The Digital Agency Model is Broken

The Digital Agency Model is Broken

Digital agencies remain a crucial component for companies execution of an overall growth and marketing strategy. All major corporations rely on agencies to supplement their in-house marketing teams to varying degrees. This reliance will increase in the future as the digital landscape continues to change in both volume and complexity on an almost daily basis. A prime example of this is the entry of the big consulting firms into the digital arena. Deloitte, PwC, and KPMG have fully embraced digital as a normal extension of their current consulting practices.

Even with all this growth and momentum, the digital agency model is broken and it really is no one’s fault. It’s not an easy problem to solve.

Increasing Marketing Channel and Digital Complexity – Digital advertising spend continues to grow at double-digit clips each year.  Offline spend continues to decrease but it’s still important to the overall marketing mix.  Channel proliferation is at an all time high and Facebook, YouTube, SnapChat, etc are only spawning other new social media channels.  The digital landscape isn’t getting less fragmented, it’s growing in complexity.  Traditional marketing strategy, planning, and direct response best practices are a lost art.  The people who get it are moving on and the new people know how to execute a channel, not how all of the levers work in tandem to produce value for your organization.


Agencies Take On Too Many Clients
– Agencies love clients and they love to tell you who they work with more than they love clients. Every agency that I’ve worked for has had too many clients and this puts too much pressure on your top clients. The 80/20 rule is pretty universal. 80% of your revenue comes from 20% of your clients. This leads to either trying to continually sell more to your top clients or under-resourcing them.

Account Teams Are Spread Too Thin – This is a combination of taking on too many clients and not pricing the engagements properly. Today’s agency has a tremendous amount of overhead that is not properly priced and this ends up as a detriment to the account team and by default the client. The client, however, is not without blame because they are usually unwilling to pay for these services. This leads to an overpromise and underdeliver due to agency margin pressure.

Employees Are Promoted Too Soon – Let’s be honest. It is increasingly difficult to hire, train and retain your best people and even your mediocre people are being poached for more salary and a better title on a regular basis. This never ending cycle forces early promotion of your top talent. Unfortunately, your top talent is not ready for the increased responsibility, especially managerial responsibility. Clients, as a result, are paying for the title but not necessarily the experience.

Too Much Focus On Execution And Not Enough On Strategy – Agencies win new business on strategy and staff this new business with execution teams. This is typically due to where the client/agency relationship sits. The client day to day contact is usually too junior to worry about the higher level strategic discussions and client satisfaction then falls to more of the rudimentary tasks. Also, in most engagements, strategy isn’t broken out and paid for separately so it gets lost in the overall execution. This devalues strategy as the critical component of why you hired the agency.

The good news is there are many ways to fix the agency model and clients can certainly assist. One is to have a clear understanding of why you are hiring an agency and to fully understand how to separate strategy and execution. Another is to only pay for services that you need to improve your in-house team. It might be more beneficial to hire a consulting firm to set goals and structure your paid search campaign but to staff the execution team in-house. The firm can provide training, strategic oversight and attend meetings as needed.

You need experts.  People who get organizational strategy, marketing effectiveness and how to orchestrate the choir.  People that have these talents don’t come cheap, that’s where we can help.  We can help fill the holes in your marketing organization without having to commit full-time dollars to solve the issue.  Our team have been there and done that and are experts in marketing strategy, direct response marketing and crossing the digital void.

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