The Digital Agency Model Is In Flux, But That Doesn’t Mean They’re Not Needed

PostbackIf a brand is able to handle its own growth hacking, user acquisition, audience creation, tracking, measurement and testing, then fair enough – there’s no real reason to work with a digital agency.

“But if you’re not Machine Zone or Supercell with a 50-person team that’s really good at that, then you do need us,” said Craig Weinberg, VP of mobile strategy at search agency 3Q Digital, speaking at TUNE’s Postback conference in Seattle on Thursday.

But most product-focused companies just don’t have the bandwidth to bring all of that stuff in house, and “it’s okay to use us for what we’re really good at so your product can shine,” he said.

And for that service, agencies get their fee.

“Like any business model, you have to manage your bottom line,” said Benjamin Bring, who joined IPG’s mobile arm Ansible as VP and mobile media director a little less than a year ago after various stints in the ad tech world at Collective, Opera Mediaworks and inMobi.

But after entering the agency world, “it became apparent pretty quickly that we operate on a pretty slim margin in some cases and that demands continue to grow,” Bring said.

Agencies gotta eat. But there’s been a lot of talk recently about how agencies are remunerated and how those margins are calculated.

Sunlight will cure all, though, said Eric Mugnier, SVP for North America at M&C Saatchi Mobile.

“If you’re transparent with your clients and share the burden of the efficiency you provide for them, there is a much clearer relationship, and their success becomes your success,” Mugnier said.

It’s about setting the tone at the beginning.

“If you’re honest about it upfront from the start, it’s easier to have those conversations,” Weinberg said. “Just no bullshit.”

But some types of clients, like Silicon Valley-esque startups, for example, are a little more understanding than others – say big brands – about what goes into defragging the fragmented ecosystem.

“We still deal with the same stuff, but those conversations are more open,” said Weinberg, who noted that 3Q Digital is starting to position itself as what he called a “system facilitator” by helping clients integrate with various tech vendors, like attribution providers or the fraud detection guys.

“We’re selling our services and turning them more into products,” he said. “We don’t know what that rabbit hole will look like, so maybe we’ll charge for it. We create tiers around them, and that clarifies some things.”

It’s a representative of how the agency model itself is shifting (or being made to shift).

“When it comes to the digital agencies, things have changed completely,” said Stephanie Emmanouel, GM of mobile marketing agency Somo, pointing to the rise of consultancies and companies like IBM, Accenture and Deloitte, which have started to sneak into the top rankings of global agencies “almost overnight.”

“Marrying product with marketing – we’re going to see far more in that area and more competition,” Emmanouel said. “[But] we like competition – it keeps us on our toes and makes us better at what we do.”

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  1. I think agencies provide great value in these buckets. These are the areas i think are much harder for a marketer to bring in house. Would love to hear what others think, am i missing anything?

    1. trafficking
    2. creative development and execution
    3. contracts negotiations for all new and existing vendors
    4. invoicing and collections
    5. set up of new campaigns on new platforms

    • Charlie

      While I agree those things are tedious and somewhat foreign to a lot of brands, this can be done by one full time employee on the brand side if you really wanted to bring things in house. Maybe 2. Most agencies choose one vendor and get that contract signed and just keep running the same campaigns against that vendor. Trafficking is simple once you’ve done it once. The only thing on that list that really requires outsourcing is creative development unless you have a creative team in house. Creative development and strategy are the only things that digital agencies can really help with at this point. Brands could easily hire 1-3 people with agency backgrounds to handle campaign execution which would eliminate all transparency issues.