Digital agencies and their clients have started teaming up for longer partnerships, as opposed to the erstwhile one-off projects. A look at the change.
Some time back, at afaqs!, we stopped covering news about new-account wins by digital agencies. This was mainly because most of these accounts were short-term projects, after which the agency wouldn't be involved with the client at all.
But in the last year or so, whenever we explained our position to some of these digital agency heads, they replied that their recent account acquisitions were long-term deals and that the particular agency is its long-term digital partner. One-off cases, we thought, and kept ignoring them. When it happened for the second time, we took note but the third instance got us thinking.
Today, the global economic climate and the stress on every marketing dollar to instantly perform are changing the expectations for strategy, execution and delivery of a campaign. Meanwhile, agencies also learned the truth that a deeper involvement with their clients and solving business - rather than marketing - problems was the best way to provide value. Most of them now prepare themselves with the brand's digital roadmap at least for one financial year.
This was followed by LG India going to Havas Media Digital in July 2013. LG had earlier used Runtime Solutions, Publicis Modem and Reprise Media on various occasions. Meanwhile, Quick Heal Technologies consolidated its digital duties with Motivator, GroupM. It had earlier used Cogmat for a couple of its campaigns in 2013.
There are more examples. Motivator roped in Himalaya, which had used Id8Labs in some of its digital campaigns. Havells India too picked Motivator as a long-term partner. The brand had earlier used the services of New Media Guru for one of its campaigns. Similarly, Yamaha, which had earlier used DDB Mudra in one of its campaigns, went in for Motivator as a long-term partner.
Chicco, the baby care brand from Italian health and wellness products major Artsana Spa Baby, named Sirez Infosystems, a digital marketing agency from the Sirez Group, as its long-term digital partner, in December 2013. In the same month, Dentsu Digital, a fully integrated digital marketing solutions company of the Dentsu India Group, won the digital duties of Gatsby, a brand of personal care products aimed specifically at men. ITC's lifestyle retailing business division - best known for its sub-brands Wills Lifestyle and John Players - is looking for a long-term digital partner and by the time you read this, would have zeroed in on one.
Secondly, agencies are trying harder to acquire key skill sets so as to execute crucial activities for clients. "Both clients and agencies are maturing and realise that the days of paying lip service to a medium which is increasingly becoming easier to evaluate performance on, are over. This seriousness is leading to marketing plans and client-agency relationships graduating from the esoteric," opines Karan Kumar, general manager, Lifestyle Retailing Business Division, ITC.
Many believe that the shift has got to do with the change in the amount of spends that are done for digital media. "Today, some of the top digital spenders could be spending more than Rs. 50 crore on digital marketing every year. This in turn, has led to the demand for partners who can help identify and fulfill the opportunity," says Mathur. Nowadays, a digital agency bags a client for at least 12 months.
"Digital itself has grown into multiple verticals in the last few years. Multiple channels under digital media have emerged and agencies are required to manage all assets. Earlier, clients had to deal with multiple partners for all these. With agencies growing in scale and marketers wanting to reduce dealing with the number of partners, some consolidation is happening," shares Unny Radhakrishnan, head of digital, South Asia, Maxus.
The project-based approach works best for turnkey initiatives like developing apps or a website - but for integrated digital marketing that includes search and display, SEO, social, mobile - it makes more sense to have a long-term model in place. "There are multiple reasons that don't tend to work any more for the project-based model. The primary reason is inconsistency in brand communication every time the client comes back with a new project. Besides, there are no cost benefits as the clients want the agencies to execute all new projects at the same old cost. Besides, as a client, it is a huge logistical nightmare to evaluate multiple agencies for every project and on a project-based model, it is difficult to get dedicated resources from agencies on the brand's account," explains R P Singh, CEO, Sirez Group.
An agency also benefits from a long-term association. Once an agency partner has assurance for a long-term business, they can invest more in resources, tools or research, which is ultimately a huge plus for the brand only.
A decade ago, it was difficult for traditional agencies to provide the scale and expertise required for digital marketing and we witnessed the emergence of digital specialist agencies. But now, mainstream agencies have woken up to digital - something, they were being a little "ostrich-like" about - and this has led to the some of the lead agencies working hard to possess specialist digital skill-sets, either organically or by acquiring them.
Acquisitions apart, many mainstream agencies have acquired key skill sets in-house by appointing digital specialists in their ranks. Many have also developed in-house digital courses to enable their workforce digitally. For example, in GroupM, the onus to enrich clients on digital was envisioned nearly a decade ago and hence, in the agency, digital certification is imperative. There are in-house GroupM digital courses already in place to help the employees understand and execute the media better for its clients.
"Large agencies are building skills and expertise organically as well as through strategic partnership, mergers and acquisitions. There are many niche skill sets that they have already acquired. For others, however, the agency might involve with another expert to get the work done, but not many clients would be involving with small outfits on a project-to-project basis," points out Glen Ireland, CEO of Dentsu Digital.
Many believe that this tussle is here to stay for some time. But, in spite of that, the demand will be to have partnerships that are strategic and which allow explosion of brand essence-based messaging across multiple media. All brands need a long term strategic plan for digital and it is most likely that clients will have one key partner who will, in turn, get the required specialists (individuals or smaller outfits).
Dentsu Digital has 90 per cent of its clients engaged with it on a long-term model. But, there is still that 10 per cent who believe that project-based model is the way to go. So is there really a room for both models to co-exist?
A brand might want to work with multiple agencies on multiple projects to begin with. That should help them come to know which agencies have a better appetite for what kind of digital marketing work because - all said and done - even today there are agencies that lean more towards one dimension of digital marketing.
"If the brand is a rank first-timer to this extremely specialised and quantifiable dimension of marketing, maybe testing out waters with multiple-agencies gives it more freedom and space to decide its ultimate charter, and in this case project-based model will work better," states Kumar However, for brands wanting to do something serious in this domain, a long-term partnership is the only recommended approach.
"There is enough opportunity for everybody to step into. Hence, a long term partner in the case of digital would be the most judicious decision for both to build internal practices and evolve the product continuously," says Iyer.
As Karan Kumar puts it, the last word in digital marketing is far from spoken. Therefore, the pursuit of excellence on this medium must be persisted with by both brands and agencies. They need to continue to push themselves higher on the learning curve, and that is only achievable when there is a long-term relationship in place, a union that would last for a longer period.
A Note From the Editor
Less than a year ago, we had run a Cover Story in this magazine, 'Harmless Flirting.' It was about the growing trend among marketers to break alignment and employ outside agencies on their brands on a project basis. The story made the point that while the marriage between the marketer and the agency stayed intact, the former flirted with an outsider, typically a boutique, for specific campaigns.
And here we are, saying exactly the opposite for marketers and digital agencies - that they are moving from a project-based relationship to a more enduring one. Why is that?
The digital story is different. Some years ago, when marketers began to move online, ad spends were small. Digital agencies, start-ups themselves, were responding to client demands and changing shape as they went along. In response to marketer demands, all kinds of specialist forms began to take root.
As time went by, online budgets got larger as did the volume of work. Marketers no longer wanted to deal with multiple agencies. In response, agencies began to acquire other agencies or develop all the specialisations under one roof. Mainline agencies too got into the digital act.
So, is the marketer-agency relationship of the same kind as in the mainstream advertising business? Not yet. Contracts are still of limited duration, typically one year long, but this is a big improvement over entirely project based brand work. At least it brings some consistency to the work on a brand; and from an agency viewpoint, a better sense of the future when it comes to hiring people.
To return to the beginning: if clients are seeking stability in their agency relationships when it comes to online, why are they flirting when it comes to mainstream advertising? What explains the contradiction?
The answer may lie in this truth: Stability in a relationship is a good thing - but too much of a good thing can lead to a decline in the quality of the output.