By now you have probably read about the new Forrester report, "Help Wanted: 21st Century Agency," that sheds light on the widening capabilities gap between traditional ad agencies and the smaller, specialized digital shops when it comes to new media marketing. If you haven't yet seen it, the report placed the spotlight on the demand from marketers expecting their agencies to deliver expertise in emerging areas, such as search engine marketing and interactive advertising, and marketers' growing discontent with their agencies. The report identified technology being at the heart of the skill gap that appears to be growing and leading to marketers' dissatisfaction with their agencies of record.
Traditional ad agencies' relevance and growth is at stake if they don't adapt to the changing needs of their clients and the shift of marketing dollars to new channels. What are commonly called "below-the-line" marketing strategies are becoming much more mainstream in reaching the desired audiences with right message through the right medium. It sounds obvious, but the Forrester report uncovers marketers' doubt that Madison Avenue is adapting to the changing landscape.
NOTE: If the Forrester report doesn't convince you, then also consider a recent study by Evalueserve for Sapient that found only 10% of the more than 100 CMOs and senior marketers surveyed in the U.K and U.S. "seek to partner with large advertising agencies for their online marketing."
Last summer, I penned a column for Search Insider that dealt with this very issue, and in particular how it relates to the SEM space. I talked about the requisite for traditional agencies to expand their SEM offerings and the demand from clients to integrate it into their overall campaigns.
Never was this more apparent than this year's Super Bowl ads. Very few big brand advertisers used their million-dollar plus investments to drive consumers online to continue interacting with their brands and maximize spend. According to various media reports, Pizza Hut and Salesgenie.com did a solid job providing a call to action to viewers to head online to continue the dialogue. In fact, in a recent Advertising Age article, Reprise Media's Peter Hershberg noted that Pizza Hut smartly used paid search to send people to a Pizza Hut-branded YouTube channel rather than its own corporate site.
It was disheartening for me, if not selfishly as an SEM executive, knowing that there was so much that other big advertisers could have done to extend the reach of those ads beyond the 30-second or minute TV spot. Also in the same Advertising Age article, Anne Frisbie, vice president of category at Yahoo Search Marketing, commented that she felt Super Bowl marketers could have done a better job bidding on search terms and could have milked more out of the TV ad buys if they'd coordinated search campaigns better.
As I have written before, and many of you know, these specialized digital media capabilities don't appear overnight, nor are they easily grown with a few new hires. It's a trial-and-error process that takes a lot of work and experience. It also takes lots of data (and I'm talking terabytes) and sophisticated, scalable technology that can handle all of the different "what-if"/tradeoff scenarios, particularly if your campaign consists of thousands and thousands of keywords. Unlike the typical ad buy for impressions, search is a dynamic marketplace with many factors (prices, competitors, variations of keywords, time of day/day of week/month of year, seasonality, copy, usability, etc.).
The Forrester study referenced the notion of "media-agnostic thinking." The report's author, Peter Kim, was quoted in the media saying that it is crucial for big agencies to be able to counsel their clients on the hottest and most effective marketing channels. But we all know you simply can't be all things to all people. In fact, clients expect and want best-in-breed services that can come only from multiple agencies. In that same Evalueserve survey I referenced above, 68 percent of those surveyed said they prefer to work with multiple agencies because of the benefits of specialization.
So the most effective way for big agencies to gain expertise, as I suggested previously, is through strategic partnerships with specialized shops. Building new capabilities -- in particular, technology -- from scratch takes years and tons of money. With the right partners, the traditional agency can seize more of their clients' spend and more importantly, retain/grow business by being able to offer services in the emerging channels through strategic partnerships.
I believe the best solution for agencies is co-opetition where everyone wins -- especially clients, who get what they need/want from their agency of record, i.e. best-in-breed services.