a long term strategy than at individual agency level.

Analytics

Well ... real-time analytics are hard. Twitter is especially hard given the high rates at which tweets are created and the minuscule number of those tweets that are relevant to a campaign. At those rates, pretty much all you can do is count impressions (if you have Twitter's dashboard,) clicks on links in tweets and the traffic that the link destinations get. You can plot those in real time and gain some insight from the shape of the curves. But in essence real-time analytics is very much like "day-trading" of stocks or commodities - a human sits and watches charts unfold in real time and learns to recognize patterns.

Thanks for an excellent

Thanks for an excellent write-up Sean!

On a related subject, I have blogged about the value of creating an integrated, holistic and actionable multi-channel strategy using a top-down and bottom-up approach, which ties back to business goals. http://nitivaish.wordpress.com/

I am speaking on the same topic at Mobile Monday Chicago http://momojan2011.eventbrite.com/ and will be addressing some of the topics you touched upon, such as the value of:

- Creating a 360 degree view of a customer and deriving business insights by aggregating analytics across mobile, social and digital channels
- Understanding the big picture and being able to "connect the dots" between mobile, social and digitals channels rather than focusing on a single channel
- Viewing some of the digital roles as 'cross-functional' and staffing them with people who are able to understand the dependencies between channels

Custom Content Agencies

What about custom content agencies and publishers. I joined Pace Comm. last year, and learned about this whole industry where companies have been publishing custom content for ever. They are the perfect content marketers. Have you looked at the industry, and what its doing in terms of building successful digital solutions for clients?

Good point

Thanks John. I agree that content agencies are busier than ever and growing. They also tend to float under the radar. That's mainly because they have been mostly executional agencies and typically not involved in overall strategy for most big brands. They may change down the road as content development becomes more important but I don't see it happening in 2011.

Sean, Things might be

Sean, Things might be changing there, what's key to this new world of building digital "content gardens," is being able to think strategically about content creation teams, optimization of media, and thinking about agency/client processes. Everyone in the country is in a dilemma at the moment how do we manage all of the content we have to produce for all of the channels popping up, without increasing our overall costs because of duplication from content creation. How do we leverage content development to work across different medium? And how do we build an internal process that gets different departments and silos working together. Leveraging existing content, understanding the rules for content deployment have all been part and parcel of editors for generations, and that's how to think of custom content agencies we're the editors out of the professions listed by agency. I think several custom agencies are recognizing this, and mainly because client are coming to them asking for help.