Why digital shops need to be proactive

SoDA's latest report reveals what clients value most in their digital agency.
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Expertise in emerging trends is considered the most valuable asset a digital agency brings to the table, according to a new global report from SoDA, an association made up of digital shops.

The study – conducted in partnership with Econsultancy – points to the increasing role digital agencies are playing in clients’ marketing mix, why they’re valued and how much. Along with being on top of trends, creativity and costumer-focused marketing are the key things clients want from their partners, according to the report (based on a survey of 680 respondents from both clients and digital agencies/consultancies and production companies, including in Canada).

But about one-third of these shops are taking what’s deemed to be a “passive approach,” only offering clients education around emerging trends when they ask. The research suggests agencies should “be more proactive in adding value when it comes to providing industry intelligence and know-how,” according to a release.

When it came to whether clients would recommend their agency – the average score was 4.3 out of 10 (independent shops ranked at 5.4). “This could be because agencies think they are most likely to lose an account due to ‘management changes,’” the release notes, “when according to clients, their changing needs (and arguably the agency’s inability to keep up with those needs) is the main factor for switching.” Both client and agency respondents noted “cost overruns” as the second most popular reason why a relationship ended, while on the agency side, it tied with “needs outgrew agency’s ability” (clients’ top response).  Other popular rationale from clients included “unhappy with strategy,” “new management” (agencies’ top response) and “unhappy with project management.”

Clients want to be part of the conversation to dig up solutions, the study suggests, and “one-way service” just wont’t cut it. “Those agencies who have the leadership commitment and businesses processes in place to monitor customer satisfaction and to act on that client feedback are likely to win in the medium-to-long term.”

Moreover, data and analytics were deemed areas of opportunity for agencies, whose respondents scored themselves on average of just under six of 10 when asked about their ability to”Identify actionable insights from increasing volumes of data” and “Use a variety of data inputs to drive deep levels of personalization.”

However, nearly seven out of 10 agency respondents believe the relationship between clients and agencies is getting better (with more respondents from independent shops agreeing than those from holding companies), while the study suggests agencies seem to understand what clients value (more so than in 2014). Moreover, about three-quarters of digital agencies believe their kind of shops “are becoming the lead agency in the overall marketing mix,” the release notes. But more clients are handling digital efforts internally, 27%, about double from the prior year’s stats.

About one in five marketers have increased both traditional and digital spend, while one-quarter shaved their traditional budget to ramp up digital efforts; and less than one in 10 cut their digital spend. However, the report also points to a budget increase in digital spend beyond the realm of campaigns, for things such as platforms and applications.

One the agency side, those shops that invest in an innovation lab or incubator are reaping rewards. Twenty percent of shops that had such a tool for at least three years directly benefited from significant revenue increases, while 10% of shops with an innovation lab or incubator for a year or less also saw such gains.

“Clients in 2015 feel tremendous pressure to understand and leverage emerging technology trends in order to innovate their operations as well as the products and services they offer to their customers,” Chris Buettner, executive director, SoDA and The SoDA Report managing editor, said in the release.

“Agencies and production companies – particularly those that invested in early innovation labs and product incubators – are reaping the benefit of clients’ acute need for emerging tech expertise.”

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