There’s a bit of a war going on in the marketing space at the moment, and the key opponents seem to be agencies, consultancies and marketing technology (martech) companies.
To fully understand the ongoing war, it’s first important to differentiate the services, because agencies and consultancies are often confused. Essentially, an agency provides talented people to address the client’s problems. The client will be provided with help, but will have to direct and manage the project itself. Additionally, when working with an agency, the client will most likely have to provide a method and framework that it has already, or instruct the hired agent on how to create a new framework. In other cases, agents are given free reign of the project. Meanwhile, a consultancy provides a solution to the client’s problem, including a team or individual that will employ a best-practice delivery method and framework (template, accelerators, tools, etc.).
The key difference is about how the client’s problem is solved. Agents have the freedom to act on a company’s behalf, and consultancies are brought in to figure out a problem, like “What should our strategy be for the next 24 months?” Meanwhile, martech is applicable to basically anyone dealing with digital marketing, as it’s the combination of marketing and tech.
Now that we have the definitions out of the way, let’s take a look at the issue. According to Martin Coady, executive director of marketing technology at digital agency VML, “Agencies bring the context the CMO needs and have the potential to be the best orchestrator to help the CMO get the most out of a marketing cloud…However, most agencies don't currently have the depth in these technologies that the vendors and other partners have, nor the experience scaling operations that consultancies have.”
In short, consultancies offer a greater variety of skill sets than agencies, and martech providers are also becoming a threat. As martech giants like Salesforce and Adobe battle it out to determine which will be No. 1 in the space, they’re simultaneously harming agencies by pursuing clients that sell consumer products, not just business-to-business marketers, according to Geroge Slefo in his recent article for Ad Age.
Slefo continues by pointing out that half of marketers aren’t satisfied with their lead agency. A new report from Forrester states that 60 percent of marketers are open to working with consultancies like Deloitte, but 21 percent of marketing budgets are already being spent on martech providers such as Adobe and Salesforce. Based on these findings, it seems like marketers still want the technology martech providers offer, but also want more help with problem solving. Simply providing technology or a single agent isn’t enough—the company’s business model and skill set also needs to be transformed.
What this means for agencies is that their approach is going to have to change. “The impact on an agency, as brands wrap their heads around all of this, is the nature of their services is going to change,” said Mark Singer, digital marketing agency lead at Deloitte Digital. “Brands are developing more direct relationships with consumers, and the nature of what agencies are doing is going to shift and match that model to take more of a direct role.”
According to Singer, if agencies want to beat out consultancies and martech providers, they’re going to need to become experts in the technical, operational, business and strategy arenas—which is where consultancies already have an advantage. Marketing may always be a necessity, but the way in which it’s done is always changing. Based on these findings and insights, it sounds like agencies are going to have to become a jack of all trades to continue successfully.