Agencies See Dollars in Digital Products, But Managing Data Is a Trick

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agencyBuilding digital consumer products for clients - in contrast to marketing campaigns - is a growing discipline for agencies, but they have to get the data right. That means embracing analytics and A/B testing from the outset; tapping customer databases; and using targeted ads to spread awareness among both existing customers and prospects.

“Clients are sitting on a tremendous amount of customer data that's under leveraged,” says Todd Drake, VP technology for Organic. “There are a lot of startups in the Big Data space that are providing valuable services to users – a lot would love to have all the data some clients, especially CPGs, have. How can they bring all that detailed customer knowledge to bear to build [useful] services for clients, rather than focusing solely on conversion marketing?”

Plenty of brands are asking the question.

R/GA helped set the bar for what a data-driven digital product can be when it launched the Nike+ personal running app six years ago. That success, combined with the rise of personal health data in general (See: Strava, Fitbit), has motivated other athletic and health-oriented brands to create apps. But plenty of other sectors are also building digital products that answer users’ functional needs. Think banking apps for financial brands, POS and “showrooming” tie-ins for retail, travel utilities for hotels and airlines, and car-to-phone integrations for automakers.

“With heavily digitally enabled products, we really think that space is exploding,” said Jeff Maling, co-CEO at digital agency RoundarchIsobar. “Companies are trying to think more about building these assets or making assets they have far more digital in nature.”

RoundarchIsobar recently signed a five-year, $50 million relationship with HealthWays to integrate a digital product with the client’s weight loss program based on john Hopkins protocol. Previously it built a fitness tracking app for Adidas, part of a system called MiCoach.

To inform the products, RoundarchIsobar uses a panel of “thousands” to analyze traditional and digital media consumption. For multivariate testing it works with vendors including Interwoven’s Optimost.

“Particularly on the digital product spectrum, we’re going into far more ongoing analytics and adjustment as we go along. We’re increasingly using things like multivariate testing, A/B testing,” Jeff Maling. “Not like you think of them in the ad world, with two versions, but really tweaking.”

What’s the time investment for intensive multivariate tests? “For the time it takes, it’s super high value. We have five or six experts at multivariate testing who work with our teams to put the plans in place,” Maling said.

For San Diego-based Digitaria, analytics and data play an integral part in the JWT network agency’s digital product innovation process.

In a previous interview with AdExchanger, Digitaria CEO Dan Khabie said, “With connected products we have the opportunity to design measurement strategies that speak not only to awareness and engagement, but usability too… Awareness metrics look at how many are using the product and how they found it, while engagement metrics start to get at a sense of affinity and loyalty towards the product. Usability metrics provide data around task-based interactions, which is a unique emphasis of many digital products. Our expectation that digital products, that are connected, will be iteratively optimized, necessitates the inclusion of analytics from the earliest creative phases.”

There are other key considerations, not least of which is getting buy-in from clients for the long, iterative development cycles and years of maintenance such projects entail - not to mention the cost.

“It's more like a startup than a traditional marketing initiative, and most clients are still wrapping their heads, budgets, and organizations around it,” said Organic’s Drake. “There is still a large gap between what it actually takes to develop a brand-worth mobile app, say, and what clients *think* an app costs. Too many are still thinking in terms of campaigns. Building a product takes commitment and investment to update features, to add new ones, to provide support, to do PR and media around the product.  It's a very different, deeper beast than a messaging campaign or a new commerce rebranding.”

Even if the client commitment is there, changes to the IT and marketing organization can be disruptive. Drake again: “You need product managers on the client side who are similarly long-lived, and are managing all the pieces of the product. This is important, because you're going to measure, adjust, and continually improve the product so it continually adds more value. And if people aren't finding it valuable, you need to pivot or add more valuable features.”

And he says project management function take on a bigger proportions. “These days you're usually integrating other services or APIs into your product… You may have to work with other folks you're not used to, like physical design vendors.”

A tall order, yes, but some partnerships do last. RoundarchIsobar has a relationship with the U.S. Air Force to track logistics systems that goes back 10 years.  “Most of our clients are coming around to the fact that digital products are out of date as soon as you stop working on them,” said Maling.

By Zach Rodgers

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