‘Most of the hierarchy found in the traditional firm must be eliminated, and the walls between functional staffs must be destroyed. You can’t move fast, no matter how good the systems are, if turf fights among functions are the norm, and if even routine decisions must be processed through numerous layers of bureaucracy.” -Tom Peters
Traditionally, digital agencies are tertiary in a client’s hierarchy of marketing strategy and budget allocation.
Proctor & Gamble, for instance, spends between 25% and 35% of its $2.9 billion measured media budget on digital as evidenced by this quote by P&G Chairman-CEO A.G. Lafley that was included in an August 2013 AdAge article, “Our digital, I think, is now up to 35% in the U.S. roughly. It goes up and down, 25% to 35%.”
P&G’s 2012 total U.S. ad spend was estimated at $4.8 billion according to Advertising Age’s DataCenter. And that number included spending on search, social, online video, mobile, and “other costs” according to the article.
Digital agencies such as HyperDisk have been around for roughly 20 – 30 years. The best of these agencies have matured from strictly “website developers” into sophisticated strategic planning and digital brand platforms offering an array of consulting services for branding, revenue management and analysis, as well as media planning.
For example, HyperDisk now provides multiple layers of service for some of the most recognized brands around the world such as Pfizer, Luen Thai, Trump, and The Irvine Company.
No one can argue the enormous amount of change that has occurred in the several decades since digital agencies first emerged forcing them to adapt, learn, and innovate. It is in fact, one of the strengths of these firms.
It’s surprising, then, when Mr. Lafley elaborated, “…some brands are finding digital ‘incredibly effective’ while others need to ‘get up the learning curve faster.’”
“Finding digital incredibly effective?” And then he added, “We’re pounding away on communication effectiveness, OK?”
My initial reaction upon reading this was shock. The CEO of arguably one of world’s largest consumer packaged goods “finding digital incredibly effective” as late as 2013 was quite a revelation. I wonder if the stock holders had the same reaction! I also wondered why digital isn’t leading the marketing efforts for this company (or any company, for that matter)?
Part of the blame may lie at the feet of the agencies themselves. Digital agencies tended to have inferiority complexes partly based on the inability to have produced sales in the early days of online marketing. That, and the relative ignorance most marketing executives had back then about the Internet as a whole, not to mention how it would radically transform their business.
Those executives were reluctant to allocate budget money for unproven channels which forced agencies to accept a small portion of the marketing dollars along with a lower-tier status.
But, it is now almost 2015. For all intents and purposes, it’s time for companies to put digital agencies at the forefront of their marketing strategies and budgets. There are numerous justifications for this premise:
- Digital agencies have a well-established historical record of tracking and reporting on the effectiveness of every dollar spent which is getting more and more refined
- New creative capabilities are allowing digital agencies to push the envelope in terms of design
- New technologies, both on the agency side and the consumer side, are and will continue to provide increasing levels of engagement with the target audience
- Due to the history of small budgets, digital agencies are forced to be more strategic in their planning and implementation
- Digital agencies are typically smaller, more entrepreneurial than traditional firms allowing for more innovation and quicker time to market
- Traditional firms are more inherently territorial and bureaucratic leading to the dysfunction referred to by Tom Peters in the opening quote on this post
- Technology and digital companies are responsible for many of our most popular products (Apple,) largest IPO’s (Facebook), and market share (Google)
Should digital be leading your strategy? The answer is an unequivocal yes. Once that happens, not only will the “2.8% of digital sales spent on digital marketing” reported in a Gartner survey of manufacturers increase, but so will the ROI.