Marketing and Advertising Agencies are being subject to seismic shifts as more and more firms execute on their aim to bring marketing strategy in-house. In addition, the new breed of digital consultancies - Accenture, IBM, Deloitte, PwC - can easily get a foot in the door with their pitch of digital transformation powered by business strategy, technology and design thinking.
It doesn't take long for these digital consultancies to quickly layer-on upstream services such as digital advertising and content management. This presents an existential threat to traditional agencies.
It's an existential threat not because it is the core of what agencies offer, but because the bread and butter non-creative digital advertising and content marketing creates the underlying margins and cashflow which supports the lumpy creative side of the business.
Moving up the value chain threatens cash flow
Agencies are responding by in turn bolstering their digital consulting and data integration offerings. And by taking advantage of existing close personal relationships with major clients to move up the value chain.
Moving up the value chain means reshaping the agency to become more like a digital consultancy — adding more analytics in particular — while leveraging their reputation for creativity. In particular, they are seeking to form "partnerships" with clients to jointly address strategic and creative challenges - even placing strategy teams in-house on long-term contracts. This is a good response, and, in Australia at least, there is a multitude of large legacy not-born-digital organisations where silos will persist for a long time and create very profitable niche "partnering" opportunities.
The big question is this: as agencies reshape themselves and present themselves as the new strategic partners, how do they retain the cash flow and margins of the operational side of the business and survive?
Those margins are coming under increasing pressure as content planning, curation and publishing become commoditised, along with social media advertising. The opaque esoteric art of social media advertising yielding 60% margins are all but gone.
Deploying enterprise social media management software in agencies
The answer is in the agencies becoming skilled masters of the enterprise social media management platforms such as Spredfast, Percolate and Sprinklr. These platforms provide the foundation for super efficiency and effectiveness across the whole gamut of enterprise social media activities including social media advertising.
In fact, Sprinklr was nominated by Forrester (Q3, 2017) as leading the pack in social media advertising as well as providing the complete suite of enterprise social media management.
Agencies who master the social enterprise suites will not only be pushing down their cost curve and improving client collaboration but will also be providing better outcomes.
There is a competitive advantage in mastering these platforms. As they are complex when taken as a whole, and the set-up, configuration and tuning is never going to be the forté of the traditional clients.
Ultimately strategy has to be executed. Agencies who master the operational efficiencies and effectiveness of execution and latch that on to their strategic practice will be well placed to survive.