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What Digital-first Agencies can Learn from Madison Avenue’s Failures

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Digital is disrupting marketing. No big news there, right? Not for those of us working in digital and local marketing.

But what’s most interesting to me is the tumult that digital is causing on Madison Avenue with traditional ad agencies — and what digital-first agencies can take from it. Namely, that technology and marketing are now inextricably linked.

One of the “Big Four” agency companies, WPP, is undergoing massive change. It started with the departure of legendary founder Sir Martin Sorrell, but now the new leadership is driving wholesale restructuring with digital being a prime factor.

An anonymous exec within WPP recently told AdWeek that they “praised the decision to combine legacy creative with data-driven digital, adding creative shops without that don’t stand a chance in the current climate.”

Industry data certainly supports the notion that traditional creative and advertising without digital is a death knell for today’s agencies. AdAge reported that 2017 revenue growth for U.S. agencies declined to 1.8%, the lowest since 2010.

This slowing of growth isn’t a trend that industry experts expect to change without the agencies themselves rethinking how and what they sell. As AdAge’s Bradley Johnson wrote, “Job cuts at ad agencies, weak organic growth, slumping stock prices and a tightening of marketing budgets all point to tumult in the agency business.”

Meanwhile, digital has grown rapidly (7.0%, according to AdAge) in that same period. But because digital is very technology and data-oriented, technology consulting companies like Accenture and IBM are capturing much of that growth.

“These consultancies are rising fast by gaining a foothold in marketing departments and wooing chief marketing officers with their vast array of strategic and data analytics solutions to big business problems that traditional advertising can no longer solve alone,” wrote E.J. Schultz in a recent AdAge story. “And in some cases, they are layering on creative services and content marketing, putting them solidly on the same turf as traditional shops.”

These troubling trends for the “Big Four,” however, are an opportunity for the many growing digital-first agencies serving small and medium-sized businesses (SMBs).

Tech and tactics are intertwined. So why not sell the tech?

As today’s buyers continue to consume more information on digital mediums like the web, mobile and through digital assistants like Alexa, the tools used to execute sophisticated digital programs are more integral to marketing than ever.

Digital-focused agencies know that the tactics and technology are becoming more closely related every day. And many agencies are stepping into the role of technology provider. In some cases, that might mean being a trusted strategic advisor for clients on purchasing technology. But it’s also an opportunity for agencies to literally own and sell different digital products, whether developed on their own or offered as a reseller.

In our new ebook, Merging tech and tactics, we examine how and why today’s top digital agencies are taking ownership of the tech — and selling it as a value-added service to clients. And we cover the types of complementary product-based services and martech that make the most sense for agencies to invest in and add to their capabilities.

SMBs can’t possibly navigate the martech landscape.

The opportunity for digital agencies to provide technology to clients is in part born out of need. SMBs today, especially local businesses (typically your hairdresser, dentist, lawyer, plumber or financial advisor for instance), don’t have the expertise nor the time to build the technology “stack” they need to succeed with digital marketing.

A recently updated infographic from chiefmartech.com shows that 6,829 (and growing) companies exist within the martech landscape. Can you imagine a small business owner finding the time to vet different services, understand the capabilities and differences in each, and make purchase decisions to build their own martech stack?

Meanwhile, agencies serving those businesses are already experts in different martech services — because they use them every day. So, it just makes sense that digital agencies today would help clients implement the technology they need to run their programs.

So, while the traditional agency giants struggle with restructuring and battling the big consulting firms, digital-first marketing agencies have a tremendous opportunity. They know digital marketing. They use the tech every day. And they can bundle the tech and tactics, boosting their bottom line and better serving their clients.

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