Diversify or Die – Part II: A Memo To Full Service Ad Agencies

For those of you that run full service agencies, I recommend reading this Adweek article by Andy McMains: “Marketers to Digital Shops: Diversify or Die.”

After reading, you may feel pretty good about the fact that you’re not a digital firm.   But not so fast grasshopper….

In the article, McMains cites results from our latest 2011 Client’s Look Ahead at Agencies survey where marketers state that in order for digital shops to stay relevant, they need to find their way into more traditional media to meet the needs of marketers looking for fully integrated solutions.

As noted in the Adweek article, “More than two-thirds of the 174 marketing executives polled (67 percent) said digital shops need to offer more traditional services to remain relevant, while just a third thought digital-only firms could survive long term.”

While I completely agree with the findings, there was a point during Andy’s interview that caused me to take pause and think more broadly about the issue.

During the interview, Andy asked a question I found very difficult to answer…but in the end I chose “digital agency with little experience in traditional media” over “full service agency with little digital experience” as my answer.

He asked: “assuming nothing else changes and you have to pick one of the two types of firms today to service your needs, which one are you going to choose?

The way I look at it, it is easier for a marketer to shepherd a digital firm through the less complex landscape of traditional media than it is to shepherd a traditional firm through the very complex world of digital.

In our survey only 18% of marketers believe that traditional full service advertising agencies have “excellent” digital marketing/advertising skills.

This compares to 29% of marketers who believe that digital firms have “excellent” traditional marketing/advertising skills.  Right now, it appears that digital firms in general have the advantage.

Let’s turn the clock ahead 5 years….

You’re a full service advertising agency who has done little to upgrade your digital services.

Sure you do websites, and create facebook pages, and know how to buy banner ads…but do you know how to measure ROI, do you know how to run sophisticated analytics, do you know how to evaluate the impact of print or broadcast on digital activity, do you know how to buy bid-able media versus buying from networks?

You’re in a pitch and you’re up against a digital firm who has only slightly made moves into traditional media.  Who is the marketer going to choose.  Probably not you.

So it’s not just about digital agencies diversifying or dying, it’s about full service firms needing to diversify as well.  If you’re not in it, get on it.  If you don’t have the skill sets, acquire them, or hire them, or build them.  You have a great opportunity ahead of you…you just need to make the effort and keep on top of the changes that will continue to occupy this space.