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Why Digital Agencies Are Poised to Take Over the Ad Market

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For the last several years, ad agencies and holding companies have boldly and stridently bought digital marketing firms to add to their coffers.

In most cases, the acquired talent is subsequently sequestered in one area of the office---if not in a completely separate location---to do their “magic” while the rest of the agency goes about business as usual. In the background, the traditional creative team's concepts play in digital and vice versa while they kick execution to the person best suited to punch the right sequence of buttons on the keyboard.

While the acquisitions have reduced the total competitive landscape, they have increasingly fragmented the execution of great ideas and stymied information flow. Thereby, the inability of ad shops to integrate the business approach of digital firms into their culture has provided even greater opportunities for the tides to turn.

Soon, I venture that we’ll see a different approach: Digital agencies taking on integrated duties. It will happen with little fanfare or sizzle; it will simply be the case.

In fact, the assimilation has already begun. Catalogs now beget an iPad app version, which, in turn, informs improvements to those catalogs. Then a mobile campaign begets a direct mail piece to supplement the reach of that mobile campaign. And, yes, digital agencies are handling the online and offline components of both these initiatives simply because it is easier that way.

What About the Strategy?


Traditional counterparts and even marketers sometimes forget that digital agencies that handle social media duties for their clients talk to their clients’ customers every single day. So, it is no wonder they “get it” more quickly than those agencies that continue to await research from their planners. The digital agencies know the voices of the customers, and they feel their pain in some cases. Beyond that, those digital agencies have more behavioral data (in real time) than most agencies care to go through. Which subject lines work better than others? What do consumers search for and are not finding? Each bit of data gets them deeper into the minds of the customer. The closer they are to the customer, the better and more relevant the ideas that motivate them.

Despite the early indicators, I’m certain many “Mad Men” will scoff at this prediction, stating that the need for offline marketing has never been greater and the notions of their demise is very much premature.



I would go one step further: Offline advertising and marketing initiatives will never go away. They are as vital as they have ever been. The dilemma is not in the strategy but rather in their execution, measurement, feedback, and continuous improvement cycle. The overwhelming majority of advertising firms remain mired in their insistence that many offline tactics (though necessary) cannot be directly tracked for their direct benefits. Rather, it’s the overall impact to brand awareness and sales that must be looked at to know if a more traditional marketing campaign is working---and not whether a company can pinpoint if a certain print or broadcast ad “tipped the scales in their favor.”

In contrast, the discipline and methodologies that digital agencies provide their clients determine what programs are generating more interest and how that interest is converting to conversations and engagement as well as new and---as important---repeat customers. To digital markers, the term “interactive” means more than a new social media follower or improved Google search ranking. It means understanding and responding to what the customer, partner, investor, and other important audience member wants wherever they are and whenever they desire. That commitment is driven by a fierce passion to comprehend how to exceed a key constituent’s expectations on a very personal level.

A digital agency's DNA is one that is unique but very much sought after by companies wanting to profit from its marketing initiatives. It means more than knowing the code behind the latest mobile app or the ever-evolving Facebook campaign rules; it means also understanding fundamental edicts.

Traits of the Digital Marketer


The three most unique characteristics of a digital marketer’s mindset in comparison to those found in traditional ad shops include...

Being driven by results. Measurability and analytics come with the digital territory, but somehow the more “traditional” touch points escape without much questioning by the established ad firms. In contrast, the leading digital agencies believe every piece of communication---no matter the media---has to deliver real results with real successes.

Being a relatively new service at the time, such firms had to prove that what they were doing was actually working. Now these same digital agencies are poised to help organizations realize that their entire communications program can be held to the same measurable standards. Having one firm manage it all is also the only way to see how each execution is truly affecting the other.

Knowing their audiences. Digital marketing firms make their strategic decisions based on insightful behavioral, emotional, and cultural research. The data they capture tells them what motivates customers, so they can create meaningful, measurable solutions based on intelligent and real customer actions.

It’s because digital agencies know their audiences so well that they can strategically execute communications that engage, motivate, move, and inspire. They act consistently. And they can effectively produce the smart things we envision because those things are based on such a detailed portrait of our consumer.

Being interaction-oriented. Digital firms believe everything---online and offline---is intended to be interactive. Their belief is that all communications must engage and influence behavior across multiple touch points. The success of any marketing campaign lies in carrying out continued conversations wherever our consumers live, work, and play.

What’s more, digital agencies don’t let the media dictate the message or the other way around. Instead, they uncover their clients' business problems and give them what is needed to solve it---be it a website, a print ad, or a radio spot. Connecting with audiences across multiple touch points is what allows organizations to strengthen the conversations with them over time.

Now that digital marketing has become mainstream, firms need to open up the “black box” of offline marketing initiatives and make them as accountable as their online counterparts for their contribution to acquiring, converting, retaining and engaging audiences. I look forward to the day when the marketing industry no longer accepts the “you just know it’s working” as an appropriate measuring stick. We’ll be a more effective business service as a result.





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Reid Carr is the president and strategy director for Red Door Interactive (www.reddoor.biz). He can be reached at rcarr@reddoor.biz.

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Comments

  • by Jeff Wilson Thu Nov 29, 2012 via blog

    The decline or evolution of the traditional ad agency has been happening since the late 90's when clients started asking for return on investment, not just flashy creative. Their response was partly the acquisition of digital firms which provide necessary analytics clients could smell, taste and touch to satisfy accountability for the spend on the agency.

    But digital agencies were always the red-headed step child of the marketing world in the eyes of Ad execs thus ignored and separated for the most part.

    Its interesting to note that as digital agencies grow in power and share of client spend, you see them acquiring traditional agencies to bolster their overall value to the client.

    In the end, you will always need what Ad agencies do and you will always need what digital agencies do. They are complimentary opposites.

    Great post and thanks for sharing

  • by Merri Grace McLeroy Thu Nov 29, 2012 via blog

    Hi Reid,

    We are still at the digital frontier, and it's an exciting time for marketing pioneers. What you are attributing to digital marketing agencies though, is a thorough description and optimal execution of direct marketing. It isn't about a new Integrated Marketing Communications (IMC) strategy, rather it's about an evolving platform for executing a direct marketing strategy. IMC has been the leading trend in marketing for more than a decade. What digital brings to the table is a new, amazingly broad-reaching channel for more effective and timely direct communication with one's customers and mind-boggling metrics. The digital frontier is moving rapidly. In my opinion, as a creative type, one will always find the gold in the metrics, and, at the moment, digital agencies have the better tools.

  • by Mike Spanjar Thu Nov 29, 2012 via blog

    Many good points throughout. I do have to present an opposing view regarding the cut-and-dry distinction between traditional and digital agencies. Sure, some traditional agencies have made digital a "thing we do." But many others recognized the birth of digital marketing years ago and integrated it into their business model. Now, our "print group" learns digital trends and we have our digital experts working in concert with them. I'll go so far as to say it's become irresponsible to think of marketing as either traditional or digital. These days, we look at the whole picture – how we can integrate all appropriate methods of communicating a message. It's no different than what we've done since the beginning.

  • by Dale B Sat Dec 1, 2012 via blog

    Fantastic article, it was enjoyed by everyone in our office. The points about a digital agencies use of data is very true. In fact, it is just assumed that strategies and campaigns are based on data. This goes back to our orgins of digital marketers using SEO and PPC data to evaluate engagement and results. This has carried over into the natural trackability of mobile web, mobile apps, social metrics such as mentions and trending #'s.

    However, from the perspective of a digital agency, today's consumer has the power and expectations to demand deeper engagement with brands and content. Whether online or offline. In fact, from the point of view of a digital agency, every offline or "traditional" marketing asset can and should allow for digital engagement. QR codes, NFC tags and developing Augmented Reality offer the ability to make print media a rich and interactive experience for consumers. After all, consumers have the tools (mobile) to make that possible within reach during every waking hour. For many, these tools stay by their side even while they sleep. It seems illogical not to take that into consideration when creating client strategies.

    If there is one distinction, for myself, between "traditional" and digital agencies, it would be that we have the responsibility to understand the changing landscape of marketing, technology and the impact it has on consumers and brands. A good example of that is the growing impact of tablets. Because of tablets, smart phones and desktop, consumers are interacting differently to different content based on time of day and by device being used. These nuances are just not factors that "traditional" marketing needed to take into consideration. But this is the new reality. Even to the degree that traditional channels like TV are finding viewer bases begin eroded by growing video consumption during off-peak hours using mobile devices.

  • by Tom Martin Mon Dec 3, 2012 via blog

    An interesting point and full of good thoughts but there is one glaring issue:

    This is all opinion supported not once by reference to fact.

    A recent research study OF MARKETERS would seem to suggest that digital agencies will NOT be taking over the world any time soon (http://bit.ly/YHArEV).

    Your primary argument is that Digital Agencies are DATA DRIVEN yet you use no data to make your case? Hmmmmm

    @TomMartin

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