5 reasons digital agencies will fail

Oops. I was commenting on reason 1, not reason 2.

I come from the client side and your reason no. 2 is interesting. I think that creative is highly important and often under-appreciated by the client side (precisely because so many client-siders have no real flair or appreciation for creativity). But revenue (and budget, and time, and so on) is really the bottom line (well, in accounting terms, it's the top line, but I digress). I think agencies and creatives need to re-set the bar for digital creative. The internet is like a telephone pole where hundreds of bands have stapled flyers for their shows - this pole is completely covered in overlapping, multi-colored, tattered pieces of paper (as well as lots of old staples and bubble gum). Do you really need to print your flyer in full color on fancy paper stock? The answer is no. Looking just at display advertising (not social media, viral stuff, etc), the expected ROI on a banner ad or rich media ad is so low (and getting lower all the time) that it simply doesn't make sense to invest much in the creative. This doesn't mean that clients should cease running display campaigns, or that agencies should stop focusing on creative, but the sheer saturation of digital advertising dictates that, economically, the resources devoted to each ad or video or micro-site, etc etc should be minimized to meet the expected (low) impact of that ad. Digital agencies that continue to strive for creative excellence where each piece is a polished gem are simply going to alienate their clients, who are probably much more realistic about ROI. The clients will just find a cheaper alternative to reduce the "I" part of ROI.

Interesting.

This article misses one key point- Traditional agenices do not have the technological and quantitative skill set required to succeed in the digital space. The truly innovative digital agencies are able to conduct real-time multivariate tests on their campaigns and optimize each element in flight. They maintain massive databases capable of crunching performance data, and utilize that information to tweak creative, media placements, demo targeting, behavioral targeting, landing page layout etc. on an hourly basis. I have yet to see a tradtional agency that is this agile.

You've nailed the issue. I am constantly meeting with prospective clients who want the newest latest thing without thinking about what they are trying to accomplish. The solution is usually a mix of tools and techniques that drive their customers through funnel into a purchasing decision. This might be a new mix of tools compared to the past, but it is the same strategic thinking and execution that sets everything up.

First thank you all for your comments, in support of and challenging my perspective. Just a few things to address in response:

- I have used the term "digital agency" in the most generic sense. There are some that would say a digital agency has to be "pure play" digital. Others might argue it can be an off-shoot of a traditional shop. So I'll state my further opinion that my comments apply to any agency/practice that is INVOLVED in digital marketing.

- Regarding measurement behind the curtain (which has generated some good discussion as I had hoped) my points, simply put, are we have to involve more consumers and we have to focus on the positive. That could range from the IAB establishing a consumer publishers forum, to agencies doing primary research to test consumer reaction to statements that paint a more positive picture of the benefits of tracking and relevant ad messaging.

Karen

This article is not true. Digital agencies offer brands and marketers a level of expertise that off line agencies don't have in a world where the Internet is evolving too rapidly for most marketers to keep pace. Good agencies don't hide behind technology they in fact embrace technology but marketers often don't want to know they just want data that is relevant to making good decisions. Digital agencies need to be strategic and tactical brand partners not implementation arms and they need to provide agencies with insights not data.

Hi Karen,

Excellent points! As an online publisher who deals with a lot of advertising agencies (including AMP), I can share with you that there is a very wide range of philosophies. I've seen the bean counters ("if I can't count it, nothing else matters"), those who control the client (and vice versa), and those who have THEIR way of approaching an online advertising solution ("we only do banners").

But the best agencies are those who listen to the client, approach the online publications with an open mind, and come up with a solution that takes advantage of the strengths of the publication and uses them to satisfy their clients' needs. Sometimes, creative can be repurposed, and sometimes original creative must be developed. Sometimes a different type of metrics may need to be studied (after all, "not all click-throughs are created equal").

Because the times are changing very rapidly, flexibility and agility are two key buzzwords that must permeate through all levels of a successful agency. And yes, as you put it, that human element is so important (although often forgotten or misplaced). There is a team (agency, client, media and consumers), and whenever there is a team, teamwork is imperative,

How do I know that what you are saying works? Because from my perspective, I can see the different approaches, and I use our own metrics to see which approaches work the best.

Your comments hit the nail on the head., I hope that I was able to reinforce them from a different perspective.-- that of the publisher.

Peter

Your article address issues correctly in many areas. Good stuff.
You mention one area where the focus is on creative for individual fame. That's human nature. This will always be with us. A few pats on the back from your peers is great to receive and place on your office wall. A far better achievement is a great idea that does all the above and moves the needle in the marketplace. Sadly this isn't always the case.

Hiding the measurements is difficult to do and a questionable practice. Real-time measurable results are exciting to see and hard to hide behind a curtain. The continued shift in ad budgets to the digital space is a hard fact that can't be denied either.

Clients want true, immediate accountability for their marketing dollars. They should also get that insightful info without having to request it.

Doug Cleek
Magnitude 9.6

I agree with a lot of your points, but I think it might be worth clarifying the type of business you are putting into the "digital agencies" bucket for the purpose of this article. To me, it seems more like you are describing traditional ad agencies, who might be dabbling in the digital/interactive space. I think many true digital and interactive agencies are doing a lot of these things very well.

You are so right about digital agencies. Too many ad-based people who think they can just transfer traditional advertising tactics to social networks are creating cheesy looking web commercials, not web videos that engage the viewer. It's all about push-advertising, not pull-conversation building.

This is why social media tools do not belong in the hands of the ad agency, but in the hands of professional communicators, i.e., the PR department, which is about building dialogue with various constituencies.

Steve "@PodcastSteve" Lubetkin
Managing Partner, Professional Podcasts LLC
steve@professionalpodcasts.com
@PodcastSteve on Twitter
www.professionalpodcasts.com