A couple of weeks ago we published the article which depicts the most common challenges digital agencies are going to face in 2016. Our goal was not only to define the problems digital agencies are dealing with, but also to clarify the reasons why more and more companies are turning their backs on external marketing campaigns and tend to build their in-house marketing teams. Basically, the goal was to present clients’ point of view on digital agencies, reveal the issues, and erect the road signs that might help outdoor marketing teams to rethink their approaches.
In continuation of this campaign, we’ve translated our ideas into a little survey in order to understand how digital agencies are going to acclimate to the new market circumstances. Our respondent pool consists of more than 100 managers and CEOs of digital agencies, who received emails offering to fill out the questionnaire and agreed to participate.
The majority of our respondents represent small and medium size digital agencies with 2 -100 employees in their teams from North America and Europe.
Respectively, these companies have an average project 50-500 hours long.
Areas of engagement
The majority of our respondents (34.69%) are providing UI/UX design services and 26.53% provide the overall set of services consisting of UI/UX design, consulting, software development, and inbound marketing.
As the market evolves to offer highly specialized expertise, these numbers seem coherent, except for the fourth group offering the overall set of services. That might be explained by the number of companies that apply to outsourcing in order to find the right talents for each specific task.
More than 50% of our respondents either apply to outsourcing approach on a regular basis or sometimes use outsourcing to handle specific tasks.
Still outsourcing doesn’t look a reliable approach for 46% of the respondents.
As we were analyzing, the most ailing issues clients have when they apply to digital agencies, the efforts-based pricing appeared to be one of the tops. Before investing in marketing campaigns, companies seek objective forecasts regarding outcomes that could be correlated with the money they pay. Even though calculating future ROI and adapting pricing model to it seems a difficult task, it’s far from impossible. Our survey reveals the fact that the majority of agencies have acknowledged the problem, but the value-based pricing is still in its infant stages.
Less than 10% of respondents have adopted the practice and more than 60% of agencies are still hesitating.
Training of new hires
Another challenge is to find the right talents for inbound marketing. As the expertise requires to cover several areas, ongoing training is supposed to be among priorities. Once agency hires a specialist, he must be trained the way both to understand technical aspects and to provide engaging content successfully leveraging the social media tools that are available. It’s a common case when an SEO or SMM professional doesn’t understand the content writing techniques, and vice versa talented writer who majors in liberal arts doesn’t know what are the means to deliver his works best possible way. The rapidly evolving nature of the digital market also sets challenges to keep up with new trends and techniques.
According to our survey, 41% of respondent agencies only have dedicated courses to train employees. The rest 59% may experience difficulties when trying to keep up with the market development rates.
A couple of years ago, the complaint about the inconsistency between expectations and results was common. A lot of people that applied to digital agencies were unsatisfied by the lack of direct communication which resulted in the outcome quite different from what they initially expected. We decided to ask what kind of approach is the most relevant for digital agencies.
More than 50% of respondents try to solve this issue by providing dedicated project managers who deliberately eliminate any misunderstandings. 6.12% only require documentation before starting their work. It might be the most objective approach, but still the majority of clients don’t have time and spare efforts to document their projects. Surprisingly enough, more than 11% rely upon their own expertise, which is supposed to be mutually accepted by the both parties in order to reach successful cooperation experience between a company and a digital agency.
The digital market landscape becomes more and more diverse with players coming from non-digital guilds and starting to capture their shares of the market. We asked what kinds of new players seem to become the major disruptors of the digital agencies market.
Our respondents considered highly specialized vendors, freelancers, and traditional advertising agencies the biggest threats to the digital agencies market, 38%, and 35% respectively. Even though famous publishers and platforms (Google, Facebook, Pinterest, Buzzfeed, YouTube, etc.) provide their own means to perform marketing, these tools require specialists anyway to handle them.
Since current months are the time to make predictions for the coming year, we asked whether digital agencies are expecting the revenue growth.
75% of our respondents believe that changes are inevitable though there’s no unity regarding the vector. The division reveals forecasts based on internal circumstances rather than shows definite tendency.
We were trying to show the most significant challenges digital agencies are going to face in the coming year and understand how well prepared agencies are. Although this research isn’t comprehensive, we must admit that our respondents have either acknowledged the issues or have already taken measures to optimize their approaches.