Denis Grankin Head of Sales Department

5 challenges to be faced by digital agencies in 2016

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According to a new research by the Society of Digital Agencies, the number of companies choosing to do marketing in-house has remarkably increased in the past year as compared to the previous one. In 2014, the percentage of organizations hiring internal marketing teams was 13, whereas in 2015 this number is 27. These changes imply that digital agencies should rethink their approaches and adapt them to the market evolving. Let’s consider the challenges to be faced by digital agencies in 2016 regarding current trends and issues that make potential clients turn their backs on outdoor marketing.

1. Value-based pricing

Even though it seems practically impossible to withdraw from traditional hourly rates and monthly fees, the demand for results-based pricing is growing. Since most agencies set rates based on the efforts spent and fail to justify their prices policy according to outcome, it becomes more attractive for companies to bring the marketing duties in-house. They prefer to control the costs and markup themselves. The agencies’ challenge here is to develop trustful relationships. Probably, the most straightforward way to gain trust is to combine hourly cost with value-based pricing. It’s not as hard as it seems though this approach takes more time for analysis. It requires the understanding of the lifetime value of customers for a client (LTV) and current marketing cost of acquisition (COCA). On the early stages of engagement top-of-the-funnel numbers (TOFU) would provide information about traffic and leads. Committing to these values in price estimations would be a great investment in trustful long-term relationships. Otherwise, digital agencies have to find their ways to justify prices.

2. Competitors from other guilds

The number of available marketing options for companies grows as the landscape of players becomes more diverse. Some of them appear predictably, like traditional advertising agencies. These organizations inevitably try to fit into the trends and become partly digital to meet modern standards. However, in the coming year digital agencies are going to face rapid growth of other players disrupting the market. Just to name a few. Online platforms such as Facebook, Google, and Pinterest offer their promotion services that might be much more affordable to choose and yet not less effective than digital agencies. Moreover, they provide technologies for internal marketing departments and have creative studios that can utilize available analytics to refine marketing methods swiftly. There are also highly specialized agencies that elaborate their particular niches rather than covering the whole campaign. It may be social media, mobile development, UX/UI design. Anyway, these specialized players manage to deliver smart solutions on a great quality level. It may be somewhat expensive to hire this type of agency, so as an affordable substitute to them there are freelancers who get engaged in the team just for a definite period of time for tight rates. The growing number of players puts up a more and more challenging struggle.

3. Engaging content

Seeking creative approaches is a truism nowadays. And it isn’t worth mentioning unless you consider what kind of innovations are supposed to be applied. Bringing new concepts on a daily basis to engage customers is a complex task that discovers extra challenges for agencies in the coming year. Being just innovative and talented is not enough because you risk to throw your experimental and great solution into the white noise. Modern customers may never notice creative experiments because they are so overwhelmed with data coming every day. It doesn’t mean you have to give up experimenting. It rather means that the new challenge is to build the whole integrated environment to bring a solid experience to a customer, who shouldn’t be distracted by various factors. Thoroughly leveraging content marketing and social media means delivering experiences rather than pure advertising.

4. Talent issue

This point is closely connected with the previous one. Finding the right talent is all about the people who are well-versed in building experiences by storytelling instead of throwing ads at potential customers. According to Forbes, college graduates who major in liberal arts, photography, literature and related suffer from high unemployment rates and underestimated salaries. Nonetheless, these people are trained in composing essays, analysis of content quality, and creating engaging stories. It is the point when low-value majors can be the best people to fit the job. These graduates can become great marketers with the right approach to training. Another issue is the assembly line principle of digital marketing. Even having the right talent on a place doesn’t mean this person is going to deliver proper experiences since he has several campaigns on a checklist. Deadlines and multiple tasks aren’t encouraging to immerse into creativity and storytelling. That may be the reason why talent turnover is one of the major issues of digital agencies. Trained marketers may prefer to work in-house for companies to deliver dedicated services with their own pace.

5. Campaigns become outdated

The majority of digital agencies align their workflow with campaign models that are based on a closed-loop cycle. You do research, apply creativity, run a campaign, report, and move to the next campaign. Modern customers lack continuous experiences since they are highly integrated into social interactions. In order to keep people engaged, you’re supposed to lead them through one story to another. That’s an extra point to build an internal marketing team for a common company and adapt efforts to the evolving trends continuously.

This list of growing challenges is not exhaustive, but these issues seem to be the most actual in the coming year.

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