Table of Contents
Section I: Digital Agency Capabilities and Services
Section II: Digital Agency Market Trends
Section III: Choosing a Digital Agency
Section IV: Conclusion
Section IV: Resources
"Digital Agencies in 2013" editorial team:
Editor:
Claire Schoen, Digital Marketing Depot
Researcher/Writer:
Karen Burka
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Digital Advertising Agencies 2013: A Buyer’s Guide
Introduction
Faced with an increasingly complex digital marketing landscape, as well as limited resources, and higher C-level expectations, more advertisers and marketers are using digital agencies. If you are considering hiring an agency for one or more digital advertising channels, this report will help you decide whether or not you need to.
Editor’s Note: The following is an excerpt from "Digital Advertising Agencies 2013: A Buyer’s Guide," published by our sister site Digital Marketing Depot. You can download the report here free.
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Digital Agency Market Overview
Digital agencies come in all shapes and sizes. At the high end, for global brands, are the agency holding companies with full-service digital agencies around the world. There are also boutique and specialty agencies that provide channel-specific digital marketing services such as mobile messaging programs, social media marketing, or SEO link-building campaigns.
Digital agencies may provide some or all of the following capabilities: digital lead generation, digital brand development, interactive marketing and communications strategy, rich media campaigns, interactive video brand experiences, website design and development, e-learning tools, email marketing, public relations, SEO/PPC services, social media marketing, mobile campaign development and management, content creation and management services, and data mining and ROI assessment. Like any organization, each type of agency has its own strengths, weaknesses, and culture.
The Benefits of Working with a Digital Agency
Agencies owned by large media or holding companies can provide the following benefits:
- Diversity of capabilities from co-owned media properties
- Built-in sister agency relationships and priority referrals
- In-network efficiencies
Working with a specialty or boutique agency offers unique benefits as well, including:
- More granular channel strategy and tactical expertise
- Client access to agency decision makers and top personnel
- Lower spending minimums
Specialty agencies offer a subset of the services provided by full-service agencies. These services may be channel specific, such as social media or SEO, or media specific such as display advertising or email marketing programs.
Choosing a Digital Advertising Agency
The decision to hire a digital agency is a significant investment that requires a rigorous evaluation of your business’s and any potential agency partner’s needs, resources, and cultures. The following sections discuss five steps involved in making a more informed and successful choice.
Step One: Company Self-Assessment
Deciding whether or not your company needs to hire a digital advertising agency calls for the same evaluative steps involved in any significant investment, including a comprehensive self-assessment of your organization. This includes answering questions such as:
- What are the primary objectives we want to achieve? Working with an agency can help advertisers that are looking to scale their digital initiatives but lack enough in-house resources to do so. Find clarity and consensus on what you’re looking to achieve.
- Do we need a full-service agency or boutique? Traditionally, advertisers have hired an agency of record (AOR) to handle all of their advertising needs. But one-stop advertising shops may not represent best-of-breed expertise in every digital channel. Many advertisers hire both AORs and boutique agencies with expertise in SEO or social media, for example.
- Who will manage the agency relationship? Every successful partnership needs a champion who is invested in that partnership’s success and can pull together the disparate groups that have a stake in the outcome or a role to play.
Step Two: Understand Digital Agency Fee Structures
Many agencies are evolving their service offerings and fee structures to meet client demand for more integrated campaigns and clearly defined fees that better reflect the work involved.
Each fee structure has advantages and challenges for different types of media. Many agencies use time-based pricing, which is based on a set hourly fee to track time spent on a client’s earned and owned media accounts. Increasingly, agencies are using performance-based hybrids that include a time-based, fixed-fee, or percentage-of-spend rate, as well as a smaller performance-based component for paid media work. The goal is for clients and agencies to share the risk when trying new campaign strategies or tactics, yet fairly compensate the agency for its time and work. This is also a way for agencies to become more competitive in the base pricing; by adding in bonuses based on performance, the initial agency fee may be lowered.
Step Three: Begin the Agency Selection Process: Phone Calls, RFIs and RFPs
Many digital agency executives report that the majority of their new business comes from referrals rather than RFPs. Therefore, before – or instead of – initiating a more formal RFP process, it may be wise to begin by contacting some of your marketing peers to find out which agencies they are using and why they chose the partners they did. Then call any recommended agencies to discuss your business needs and whether or not they might be an appropriate fit.
Some clients begin the selection process using a broad-based RFI to cast a wide net to between ten and 15 agencies before homing in on a more targeted group of potential partners through an RFP. An RFP follows through on the process to gather and assess targeted information from the agencies that seem most interested in your business and would be the best fit for your advertising needs and culture. It should include tangible factors such as the agency’s ability to provide scalability, proven results, and an acceptable fee model; as well as intangibles such as common goals, cultural fit, and chemistry. Industry experts recommend sending out no fewer than three and no more than six to eight RFPs with a two-to-three week deadline for responses.
Step Four: Choosing the Right Agency
When you have received your RFP responses, arrange for face-to-face presentations from each of the "finalists. " During these meetings, consider quantitative factors including pricing, channel expertise, and analytics/reporting capabilities; as well as qualitative – or intuitive – considerations such as the agency’s culture, and the chemistry between your staff and the agency’s team. Decide which of these factors are most important to your business goals.
Step Five: Negotiate Contract Terms
Contract length can often be a sticking point in negotiations. Before signing any contract, you should clearly understand the pricing, contract length, and renewal status. Many advertisers want the flexibility of a month-to-month contract. However, agencies usually want longer contracts to ensure revenue flow. One factor to consider is that many digital campaigns, particularly PPC and SEO programs, take several months to build results. If an agency is offering bundled services with additional built-in costs (i.e., website design, domain name procurement, call-tracking numbers, etc.) then an annual contract may be necessary. Sometimes annual contracts can include a three-month opt-out provision.
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