Digital Marketing and Clients

Transcription

1 Digital Agencies 2016 Are You on Track or Are You Lagging Behind? WEB

2 Introduction There has been a lot of noise about digital marketing in the last few years, and almost every company around the world feels the need to deal with this. In order to satisfy their clients, digital agencies must often decide between the client s expectations and the limitations of their own business. What are their plans for 2016? What tools and solutions will they mainly be offering their clients? What are their struggles? Do their clients understand digital marketing well, and to what extent are they cooperative? And how much are the agencies paid for digital services? Is your agency on track or is it lagging behind? We surveyed a random sample of more than 300 senior managers and directors of digital agencies in ten countries across three continents. These decision-makers are no freshmen. With an average age of 39 years and responsibility for 30+ employees, they offer a strategic view of their needs, their clients needs, and the industry s trends. Highlights The vast majority of digital agencies plan to hire new people and invest more money in software in At this moment, it is primarily the agencies that are deciding about the brands and products their clients use. Web development, analytics, , social media, and content marketing are still the core businesses of most agencies. As for the solutions and tools, content management systems and social media management solutions are the most recommended, though the bigger agencies are also suggesting e-commerce, CRMs, and automation platforms to their clients. Although the majority of agencies feel that there are lots of competitors in the market, it seems that it is mostly the clients that concern them. Clients want to use digital marketing but don t understand it properly and usually expect lots of work for little money. The representatives of digital agencies believe that success lies in a better understanding of digital marketing from the client s side. Nevertheless, employees are also expected to understand tasks better. The average price of one project varies a lot. Regarding the betterperforming agencies, a project costs twice as much when compared to the rest. Relative to the others, agencies in Australia and New Zealand charge less while those in the US charge more. 02

3 Plans for 2016 Strategies for Success So, Who Are the Agencies? Throughout this report, we are comparing above- and below-average agencies. This definition is based on self-evaluation, where managers described their agencies as performing better or worse than the industry, taking into account the region in which they mainly operate. Although self-evaluated, the definition also reflects their turnover in While revenue was approximately $4.5 million in above-average agencies, it was just $1.9 million in below-average agencies. Which Activities Does Your Agency Plan to Do Next Year? less likely < > more likely Degree of Likelihood (%) Hire more people Invest more money in software Australia, together with New Zealand, seems to be the most progressive region. Agencies there are planning to outsource work more and will change their CMS/digital marketing platform more often than agencies in other regions. Other agencies, especially in the UK and Czech Republic, do not plan such significant changes this year. US United Kingdom Invest more money in hardware Outsource work more Acquire another company Australia New Zealand Benelux Czech Republic Change CMS/digital marketing platform Merge with another company 03

4 The Growing Season The vast majority of digital agencies plan to hire new people and invest more money in software in The growing and more profitable agencies plan to make even more significant changes. They are more likely to hire new people and invest in both software and hardware, as well. 81% Hire more people 66% 71% Invest more money in software 62% 63% Invest more money in hardware 55% 68% 52% Outsource work more 46% 55% 45% Acquire another company 34% 44% Change CMS/digital marketing platform 33% 36% Merge with another company 26% 90% 76% 42% The majority of business representatives across all regions believe that all of these changes will increase the efficiency of their work significantly. Those that plan to hire more people, invest more money in both software and hardware, and change their CMS/digital marketing platform have especially high hopes. 91% 89% 86% 81% 82% 86% 79% 80% 71% 63% 52% 45% 44% 36% Hire more people Invest more Invest more Outsource money in work money in hardware more software Above-average agencies Below-average agencies Acquire another company Plans for 2016 Expected increased efficiency The orange columns show the percentage of agencies that plan to do these activities in 2016, and the yellow columns refer to the percentage of managers from these agencies that believe that such changes will increase the efficiency of their agency s work. Change Merge with CMS/digital another marketing company platform 04

5 The Landscape of Digital Agencies: Tools and Solutions Web development, analytics, marketing, social media marketing, and content marketing are still the core businesses of most agencies. Loyalty programs, customer communities, remarketing, and gamification are the least demanded and, therefore, the least provided services. Personalization and Automation? Agencies Aren t There Yet Solution that is more typical for below-average agencies Web Analytics Web Development Core Business Social Media Marketing Graphic Design Marketing Content Marketing 60% Solution that is more typical for above-average agencies Application Development SEO 40% Personalization of Online Content and Offering Video Advertising (online) Gathering and Analyzing Online Customer Data 30% Mobile-specific Marketing Marketing Automation Online Display Advertising Search Ads 20% % of above-average agencies that offer the service On average, 38% of agencies offer digital marketing personalization, and 31% provide marketing automation (lead nurturing) to their clients. Remarketing Customer Reviews and Community Gamification Loyalty Programs (online) 10% 20% 30% 40% % of below-average agencies that offer the service 05

6 The Most Recommended Solutions As for the specific software and solutions, web and mobile analytics, content management systems, social media marketing, and marketing solutions are the most recommended 58% Web and Mobile Analytics 51% 63% 58% Web Content Management Platform 63% Social Media Marketing 49% 48% Marketing Solution 43% 40% E-commerce Platform 29% 46% 40% Customer Relationship Management Software 30% 45% 35% Marketing Automation/Integrated Marketing Software 25% 32% Testing and Optimization Tools 26% 23% Lead Scoring 16% 20% Personalization Software 11% 25% Above-average agencies Below-average agencies 40% 35% 26% though the bigger agencies also suggest e-commerce, CRMs, and automation platforms to their clients. These are the solutions most recommended, besides the traditional Top 4 CMS, , social, and analytics. We expect them to be the future competitive means for agencies. As their prices get lower, smaller clients will be able to afford them. 06

7 The Marketing Landscape: Building Expertise Who Knows What s Best? Clients Listen to Their Agencies At this moment, it is primarily the agencies that decide about products. According to managers, less than a quarter of their clients suggest or choose the software and cloud solutions themselves. The rest are driven by the agency providers. This estimate is universal for all agencies, regardless of their size or region. 77% of solutions are based on agency recommendations Solution Adoption by Agency Clients Open source or in-house-developed solutions are not on the decline in-house solutions seem to be less popular only in the UK but commercial solutions prevail. They are used more often, not surprisingly, by the best performing companies across all regions. However, a significant number of agencies fear that open source software is insecure (20 33%, depending on the solution) or inadequately supported (17 26%). That is more than double the average number for commercial solutions. Interestingly, it is the smaller agencies that are more critical. 49% prefer in-house-developed software 67% prefer commercial software 54% prefer open source software All-in-one vs. Best-of-breed? According to the agencies, 60% of their clients prefer a more universal, therefore, all-in-one solution across all regions. 60% prefer all-in-one solutions 07

8 Struggles? Usually with Clients Although the majority of agencies feel that there are lots of competitors in the market, it seems that it is mostly the clients that concern them. Clients want to use digital marketing but do not understand it well (78% agree). They also expect a lot of work for little money (78%) and acquire many digital marketing tools but do not use them (73%). It seems that less successful agencies have a tendency to blame their clients for not understanding digital marketing and for wanting a lot for little money. 80% We have a lot of competitors 78% 82% 78% but don t understand it well 75% 84% 78% Our clients expect lots of work for little money 75% 83% Our clients acquire many digital 73% marketing tools but don t use them 72% 58% Our agency doesn t have enough clients 56% 51% Our agency doesn t have enough quality employees 51% 47% Most of the projects aren t completed on time 47% 47% of the projects aren t effectively 44% Most managed or executed by employees 43% 45% 41% Most of the projects aren t profitable 39% 42% Our clients want to use digital marketing Above-average agencies Below-average agencies 75% 62% 52% 08

9 The Point of View Depends on the Region There are interesting differences between specific regions regarding specific attitudes. Managers in the Czech Republic complain more about clients that expect lots of work for little money, but are significantly less critical in terms of the number of clients, the timely completion of projects, profitability, and (comparable to the UK) the quality of their employees. On the other hand, managers in Australia and New Zealand complain more about their own employees and the size of their clients portfolios. disagree< > agree Degree of Agreement (%) We have a lot of competitors Our clients want to use digital marketing but don t understand it well Our clients expect lots of work for little money Our clients acquire many digital marketing tools but don t use them Our agency doesn t have enough clients Our agency doesn t have enough quality employees Most of the projects aren t completed on time Most of the projects aren t effectively managed or executed by employees Most of the projects aren t profitable 09

10 Achieving Greater Success? It s All About People! Contributed to greater success significantly more Contributed to greater success significantly less 1 40% 2 e Th 30% 20% Which of theseaspects could have realistically helped you minimize loss? (% agree) When considering the last significant success and loss, it is clear that the representatives of digital agencies believe that success lies in understanding digital marketing from the client s side more thoroughly. If clients better understood what they needed, the profitability of their projects would increase significantly. On the other hand, employees are also expected to understand the tasks better. Deeper cooperation would be beneficial. p t at h og te rea cc r su 1 ess % 20% 40% 60% Which of these aspects contributed to success? (% agree) Above-average agencies have even higher expectations of their employees in terms of understanding their tasks. Below-average agencies believe in cheap labor more. 1 40% 2 Above-average agencies agree significantly more Below-average agencies agree significantly more No significant difference % % Factors helping to minimize loss, according to above-average agencies (% agree) Our clients knowing what they need Our employees understanding the task well Our clients being cooperative The use of Agile methodology The use of cheaper labor High range of functionalities High popularity of tools and digital marketing Our clients knowing what they need Our employees understanding the task well Our clients being cooperative The use of Agile methodology The use of cheaper labor High range of functionalities High popularity of tools and digital marketing 10% 20% 30% 40% 60% Factors helping to minimize loss, according to below-average agencies (% agree) 10

11 Project-oriented Work Fully in Place How Many Projects? On average, agencies undertook 42 projects in There is little difference between above-average (44 projects) and below-average agencies (37 projects), but significant differences can be seen among specific countries. US, Australian, and New Zealand agencies are at the top, while European companies completed far fewer projects. US 45 projects United Kingdom 35 projects Australia New Zealand 51 projects Benelux 34 projects Czech Republic 24 projects How Long Does It Take? The average length of a project also varies slightly according to the country. While one project usually takes four months, the average in Benelux is seven months. US 4 months United Kingdom 4 months Australia New Zealand 5 months Benelux Czech Republic 7 months 2 months 11

12 Projects Usually Take Longer than Estimated A third of the agencies admit that projects usually take longer than estimated. This applies more to above-average agencies (39%). Comparatively, US agencies are doing much better a quarter of their managers declare that their projects usually take longer. US 26% projects United Kingdom 40% projects Australia New Zealand 53% projects Benelux 39% projects Czech Republic Based on open questions, the managers suggest that the reasons for project delays can usually be found on the client s side specifically, by not being sure of what they really want, a low awareness and understanding of digital marketing tools, and changing requirements. The client does not provide the necessary materials in a timely fashion, and the client changes their mind and dramatically alters the project halfway through. 7% projects Above-average Agencies Are More Likely to Use Agile Methodologies 66% Above-average agencies 41% Below-average agencies Using Agile methodologies might be one of the reasons for success, since above-average agencies are more likely to use them. This especially applies to the Australian and New Zealand region. US 54% projects United Kingdom 64% projects Australia New Zealand 76% projects Benelux 38% projects Czech Republic 57% projects 12

13 Clients Pay for Expertise Services are charged most commonly according to the project s costs (75%), but half of the agencies also charge according to an hourly rate. Charging for projects based on Agile development is a practice yet to be used widely. The numbers suggest that there are some discrepancies in how agencies charge their clients according to an hourly rate 75% according to project cost 12% according to an Agile approach Above-average agencies use an hourly rate more often. This way of charging is used significantly less in Benelux and the Czech Republic. Hourly rate 55% Above-average agencies 41% Below-average agencies 50 Project cost 76% Above-average agencies 74% Below-average agencies Agile development 14% Above-average agencies 8% Below-average agencies Hourly rate Project cost Agile development The average hourly rate is $190. While above-average agencies charge $225 per hour on average, below-average agencies charge $105. $105 $190 $225 13

14 Who Gets the Most? UX and Graphic Designers Are Paid Best In general, UX and graphic designers are paid better per hour than developers and marketers. This difference is even more evident in outperforming agencies. 10 $31 Developer $30 Marketer $35 UX Designer $35 Graphic Designer 15 Developer $31 Above-average agencies $32 Below-average agencies Marketer $31 Above-average agencies $27 Below-average agencies UX Designer $37 Above-average agencies $30 Below-average agencies Graphic Designer $37 Above-average agencies $31 Below-average agencies Average Wage per Hour (USD) Developer Hourly wages are almost equally distributed among all specializations in the US, while there are significant differences in other regions. You would be lucky if you were a UX designer in Australia or a graphic designer in Benelux! Marketer UX Designer Graphic Designer 14

15 How Do Average Prices for Projects Vary? With better-performing agencies, the price for a project is twice as much, compared to the rest. Agencies charge the most in Australia and New Zealand, but charge surprisingly less in the US, considering the higher wages of their specialists. $135,000 project price for above-average agencies $65,000 project price for below-average agencies $105,000 US United Kingdom $125,000 Australia New Zealand $190,000 Benelux $140,000 Czech Republic $29,000 According to managers, the majority (76%) of projects are profitable, regardless of the performance and region. 76% profitable projects 15

16 The Factors That Lead to More Projects You now know that the below-average agencies have a higher tendency to blame their clients for not understanding digital marketing and for wanting a lot for little money. But the problem is likely due to weaker cooperation between agencies and clients, especially in terms of knowledge sharing. Agencies have to be able to clarify all issues and explain all uncertainties before the project starts. Maybe that is why the above-average agencies have even higher expectations of their employees in terms of understanding the tasks. This could also explain why the majority of the agencies plan to hire new people. As for the solutions, web and mobile analytics as well as content management systems will be recommended the most to clients this year, especially by the above-average agencies. This suggests that these solutions will be crucial for greater success one of the reasons why the majority of agencies plan to invest more money in software. Those that plan to change their CMS/digital marketing platform have especially high hopes in terms of work efficiency. If you are one of those agencies that are looking for a better CMS/digital marketing platform, the time is now. And remember the majority of clients ask for an all-in-one solution! 16

17 How Do We Know This? About the Research Millward Brown surveyed more than 300 senior managers and directors of digital agencies across three continents. Responses were collected from an invitation-only online B2B research panel in December Millward Brown is a worldwide marketing research and consultancy agency that adheres to the ESOMAR rules on data collection and publication. For more information, please visit About Kentico Software Kentico Software provides an all-in-one CMS, E-commerce, and Online Marketing platform that drives business results for companies of all sizes, both on-premise or in the cloud. Founded in 2004, Kentico is a Microsoft Gold Certified Partner headquartered in the Czech Republic with offices in the US, UK, Netherlands, and Australia. Kentico has 1,000 digital agency partners and powers more than 25,000 websites across 100 countries. Customers include Gibson, Twinings, Ingram Micro, Mazda, Kingspan, Hunter Fan, Starbucks, and Allergan Kentico Software