Econsultancy’s Top 100 Digital Agencies report for 2018 includes a chart that I keep coming back to. The chart shows average percentage of total fee income across the top 100, split by business discipline (such as creative or technical development). This split between disciplines in 2018 is contrasted with the corresponding split in 2014, and there are several figures that jump out.
- SEO made up 18% of top 100 billings in 2014. That is down to 11% this year;
- Social media has been hit too, down from 12% to 7% over the last four years;
- Ecommerce is down from 18% of net income to 13%, and CRM/email from 11% to 8%.
There are a number of explanations for these falls. One is that the make-up of the top 100 agencies list has changed since 2014. Consultancies have come to the fore (Accenture Interactive has topped the rankings for two consecutive years). These are companies that are more likely to eschew media (such as social ads and paid search) and will be undertaking end-to-end strategy and tech projects rather than, say, specialist SEO work.
The top 10 companies in the agency rankings are growing disproportionately quickly too, compared to the rest of the list, which may partly explain these average billings per discipline.
But it’s more than just the trick of an average; there’s a trend here and one that validates the Marketing Week columnists who have long lamented our industry’s focus on digital tactics over marketing strategy.
The trend is towards Google and Facebook’s dominance in media, the commoditisation of digital work, the consolidation of marketing activity in-house, and the sharpening of agency positioning.
Let’s look at the decline of SEO, but more broadly search engine marketing, as an illustrative example. For a number of years the writing has been on the wall. Search agencies have changed their offering – the slow ones have gradually added other disciplines (design and build, content, conversion optimisation) and others have become full-service.
Writing for Search Engine Land, David Rodnitsky explains how search has become commoditised: “Over the last several years, Google has changed AdWords to ‘level the playing field’ for advertisers. These changes make it easier for advertisers to drive scale, but also increase cost-per-click (CPC) prices and reduce opportunities for expert optimisation.”
If I were a young marketer, I would resist being pigeon-holed as ‘the guy that does email’ or ‘the social person’ or ‘the search expert’, and I would head to wherever strategy meets design.
One discipline that is booming in 2018, however, is user experience (UX). And it seems to me this is precisely because UX is a broad church. UX is about meeting consumer expectations in a variety of channels, even if those are predominately digital.
UX fits within customer experience and this is at the heart of new agency propositions, where tech meets strategy and experience design.
To some extent these propositions have been forged in the heat of competition from consultancies. Earlier this year, Pierre Nanterme, chief executive of Accenture Interactive, pointed out that the company is staying out of the declining business of media buying and focusing on these more profitable areas.
He says: “Where we are focused on is this high-growth part of the digital marketing environment – what we are calling brand-meets-creativity enabled by technology. This is the sweet spot we decided to invest in.”
Agency groups are increasingly looking to follow this model, a trend corroborated perhaps by the fact that technical development, on average, accounts for 24% of fee income from digital work in the Top 100 Digital Agencies 2018. Creative work commanded the greater share of fee income five years ago, but technical development has since outstripped creative.
Of course, this doesn’t mean specialisms are redundant. Nadya Powell, head of diversity and inclusivity at BIMA, comments on the top 100, “Many brands are looking for something new: smaller, more agile partners who can work together in a nested way to solve some very specific problems.”
Solving specific problems is all about collaboration, not a transactional relationship between agency and client. What those top 100 charts say to me is that if I were a young marketer, I would resist being pigeon-holed as ‘the guy that does email’ or ‘the social person’ or ‘the search expert’, and I would head to wherever strategy meets design.
Ben Davis is the editor of Econsultancy