Will the future digital agency be within the client company?

We’ve heard about there being ‘too many digital agencies’ a client has to work with. Is there need for a one stop digital shop? Is this possible given the different facets within digital?

Are marketers investing on in-house digital resources? Are they investing enough? Do you see this growing?

 

AS: E-commerce portals such as MakeMyTrip or Yatra have built an in-house team as they have SEO, search engine marketing, display marketing, creative, IT, social media marketing functions. This is very well set in the e-commerce sector. The companies that are very serious about digital at this point of time have taken their first step towards having an in-house department. So if I speak to any of the FMCGs, they will say that they have a digital marketer but just one or two of them. Eventually as the internet base increases, this will go into a specialised function. That is when we will see vertical specialists. There will be a social media manager, search engine marketing manager, website manager and online relationship manager. That is where I see the investment coming in. Everyone cannot be a generalist. Marketing heads are already marketing generalists, also head of digital marketing more or less are generalists too. But further down the chain, you cannot afford to have generalists and that is where the need for specialists is felt. Companies have started realising this but there isn’t enough talent.

 

ST: Yes, brands are increasingly investing in in-house digital marketing resources and this trend is definitely growing. Because of the rapid evolution of the digital marketing industry, the first generation of digital marketers that we had a few years ago, have now evolved into experts in their respective job roles. If I’d wish to hire resources for digital media planning, social media marketing, mobile marketing, digital PR, etc. five years ago, I’d probably end up finding a handful of candidates that fit the bill, or it wouldn’t be surprising if I’d find none! But today, the right kind of talent is available and brands are willing to make space for it within their marketing teams.

 

It is always wise to invest in something that you know will very much be the future of marketing, and that’s exactly how the trend currently is. Over the past three years, HDFC Life too has invested in building dedicated teams for digital marketing and e-commerce. While having partners and agencies with digital marketing expertise is a must, having dedicated in-house resources only makes the efforts more effective, since teams from both ends have an adequate understanding of the medium they work on.

 

Should digital marketing resources be housed within the marketing or the technology function within the company?

 

AS: In e-commerce, there is a department which is responsible for the revenue. Technology has two roles to play here, infrastructure which is more about server processes and organisation. Second, is when the technology function is related to the website i.e. data and analytics. It is going to be a ‘techno-marketer’ kind of a scenario, which means an overlap or integration of marketing, technology and digital functions. Digital operates in the front end with mobiles, apps and websites etc. which is where we need a techno-marketer who understands these things. The challenge is that people in the technology function do not understand digital and marketing at all. But being a marketer, I don’t need to understand technology (infrastructure) to that great an extent. But what I do need to know is which technology will work.

There are organisations where digital is a part of marketing and there are some where digital is seen as a platform. Digital doesn’t exactly touch marketing but it touches customer service, purchase, customer experience. It is always better for digital to function as a platform that provides services to other departments.    

 

ST: Technology forms the backbone for digital marketing, and one cannot function without the other. When you have a digital marketing team, you need to understand that marketer and a technical expert are two different individuals who will need to exist under the same roof, and their roles cannot be mutually exclusive. Both will need to be subject matter experts in their own roles, but will still need to understand each others’ approach towards work, to be able to work as a team.

 

For example, if I’m building my corporate website, the marketer will take charge of the brand aspects, design elements, UI/UX, etc. for the asset, whereas the technology expert will take care of the actual development and bring all of these to life. Inevitably, both will need to understand the possibilities and limitations that finally result into the finished product. Within HDFC Life, we’ve tackled the situation by having digital marketers as well as technical experts in the marketing function, who in turn work with a larger dedicated IT department to execute digital projects for us.

 

Do you foresee eventual integration of digital agencies with the client organisation? If yes, why  and in what time frame? 

 

AS: Some of this has already been covered in the second question in terms of the resources available to marketers with regards to the integration. When I talk about integration, previously a digital agency used to be responsible for the campaign executed and that is where their job would end. Even the marketers in those times never allowed them to gauge how exactly digital contributes to the business. If I’m generating a lead, what is the cost per revenue that I’m generating from that lead? The digital side needs to understand this. So once you involve digital in the business decisions then the whole scenario changes and the marketing and digital departments become partners. Digital has the potential to track end-to-end, which is why the medium is trying to involve itself into the business decisions.   

 

As for the time frame, it will take another five years. I see this happening by sometime in 2018 or 2019.   

 

ST: We’ve seen digital marketing agencies getting integrated with traditional agencies, or actually growing out as an off-shoot of a traditional agency. This makes complete sense from an integrated marketing approach perspective, as they as a group can then provide a larger set of services to brands.

 

Talking of integration between digital agencies and brands, there is always a need to immerse yourself into the brand philosophy and ethos when you work together. And that pretty much defines integration of the thought processes for us, which is most essential. In terms of physical or operational level integration, I’ve seen agency resources work out from the clients’ work station, which largely is an effort to solve operational issues.

 

But I do not see the need for an agency to completely integrate with a brand, physically, since both provide different views and perspectives of the same subject, which is important to make your marketing efforts successful. Also, both are inherently distinct cultures, which really cannot integrate completely.

 

Would the integration be more pronounced in certain industries? Which would those be?

 

AS: As discussed, there are some industries which depend more heavily on digital agencies for their business than the others. Genrally, e-commerce businesses are greatly involved in utilising digital as a platform as opposed to non e-commerce industries who have varying levels of digital needs.  

 

ST: While it is stated that complete integration may not be really required or possible, there are certain industries that are more digitally inclined given the nature of their businesses. On top of my mind, to name a few would be – travel/tourism aggregators, e-commerce portals, banking and brands that are heavy on digital content production/distribution.

 

What does the future hold for standalone digital agencies? What will be their role and value addition?

 

AS: We still need an independent digital agency to provide ideas. These ideas will then have to be communicated to the in-house digital departments who need to thoroughly understand them. The in-house department will play the role of an absorber of the information being provided and try to figure out whether it fits into the brand and its scheme of things and ensure the implementation. The understanding of digital in today’s market scenario on the brand or marketing side is very minimal. This department would help them understand the potential, ROI and whether the investment has been worth it. We will still need those digital agencies operating within this ecosystem. The standalone agencies will then have to go beyond consulting and find avenues for value addition. It will have to go beyond impressions and hits. It will evolve into a performance-led role with the agency and the client helping each other in their growth stories. 

 

ST: The previous two financial years saw a lot of mergers and acquisitions where standalone digital agencies became part of larger media networks. This definitely makes business sense for them and a larger group offers more value/services to brands. That’s largely the way the industry has been moving. But standalone agencies I suppose can survive if they offer services that stand out as compared to others. For example, there are agencies who do work as niche as video, infographic creation or even writing digital content only for financial organisations. For such agencies, functioning independently can still remain as the ideal business model, as larger media houses or brands will need their services anyway, regardless of them being standalone or belonging to a larger entity. I see future in collaboration between specialised digital agencies so that they can provide comprehensive solutions to their clients.