There is an undeniable trend towards building in-house teams and away from using agency services. This trend has led to fierce debate and introspection in agency land, not to mention a fair amount of self-pity. But I would argue that if handled appropriately, this is a positive development that should be embraced and that reinforces the value of the digital strategist.
The trend to building in-house digital teams is first and foremost an acknowledgment that digital marketing is increasingly critical to the organization. This is the single most important reason to embrace this movement. Digital marketing is no longer a peripheral activity championed by the IT group. It is viewed as a mission-critical revenue-centre and as such is increasingly well funded. It is the most obvious first step for an organization to take on the path to becoming a digital organization. It is also partly a reaction to a lack of transparency among many agencies on the fees they charge, the commissions they pocket and the value they deliver. This development has led to a highly predictable reaction from many agencies who are now seeing their revenue streams directly threatened. But frankly there should be no sympathy for agencies that find themselves in this position. They did not invest in pivoting and innovating, or in finding new ways to deliver value. Instead, they stuck to a tried and tested legacy model in a disruptive age, focusing instead on finding ways to be more efficient and turning their deliverable into a commodity. This is not a long-term strategy and is increasingly leaving them on the outside looking in.
So why should you embrace a trend that looks like an existential threat if you work in an agency? I believe that this is an extremely positive development that can only spell opportunity for digital strategists in the long-term for three important reasons.
First, the acknowledgment of the importance of digital marketing means that it is more central to the organization, it is treated more seriously and it is funded in the way it should be. That funding provides opportunity to engage in ways that perhaps were previously unavailable to us.
Second, with greater funding comes greater expectations. This increase in expectations means a need to deliver stronger business results, typical in a shorter timeframe.
Third, in order to deliver against these expectations, there is a greater need to integrate every consumer touchpoint on the path to purchase. Display, search, social, content, user experience. All these need to work seamlessly together. That need for integration, performance and efficiency leads inevitably to the need for digital strategy, and that is where we come in.
Recognize that this is a cyclical process. I like to think of this in terms of digital generations. A first generation digital client is one that is just getting started in digital marketing. This is typically led by the IT team or a traditional marketer with support from an outside agency. Budgets are modest, expectations are low and there is scepticism in the organization as to the impact of the channel on the business. But this reaches a tipping point, usually with the introduction of new talent in the company. At this tipping point the business transitions into a second generation digital client.
The second generation client now recognizes the importance of digital marketing and hires an in-house team to manage it. The web presence is upgraded and investments are made in analytics infrastructure, marketing automation platforms and technology. Performance is considerably improved as projects are executed faster, and there is a general air of digital sophistication to the organization. This is the generation we currently find ourselves in.
But then something happens. It is recognized that the previous performance improvements were realized off a small base, and we start hitting a point of diminishing returns. Now any improvements are incremental at best as competition heats up. Increasing complexity in the ad-tech space and higher expectations from consumers make digital marketing much more difficult to plan, execute and ultimately deliver against elevated expectations. Gaps open up in user experience, in capabilities, and ultimately in performance.
And the first call should be to the digital strategist. This is where we show our value, bringing not only integrated thinking, but also a perspective that is broadened by working on a wide range of client accounts in a variety of competitive industries; repurposing and applying ideas and frameworks for performance from one scenario to the next, and delivering value that could not be generated in-house.
So embrace the trend to in-house execution, focus on delivering value by being strategic, and leverage that knowledge to become a valued adviser and insider. Don’t be left on the outside looking in.
Next week on octopus, we will continue to explore the role of the digital strategist. Please be sure to comment below. I’d love to hear from you. Please subscribe for alerts about new episodes and content. Thank you for listening to octopus. I’m Nasser Sahlool.