Are Digital Agencies Chasing Profits Over Performance?

Advertising clients come and go much more than they probably should in the digital marketing space. While individual marketing providers and agencies are finding relief from churn with better customer service, transparent practices and skillful execution, many may be putting too much attention on simply growing client ad spend.

The Search Engine Marketing Professional Organization (SEMPO) recently surveyed almost 500 client-side marketers/advertisers and agencies/consultants and some of the findings were interesting. According to the study, agencies said that when managing SEO, paid search, social media, display and email marketing, “getting budget” was the top challenge for each of these media outlets.

In other words, the hardest thing for agencies is getting more spend from advertisers for paid online media. Meanwhile, studies and projections show that digital spend is continuing to grow with Facebook and Google accounting for most of that spend. Some brands have even migrated to primarily digital or digital-only strategies.

While advertisers fully embrace digital and appear to be expanding spending, agencies are paradoxically struggling to get budget. Why is this the case? This could be due to a few things:

  • Advertisers are embracing digital, but aren’t completely sold on these various digital outlets to encourage more spend.
  • Agencies aren’t effectively proving value and performance.
  • Expectations on both sides are misaligned with the reality. Advertisers have lofty expectations of digital efforts and/or agencies expect advertisers to migrate more budget to digital.

Additionally, the challenge of “getting budget” may be a result of in-fighting. Many agencies have siloed departments that focus on a particular element of a media strategy, and “getting budget” could be in reference to interdepartmental battles for spend.

There are a number of causes and conditions impacting the perceptions of agencies, but it is interesting to see how agencies singularly struggle most with “getting budget.” However, client-side marketers see “integration” and “content creation” for example, as bigger challenges in some cases.

“Measuring ROI” was another commonly cited challenge for both agencies and brand marketers, but this is nothing new. The complexity of the path to purchase will continue to make proving ROI a challenge, but in many ways, it is the aggregate of digital efforts that drives results, not necessarily one media over the other.

“Getting budget” isn’t a strategy. Continued, long-term growth with digital media requires something much more fundamental: realistic expectations. Agencies need to work with advertisers to develop realistic key performance indicators (KPIs) so there can be clear expectations.

Once these KPIs are set, it is up to the agency to over-perform and continue to optimize. Only then will “getting budget” be a far more simple and likely easier conversation to have.

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