SapientNitro, R/GA, frog Lead In Innovation, Forrester Reports

CMOs increasingly prefer to partner with agencies with expertise in data, technology support, ideas, experience design, and change management. Agencies, in turn, are redefining their core competencies to better align with three areas of marketers’ demand: innovation around products and business models, integration of channels and customer data, and implementation of enabling technology systems, according to Forrester Research.

The firm recently released Forrester Wave: Innovation Agencies, Q4 2014 to examine the state of the innovation agency market and compare the core competencies of 10 agencies — AKQA, Critical Mass, frog, Huge, Isobar, Mutual Mobile, Razorfish, R/ GA, SapientNitro and T3.

Three agencies, SapientNitro, R/GA and frog, stand apart from their competitors through their abilities to sell packaged innovation offerings, which include business-model-level strategy consulting, educational modules to help clients foster innovation practices, and design and development services that build customer-obsessed products, says the report.

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SapientNitro is notable for its ability to combine digital and physical experiences to enable commerce. R/GA’s business transformation practice helps its clients create ecosystems of value for their customers. And frog's frogLabs, a concept testing and prototyping platform enables the agency to accelerate technology innovation.

Although Huge, T3, Razorfish, Isobar, AKQA and Critical Mass have less mature business consulting services, marketer education offerings and technology accelerators than the three leading agencies, Forrester says all are good at building digital experiences and creating digital marketing campaigns.

To that end, AKQA enabled Delta Air Lines to provide better customer service by building mobile and tablet applications that met customers’ needs throughout the travel journey. Razorfish created Audi City, a virtual showroom designed for urban areas, where customers were able to shop for cars via 3D visualization technology.

As the youngest agency in the evaluation, Mutual Mobile lags behind its competitors with its lack of formalized service offerings and absence of experience in building personalized omni-channel experiences. Still, Forrester believes one of its strengths is its focus on emerging technology and works mainly with clients on discrete digital projects. Nonetheless, the agency doesn’t have the size or scale to tackle large-scale digital transformation initiatives, says Forrester.

Ultimately, innovation drives loyalty: 74% of client references list customer experience as the most important competency for an innovation agency, reports Forrester. Although the fundamentals to creating digital experiences — that work across multiplatforms are similar across all agencies, there are key differences in agencies’ approach to strategy.

For example, Isobar’s strategy consulting practice uses a five-step process to guide clients from opportunity identification through product commercialization. AKQA packages its strategy experience into educational offerings that provide clients with frameworks to approach topics like digital organization design.

Forrester's first annual report evaluated the strengths and weaknesses of top innovation agencies that build digital products, services and experiences rather than those that lead creative strategy and run advertising campaigns. In order to be included in the report, agencies had to have at least half of their clients spending $1.5 million or more with them annually. Therefore, this excluded innovation consultancies, like Prophet, and smaller agencies, like Code and Theory.

Then, agencies had to have at least 25% of their annual revenues coming from customer experience, digital product development and marketing innovation work. This eliminated digital agencies, like Possible and Firstborn, that don’t prioritize the innovation competencies that are the focus of this study.

In the evaluation, Forrester also considered the number of active and new clients, as well as client retention rate and the number of non-U.S. offices to assess agencies’ global footprint. Future potential was also a factor. Forrester compared each agency’s future vision, development plan and funding strategy for technology investment.

Finally, Forrester evaluated each agency’s marketer innovation support that represents business strategy services, education and training, and support of innovation; overall client satisfaction; reporting flexibility; and client feedback on account management.

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