Digital Shops Exploiting General Agency Skill Gaps

by Gavin O'Malley, Feb 27, 2007, 6:00 AM

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The Web and related digital technologies are exposing major weaknesses in traditional agency skill sets, according to a study released yesterday by Forrester Research.

This trend, the study finds, is working in favor of specialist digital shops, which marketers are increasingly calling upon to fill skill gaps.

"Marketers first turned to digital specialists to build Web sites during the dot-com bubble," explained Peter Kim, Forrester Research analyst and author of the report. "Now, the specialist trend has expanded as marketers seek fresh approaches from digital shops--like Avenue A | Razorfish and Critical Mass--as well as creative independents--like Modernista!, Tugboat, and Mother--eroding the core value proposition of traditional ad firms."

Digital agencies, Kim noted, have even begun winning "traditional" agency work as in the case of Agency.com, which has created print and outdoor ads for IKEA United Kingdom, and AKQA, which now serves as Yell.com's main agency.

Beyond confirming what many have long suspected, the study illustrates a major rift between marketers and agencies with some harsh survey results: On aggregate, agencies scored a dismal Net Promoter rating of 21%, showing just how few marketers in the fourth quarter of last year would have recommended the same agency services they themselves pay for.

"Today, agencies must deliver technology--in addition to creative--expertise, and many traditional agencies struggle to adapt," Kim said. Indeed, according to the study, marketers today view ad agencies as the least competent among service providers to deliver marketing technology.

Huge gaps exist between marketer and agency perceptions of the ability to deal with changes in TV, Internet, and consumer-generated media, according to Forrester. To illustrate his point, Kim points to recent agency blunders like Wal-Mart's fake blogs (the product of a PR agency) and GM's Chevy Tahoe user-generated ads.

Forrester fielded a survey with the American Marketing Association and interviewed eight vendor and user companies, including: Avenue A | Razorfish, H&R Block, Hill Holliday, JWT, Kia Motors America, and Xerox.

Notably, despite the fact that agencies wield influence over a majority of the marketing budget, a whopping 76% of marketers do not measure the return on investment of their lead agency relationship.

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