LONDON: The nature of the relationship between digital agencies and clients is changing as the former move into product innovation and the latter bring more digital work in house, a new study has revealed.
The 2015-2016 Digital Outlook Study, from trade group SoDA – The Digital Society, was based on a worldwide survey of 680 decision makers, evenly split between advertisers and digital agencies.
This found that 27% of clients now claimed to work with no agencies, more than double the 2014 figure of 13%.
And those that continued to use agencies were cutting back their rosters. Just 12% of brands had four or more digital agencies in 2015, compared to 21% in 2014.
But three quarters of clients reported that digital agencies were likely to become a 'lead' partner agency. And for these, product innovation has emerged as a new business opportunity.
Half of agency respondents indicated they were consulting with clients on new product and service offerings, blurring the space between agency and consultancy. User-centric design, emerging tech and trends as well as product incubation were all cited as key priorities for both clients and agencies.
"Clients in 2015 feel tremendous pressure to understand and leverage emerging technology trends in order to innovate their operations as well as the products and services they offer to their customers," said Chris Buettner, SoDA executive director and managing editor of The SoDA Report.
"In fact, expertise in emerging trends is now the number one skill clients most value in their agency partners, up from a distant third in 2014," he added.
Consequently, those agencies and production companies that had invested early in innovation labs and product incubators – were benefiting most from clients' new needs. "They're also increasingly bringing their own IP directly to market," Buettner noted.
These trends were also remarked on, if not quantified, at the Digital Marketing Exchange, a networking event held in the autumn of 2014.
The head of one digital agency observed: "The real value of us as agencies has always been fundamentally about creativity, but increasingly it's about diversity and experience – you're no longer an educator, you're now a partner trying to bring freshness into their thinking."
Data sourced from SoDA – The Digital Agency; additional content by Warc staff