As internet channels have become more and more important to businesses, a
new generation of digital agencies have sprung up to assist them.

The value proposition of the digital agency: at a time when technology
is evolving so rapidly, it takes specialist knowledge to successfully
navigate digital marketing channels.

Based on this, one might expect the future to be bright for digital agencies, but according to a survey conducted by RSW/US, a business development firm, that may not be the case.

In surveying client-side decision-makers, it found that more than two-thirds of respondents felt digital agencies “need to offer more traditional services to maintain relevancy.” Only a third believed digital agencies can survive with digital alone.

Looking ahead, RSW/US sees a full half of traditional agencies earning more business for digital assignments within the next five years. The key to that, eMarketer suggests, will be traditional agencies “[becoming] more sophisticated in their digital offerings and [finding] the same deep insights that have set apart their digital-only counterparts.

Interestingly, SEMPO and Econsultancy’s State of Search Marketing Report 2011 seems to contradict RSW/US’s findings. In our survey of 900 client-side advertisers and agencies, respondents favored specialists over generalists for SEO, paid search and social media.

For companies looking to hire an agency, which approach is right? Obviously, that depends. Companies that are very active in a multitude of channels may find that working with a traditional agency is attractive because a traditional agency may have a better capability to see the big picture, even if its domain expertise in any particular area is not as deep.

On the other hand, a company that derives a significant return from very specific channels, such as SEO and paid search, may have a difficult time trusting management of those channels to an agency that doesn’t have expert-level knowledge.