Despite budget clampdowns and client concerns about the economy, many of us in digital marketing remain busier than ever. New pressures on agencies to take on an increasing amount of clients' marketing risk -- and increased accountability brought on by visibility to digital marketing metrics -- have traditional agencies scrambling to do things more efficiently. But beyond living leaner with fewer people and leveraging better-than-ever optimization engines for search, display, email and websites, most agencies aren't really shifting their models for the new economy.
David Shor is senior director of digital strategy at WongDoody. Some agencies, however, have made a substantial shift -- one that has its roots in entrepreneurialism and true partnership with its clients. Though this shift can create challenges for traditional agencies that live and die by fees and media mark-up, the potential heroes in the current climate are agencies that deliver digital performance marketing (DPM) arrangements.
What is DPM?
At a high level, DPM means that clients and their agencies share revenue when earned by the clients. Whereas most agencies are still in the eyeballs business, DPM arrangements turn agencies into new sales teams for their clients. Instead of cold-calling and hiring an outbound sales staff, agencies use ad campaigns to generate leads and sales conversions. DPM teams are paid through a system that amounts to sales commissions or fees on a per-lead basis.
DPM arrangements probably aren't the best way to sell cereal and fast food (couponing is an exception), but virtually any business that operates through digital sales or handles prospective client inquiries through outside or inside sales is a candidate for DPM.
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