Just a few years ago, brands needed to be educated around the messaging and measurement technologies available in the digital age. That imperative has since shifted as marketing departments try to figure out how they take that technology and maximize results.
As a side effect, the line between data and marketing services providers like Experian Marketing Services and Epsilon and digital agencies has begun to blur. Consultancies also are pushing into the marketing services arena.
“Clearly there are many companies that have a lot of expertise in data, customer engagement and outsourced professional services tied to their proprietary platforms,” said Shannon Denton, agency Razorfish’s CEO for North America. “As the digital spend continues to grow, I am not surprised they are pushing more into the digital agency world – I have been expecting it.”
Traditionally, marketing services providers like Experian and Epsilon help companies construct strategies and set goals – building out systems that determine, for instance, how media is purchased, how data is managed and how all of that information is siphoned to and activated through communication channels.
The definition of an agency is more nebulous, especially given the obsolescence of the "Mad Men" era. Generally speaking, the agency works within the always-on marketing flow, making creative or strategic marketing or advertising decisions as needs arise. An agency is the executor of the marketing or advertising campaign and often, especially if it functions as the agency of record (AOR), gets a portion of the client’s marketing budget.
In recent years, the traditional divide between these two categories has dissolved. Publicly, marketing services providers primarily supplement agencies.
“Epsilon brings a strong data background, capabilities of analytics and an ability to show a client how to think about the results that they will achieve with these cross‑channel platforms or cross‑channel programs,” said MK Marsden, the company’s SVP of its client solutions center. “These are things that the agencies would add to their mix as well. The creative mix, the buying decisions, all of those types of things are the ones that we work closely with agencies today.”
Experian similarly describes itself as an “omnichannel audience provider” that helps clients combine and use first-, second- and third-party data.
“We don’t call ourselves an agency,” said Rick Erwin, who leads Experian’s targeting business unit. “If (clients) needed an agency, they would have hired an agency. You have to recognize this really important fact: Many data-driven marketers don’t go to agencies. They go to cross-channel marketing providers like Experian.”
Erwin insisted this doesn’t create competition between marketing services providers and digital agencies. Epsilon’s Marsden also said, “We’re not competitive at all there.”
Still, it’s impossible to overlook the growing overlap in services. Experian has a media-buying division, for instance. And Epsilon, with its acquisitions of Aspen Marketing Services and Hyper Marketing Inc (HMI), has an in-house agency, which is growing.
In its Q4 2013, Epsilon’s parent Alliance Data reported its agency business grew 52%, due largely to the HMI acquisition. Without HMI, growth was “a solid 20% driven by strength in the auto and telecom verticals.”
Moreover, at the Adobe Digital Marketing Summit in March, brochures at Epsilon’s booth (it was a platinum sponsor) explicitly described the company as an “agency.”
Representatives at various digital agencies, speaking on background, said they believe marketing services providers are attempting to expand into areas that are traditionally the purview of digital agencies, though none feel particularly threatened. As agency sources pointed out, neither Epsilon nor Experian ever show up in RFPs for digital AORs.
“For Razorfish, whose focus in the marketplace has long been about brand and business transformation, we see these companies as niche competitors,” Denton said. “Meaning we will compete with them occasionally in the data-driven marketing space, including customer engagement programs and CRM.”
Of course, expansion goes both ways – CRM agency Merkle, for instance, guns after AOR business, but it also has a strong marketing services component, a unit that is competitive with Epsilon and Experian.
And IBM, often thought of as a technology and consulting giant, has fielded for nearly two decades IBM Interactive, the largest digital agency in the world, according to Ad Age.
“If (clients) have an agency of record for creative, great, we’ll work with them in areas we can add value,” said Paul Papas, IBM’s global leader of Interactive Experience, in a recent interview with AdExchanger. “There are other times they want us to do the design work. When you ask what makes us different in this environment of agencies and consultancies, if you look at that cluster of services organizations, agencies, systems integrators – none of them have our software portfolio. None of the software companies have the services offering.”
It’s fair to wonder the extent to which determining who is and isn’t an “agency” is simply an exercise in nomenclature. But definitions, especially in a developing industry, are important since they provide a convenient shorthand through which people can better understand who offers what services and capabilities.
It’s telling, for instance, that when Ad Age kept extolling Acxiom as its “Agency of the Year,” CEO Scott Howe told AdExchanger, “It’s almost embarrassing because it sends a message to a bunch of partners like WPP and Publicis. They think we might be a competitor and we’re not. We need to make a transition to become SaaS – and a DaaS company, if that’s a word.”
(Despite this stated reluctance to embrace the agency label, Acxiom had fired off press releases touting its Ad Age positioning, though it has since removed them from the company website, perhaps cementing the transition to which Howe alluded.)
No matter what label a company chooses to embrace, marketing services and digital agency duties continue to converge. Publicly, both digital agencies and marketing services providers fall back on a common refrain: “We partner to give our clients the best possible services.”
No doubt this is true. But marketing services providers will continue to build out digital agency-like services and digital agencies will continue to build out marketing services. This is because today’s marketing and advertising challenges center around a single common, complicated problem: aggregating and activating consumer data across multiple channels.
And the value propositions from digital agencies and marketing services providers are sounding more and more similar. Who said this?:
“Today we offer our advertiser clients omniactivation, which means any data set of our own and any data set we already have, we bring to bear to accomplish their marketing goal across all channels in which [a client is] advertising. We do that today at any level that client wants. They don’t have to hire us to manage their entire marketing budget. They could hire us to just manage their display campaigns. They could hire us to manage customer email communications. They are more often than not asking us to help them across channels and to unify those channels.”
That’s Experian’s Erwin, but it wouldn’t be unusual to hear that from a digital agency either.
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