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What do clients want and value in their agency relationships? What level of digital sophistication can be seen client-side? How are clients transforming in the light of increasingly digital customer experiences?
These are the questions asked by the 2014 Society of Digital Agencies (SoDA) Report and its Digital Marketing Outlook survey conducted in partnership with Econsultancy.
In this post I've rounded up some highlights from the report, looking at changes in the agency-client landscape.
The Digital Marketing Outlook Study had 736 respondents. More than 82% of respondents were key decision makers and influencers with annual marketing budgets ranging from $5m to over $100m.
Clients accounted for 42% of the total respondent base (the majority in consumer packaged goods or the service sector) while agency and production company respondents constituted 43% of the overall sample. 36% of respondents were from the US, with 22% and 20% from EMEA and APAC respectively.
Client-side expertise is growing
Digital expertise on the client side has continued to grow for a number of reasons, including:
- New talent at both blue-chip and challenger brands.
- The continuing development of client-side teams with direct responsibilities for digital.
- The hiring of former digital agency professionals.
- The increasing incidence of embedded agency partners within client teams.
- The maturation of digital as a whole.
62% of clients work with two agencies or fewer
The number of agencies clients are working with has remained fairly consistent. 2014, like 2013, sees 88% of clients indicating they have four or fewer agencies on their roster in both years.
What has changed, however, is the number of marketers working with no agencies whatsoever. This number has risen as inhousing continues.
Specialized digital agencies are the most popular assignment
As you can see from the chart below, clients relying on full-service digital agencies represent only 16% of respondents. Using specialized agencies, sometimes alongside a full-service offering, is the method preferred by the majority of survey respondents.
Client engagement sees increasing focus on education
Looking at how agencies actually engage with clients, 2014 has seen a 21% increase in agencies reporting work based on a retainer fee. This is perhaps due to an increase in number of specialized digital services.
A big change over 2013 has been the increase in the proportion of agencies providing education and training services to clients. This training is often provided to internal client teams that have been developed to handle digital production and maintenance. The number of agencies providing this education rose 25% in relative terms.
Agencies not great at estimating project costs.
The average self-assessment for all agencies and production companies was just 6.09 out of 10, when measuring their ability to correctly estimate project costs.
Client spend hasn't wavered, despite economic recovery
The report authors postulate this could be due to a decrease in respondents from North America, where the economic recovery is strongest. It could also be down to more in-house activity by clients, or due to North Americans sitting on cash reserves until they gain greater confidence in the opportunity for growth.
Campaign spend decreasing
In 2013, campaign spend was increasing, but in 2014 more than 50% of clients are maintaining the status quo when it comes to campaign spend. This could be due to clients still taking stock of the results of last year’s increase in campaign budget.
Innovation labs proliferate
50% of agency respondents had a product incubator or innovation lab. With innovation and product creation the second highest priority with clients, these labs are a bridge between agency world and clients taking things in-house.
Agencies cited funding/company spin-offs (24%), talent retention (49%) and new business (52%) as benefits of establishing an innovation lab (31% saying it was too early to tell what the outcomes would be).
The 2014 SoDA Report features much more data from this DMO study.