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Advertising agencies may be shifting toward becoming one stop shops for online and offline advertising needs, but marketers aren't buying just yet. According to a new study from Forrester, only 23% of digital marketers think that traditional shops are capable of executing interactive marketing.

But digital shops aren't taking over the world just yet. According to the study, interactive marketers aren't ready to put their whole brand in the hands of digital agencies. Forrester says there is a "great race" going on between digital and traditional agencies to win the accounts and confidence of major brands. But the idea that there can be a one-stop-shop for all advertising needs may be wishful thinking as goals and channels diversify.

Forrester interviewed about 100 global interactive marketers for the study. Only 23% thought their "traditional brand agency" could effectively plan and manage interactive marketing activities. About 46% thought they couldn't do it, and the rest didn't have an opinion either way.

Forrester's study also found that few clients are willing to give digital agencies responsibility for their brand's entire direction. Just 22% agreed that their interactive agency is "ready to lead my brand." Another 33% said their digital shops weren't ready. The rest were neutral. 

According to Forrester, clients would prefer to work with one agency for all their needs. Over 60% said they would like to use one digital shop. But they don't see that option now. Even within digital, the study found that only one in five clients rely on a single provider. Almost 60% have two or more. Forrester expects that these numbers will fragment even more with emerging media like mobile and social. But the multiple-agency approach leads to higher administrative costs and more coordination.

Sean Corcoran, Forrester analyst and the report's author, tells MediaPost:

"The complexity of the interactive landscape is creating a fragmentation of interactive agencies, which in turn is creating a whole new set of challenges to marketers. Interactive marketers should prepare their organization for even more agency partners and educate their procurement teams on the value of these relationships."

Digital agencies have made big strides over the last few years, but it's still unclear if large firms will subsume smallers shops into their offerings or if smaller agencies will grow from within. Just last week, digital agency R/GA was named creative agency of record for Ameriprise Financial, which spun off from American Express in 2005. The company's branding was previously handled by Saatchi & Saatchi and Mindshare. But traditional brands are also supplementing their offerings by acquiring digital agencies. Also last week, Korea's biggest ad firm, Cheil Worldwide, acquired eight year old New York based digital agency Barbarian Group.

"We're all waiting for this big moment when a bunch of interactive agencies take over from the traditional guys," says Corcoran. "It's not happening that way, it's a slow evolution. You'll see some interactive guys take over and some traditional agencies hold the fort."

Meghan Keane

Published 9 December, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

Comments (5)

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jhoysi

What I find even more interesting is the fact that the second study, about whether digital agencies are ready to tackle all branding efforts, showed that almost 50% of those polled didn't have an opinion either way. To me, indifferent is just as bad as not having faith in the agency.

about 7 years ago

Jonathan Moody

Jonathan Moody, Freelance at Language4Communications

Also of interest is the question of the in-depth, cross departmental client knowledge required to plan and execute effective digital campaigns. This is an issue for both trad and digital agencies. An interesting post from Paul Dunay on this:

http://buzzmarketingfortech.blogspot.com/2009/10/why-social-strategies-are-difficult-for.html

"Agencies have to get internally savvy fast to navigate the waters of an organization and this typically doesn’t happen overnight. Or perhaps they need to find the “super connector” within the organization who can help them articulate who to go to as point of contact for those conversations."

almost 7 years ago

Dominic Geary

Dominic Geary, Managing Partner at Carat (Leeds)

Like any communication model there are pro's and con's to using full service or digital agencies, it depends on the requirements of the client and what is important to them.

It's unlikely that a client will get best in breed under one roof and they will probably pay through the nose for these services. Altenatively, digital agencies struggle to think holistically across all comms and fail to understand the contribution offline has on online action.

As always clients will drive the future agency model based on their requirements and how they want to work.

almost 7 years ago

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Aaron Savage

The issue as I see it is that 'digital' means many different things, and most of those are tactical disciplines.  It's only when digital offers an end to end strategy for a client that the fabled top table will beckon and the accolade of lead agency will be awarded.

Part of the problem with online marketing, is that it has a preoccupation with 'the new'.   For me, next year is important but it definitely shouldn't be about what tool is going to grab the headlines next.  To me it should be about how to create a joined up <a href="http://www.interactive-mixcom/imix.html">digital marketing strategy</a> as a whole solution to clients.

We have had digital marketing around now for nearly fifteen years.  Since that time various boutiques have grown up as markets peaked and dived, so we have web design, email and eCRM, Social Media, Display advertising, Search etc.  All of these are fine as tactical solutions but that isn't what clients are asking for.  Clients are asking for someone to come along and start with a bunch of people who have never heard of Brand X and create a journey using digital media (all of it) that moves them along to first purchase, regular purchase, retention and referral. 

We launched Interactive Mix with this very aim in mind a year ago and at the time I used to look out at blank faces as I tried to explain why clients needed a complete solution and not just a ‘web guy’, but as the year has gone on more and more people now look back at me with understanding and agreement on their face, so I am definitely hoping that this is the year that digital finally grows up and stops being led by fads.

almost 7 years ago

Avatar-blank-50x50

Internet Strategist @GrowMap

The obvious solution is for agencies to specialize in specific types of digital marketing and work together. Then clients can hire a Team of agencies that already works well together and get far higher expertise.

almost 7 years ago

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