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The 4 types of digital agencies

The 4 types of digital agencies Neil Chaudhari
Thinking about your digital agency? You should be. The industry and its approaches are evolving like never before. Gone are the days when you could park your brand at a digital shop and expect it all to work. You need to know what's out there -- and you need to make a choice.

This is becoming an urgent situation for brands, and it puts significant pressure on marketing teams to choose well. Yet, despite the conspicuous evolution of the digital landscape, I've noticed that marketers continue to ask the same question.

Which digital agency should I select?

Customer expectations, brand strategies, relevant technologies, available resources, corporate leadership -- they all change. What was right last year will likely be wrong next year. Even the definition of "digital agency" has changed.

Clearly, the speed of all this change makes it difficult to keep up. I recently ran a test search just to see what today's marketers are faced with, and what I found wasn't encouraging or helpful -- about 20 articles basically making the same, dated points about digital communications. More regrettably, the articles fail to identify the current types of digital agencies, simplify the complexities facing marketers, or make sense of evolving customer needs.

While the question above remains relevant, it assumes that all digital agencies serve the same purpose. Fact is -- they don't. It's time to ask a new question.

Which kind of digital agency should I select?

There is little training or education given to help marketers manage the agency search challenge. You can't go to college or attend a training course and learn how to pick -- much less work -- with a digital agency. And, as I've noted, even the ever-changing meaning of the term "digital agency" raises conflicting issues.

To help you begin the search process more efficiently, I've outlined four kinds of digital agencies that exist today (from oldest-to-newest evolution).

The digital campaign agency

Overview: This type of agency has more "traditional ad agency" talent. They create "emotional" campaign ideas to help sell products or services, but instead of television spots, they create interactive commercials. Digital campaign agencies push these ideas out to all digital channels with the intention of luring users back to a central hub or destination: It's the "big idea" that hooks them in. Imagine Don Draper with the Samsung Galaxy 4s in his pocket, a Fitbit on his wrist, and a Bluetooth Jawbone in his ear.

Advantages: These agencies look to find the "truth" in any brand, surfacing those "truths" through a multitude of digital interactions. So they are ideally suited to brands seeking high-level campaign concepts and brand storytelling.

The integrated marketing digital agency

Overview: These agencies generally have less of the "epiphany" appeal than the digital campaign agencies, but their strategy of using statistics to drive the traffic back to the destination has proven effective. They develop digital properties that utilize organic search, paid search, mobile, email, display, etc. The key here is that they seek to improve performance, execution over execution. They use data, analytics, and marketing-automation platforms like Eloqua or Marketo. Having all these channels working in concert is similar to how a rock drummer manages all of the drums in a syncopated fashion -- think digital agency octopus.

Advantages: Clients benefit by having one partner that can -- in ideal circumstances -- effectively leverage available resources and orchestrate all channels in order to determine what performs best for each.

The digital solutions agency

Overview: A more recent step in the evolution of the digital agency model is the emergence of the digital solutions agency, which operates more like a custom software development company. For example, this type of agency might not only develop a CMS system, but also marketing, customer services, sales portal, and inventory management capabilities on the backend. This approach enables the brand to operate with greater flexibility and efficiency. However, these agencies tend to find competition with large consulting groups (such as Accenture and Deloitte).

Advantages: These agencies create digital experiences that enhance the overall customer experience and provide holistic benefits through complex solutions that draw from multiple data sources to diagnose and manage many business functions simultaneously. The result is external value and internal efficiencies.

The DX agency

Overview: The philosophy of a DX agency maintains that businesses need to think about the gravitational forces that keep customers in your brand's orbit. The force must be so strong that customers do not easily pull out of it to begin orbiting a competitor's brand. A DX -- or digital experience agency -- creates campaigns, leverages analytics, closes internal operational gaps, and utilizes human psychology to create solutions that, when combined, activate a strong, steady pull towards the brand.

Advantages: Strengthens the customer journey by enhancing the digital platform on every level. The DX agency tends to encompass learnings and capabilities inherent in the first three agency types to deliver the appropriate benefits from each.

There is increasing demand for CSOs (Chief Success Officers) and CXOs (Chief Experience Officers) who can lead DX agencies to create platforms that launch and connect digital experiences in ways that drive harmonized intrinsic value and the free flow of data. Our agency has found that there is no better way to reduce marketing risk across the entire digital ecosystem and empower innovation across the end-to-end customer journey. One of my personal favorite examples of this is the Orbit strategy from Mark Bonchek. Here are a few other good ones worth noting:

The stakes have never been higher. But if a brand makes the right choices, it can derive real, intrinsic value to their customers and beyond. People's lives will be enriched because, as Michael Porter says in this video, it's "how capitalism will provide more shared value to us as humans." Choosing the right digital agency relationship for you can help your business find sustainable, measurable value by building deeper, more memorable connections between a brand and its customers. And, as marketers -- isn't that what our business is all about?

Neil Chaudhari is founding partner and CEO at Propane Studio.

On Twitter? Follow iMedia Connection at @iMediaTweet.

DX graphic via Propane Studio. 

Entrepreneur and innovator, Neil Chaudhari has guided the direction and development of Propane Studio since its inception. During the past decade of growth and transformation, he and his expanding team have helped define what it means to be agile.

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