Is this The Death of The Digital Agency?

Before I start this article off, I think it’s wise to explain where I’m coming from. Firstly, I’ve worked in Digital Marketing for a decade now and my experience includes being agency based. I’ve worked from executive-level up to management and then started and ran my own for 7 years.

The prediction in this article is based around my past experience coupled with the things I’ve learned in my alternate career of public speaking on the subject of Futurism and its impact on the business world.

At the time of writing this, we are in the midst of the COVID-19 global pandemic. This has sent shockwaves through every facet of life, both personal and professional. Countless businesses are struggling, some booming and people are starting to wonder what is coming next. In the last 3 months, we have gone from a (mostly) 9-5 Monday to Friday commuting workforce who couldn’t possibly work from home to only having home-work as a choice other than being laid off or furloughed. Governments have proven that entire established institutional systems can change, fast, cutting through the red tape that apparently prevented their change for decades.

If nothing else in most people’s living memory, these times are proving that change can come, and it can come FAST. Change can be scary, it can also be great for some and not so great for others. That’s why, I think, most people have a fear of change and essentially ignore it coming or bury and head in the sand or fight it.

In our world, the Digital Marketing one, we like to think we’re all (relatively) rational human beings. Rational, that in some cases, we see the world in a different light in the cases of typical fears. 

From my many years in this industry, I think we’ve embraced change better than most others rather than feared it. Take the 2008 financial crash and plot the growth of digital marketing. It soared because we saw that marketing was still required and we were able to help clients see a return on their spend much better than in other channels.

We’ve seen things coming and by our natures have tackled them head-on for the betterment of our industry, our clients and ourselves. I used to make a joke “I hate change” when Google updated its algorithm or changed how the SERPs looked or worked. The reality was, the change was exciting because we had something new to challenge us and learn from to predict or prepare for the next change.

What I’ve seen over the last 5 or so years though is the apathy that’s wrapped around a veneer of that same ‘old skool’ gusto and enjoyment of change. Almost nobody is aware that they are even like it and not because they’re idiots but because they are focused on other things. Stay with me, I’ll explain later in the article.

As Google’s methods and technology, in particular, has become more intelligent and better able to present the user with the right answers to their queries we’ve seemed to all accidentally fall into a change-chasing industry. An industry where all we’re doing is helping this big machine do its work better and make ours harder. Think back to 2010, digital marketing wasn’t ‘easy’ but it was a million miles away from what they are now. Admittedly, a good portion of that shift has been brilliant. It legitimised our practices into a necessary department of any half-decent business. It’s hard to argue it’s ‘easier’ than it used to be though.

Here’s my prediction:

The agency model of today is unlikely to survive the next 3 to 5 years. The pace at which new or deeper skills are required is getting faster. The level of expertise in general in most agencies will not be able to keep up. Businesses will determine that they need internal centres of excellence spearheaded by external niche level subject matter experts who provide the detail and strategy with governance, not a strategy and monthly PDF report. 

I feel that this prediction comes down to two key things that I’ll explain further:

  1. Changes in required skills, methods and reporting are making the ‘traditional’ job of one generalist, the job of many well connected, niche experts; &
  2. As digital marketing further matures, businesses will start to understand that the agency delivery at scale model loses out to small teams of experts who enable growth in their businesses and help them to build internal centres of excellence.

On point 1; Skills, methods and reporting, I feel this comes down to a couple of issues:

  1. Us and our emotional and physical capacity;
  2. Employers and their physical and financial capacity; and 
  3. The pace of technical change and the impact on point 1 and 2.

Agency Employees

In recent years, what changes have done is to make a job that was highly suitable for one person, a job that needs several very different but essentially connected people. Just like a Doctor, you can understand other parts of the body but you can’t be a heart surgeon and expert in the brain. You simply cannot be as good at understanding data as you are at writing content that sells the page to a user and to a robot. You aren’t an expert in Technical SEO and ‘Outreach’ or Link Building. 

Agencies don’t tend to lend themselves to be full of experts in most cases. They need to have the experts at the top of the hierarchy doing the thinking to manage the executives who are largely doing. It’s how they can offer lots of services at a scale.

The other side of this is both the personal and professional toll we put on ourselves because of what we see. We are all constantly seeing X person posting online about what they are doing or knowledge they are sharing and we worry we’re being left behind. “If he/she is always doing a video and also running an agency am I way behind them?” or “If he/she is running SEO events for a niche group, he/she MUST be an expert and I must be less good at my job”.

In an agency or in-house, this adds pressure on us to ‘keep up’ but also, as an employer struggles with hiring (for demand or costs) the capacity you as an individual has for more work is reducing. As work capacity reduces you have less time to learn or grow. People then get unhappy and move on or burn out. If the agency of the future isn’t an evolved version of today, it’ll be gone and probably forgotten. It’s the people that make them what they are not the client logos, Tweets and awards. 

Agency Employers

Trouble is, the job market will soon struggle to cope with the new expertise needed as well as the cost demand on agencies or in-house teams to find these people.

A friend of mine put it better than me when we talked recently: “The amount of knowledge required within digital marketing roles is expanding rapidly but unfortunately not in line with growth in recruitment and team budgets to allow specialization. More is required each year from a team with finite resources.

Don’t get me wrong, there are a lot of smart people in the digital marketing world.. but. The way that recruitment tends to work and people tend to elevate to roles follows something similar to The Peter Principle

The only viable solutions to this are to change how we work and evolve into something new. It’s true of almost any department really but, as an employer, one of the solutions you can try is in data – there is money available within marketing but we need to direct more of it into the right places. Visualising the opportunity more accurately will allow budgets to open up for the right roles. 

That solves the ‘who gets what cash’ problem but doesn’t help with the ‘who gets what tasks’ problem. If the needed expertise comes from 5 people, not 2, then the employer needs to buy in the right people. This can put a burden on the current team as already explained but it can put a financial and logistical burden on the employer too. In some cases, this may be irreconcilable and cause endemic, people and operational issues that erode that businesses margins to scary levels. I’ve not even mentioned the training and HR costs of individuals but consider that additional expense and the knowledge loss when they leave the business as an additional nail in the coffin for them.

Ultimately, the agency of the future may be quite different by necessity but, with some luck, by design. As the industry changes and we evolve with it the future team will look more like a crew from a special ops unit. Specialists in their niche who know how to work as a team.

Ross Tavendale said this and I tend to agree “…we are going to be put into broad buckets of analysts, strategists and creatives. It will mimic the departmentalisation of traditional ad places. Ad buyers, planners, strategists, creative. But in our world, it’s going to be the people who know how to read the data, the people that can make a plan of action with it, the people that make the “robot food” as you call it, and the people that go into the robot cage to feed the thing.This isn’t how the agency model works

The Pace of Change

Reality is, as Nick put it, things are changing more and more rapidly than we can ultimately cope with well. – This is also true of the wider world. Have a read of “21 Lessons for the 21st Century” for the wider-reaching changes. I think that resilience is a big part of being great in our industry. We are ALL resilient in our own way.

My thoughts here are not that we can’t cope with change and adapt, that’s why we’re doing what we do. It’s more that things are changing too rapidly for us and the industry to keep up, keep people and keep relevant. How many times can you reinvent yourself before you get exhausted? What toll would that take over time? 

As roles change and the demands for experts on an agency outpace the supply, agencies will have to adopt a more consultative approach to be able to deliver anything to their clients. This shift is what will essentially kill the agency as it looks now. Agencies are primarily focused on a delivery model that is more ‘doing’ than ‘thinking’ whereas, in the future, that split will need to change. Any agency offering content, technical support, link building, Ads and the like will fundamentally find it harder and harder to deliver at a profit.

On point 2 of my prediction breakdown; Digital marketing maturation will change market demand. 

A Torque Partnership we’ve already seen this coming and built an organisation that meets the currently small but growing shift. Enterprise-level businesses are starting to see that building centres of excellence in their organisations are a long term benefit. Having external subject matter experts devise the strategy, enable teams and then provide a governance layer that gives them far more value than an externally resourced team of digital marketing professionals.

On one end of the demand spectrum, the smaller businesses will still want the packaged up services of a digital agency. The issue for the agency then is, where do they make their money? The businesses at this level are already relatively low on the spend scale and with many web platforms now able to automate much of their SEO, PPC and Social requirements there isn’t a lot of ‘value add’ from the agency model post-set-up. This then lends itself to a ‘stack-em-high sell-em-cheap’ model for an agency where the value is mostly derived from automation at scale. There’s nothing wrong with that, it’s just not what the agency of today strives for.

On the other end of the demand spectrum, larger enterprises are looking in their own organisations and realising they have the resources to deliver much of the traditional agency roles. They just don’t have the expertise to build the teams, fully understand all their data and build unbiased strategies. They also need that external governance layer to ensure that the strategies and actions planned are executed properly and measured with rigour so that growth is achieved.

In summary, the agency of today, therefore, is dead. However, the agency of tomorrow will likely become more like a consultancy with experts supporting in-house teams or, in some cases, providing the direction for agencies to follow and ‘do the doing’ for the client. Those agencies that don’t do this will be gone and forgotten, or they will evolve into marketing automation houses that make their money from automated, high volume delivery.

 

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    Chris Simmance, Marketing Consultant and International Keynote Speaker

    me@chrissimmance.com

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