The Forrester Wave : Digital Agencies In China Strategy And Execution, Q1 2015

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1 For: Marketing Leadership Professionals The Forrester Wave : Digital Agencies In China Strategy And Execution, Q by Xiaofeng Wang, January 27, 2015 Key Takeaways OgilvyOne, Isobar, And Razorfish Lead The Pack Forrester s research uncovered a market in which OgilvyOne, Isobar, and Razorfish lead the pack. VML IM2.0, Wunderman, and BlueDigital offer competitive options. Proximity and Possible are still growing in China. Digital Agencies In China Are Growing Their Business And Expanding Their Roles Digital agencies business is growing as marketers increase their investments in digital to reach China s 632 million online consumers. China s digital landscape is changing quickly, and digital agencies are expanding their roles to better serve clients, including social and mobile marketing, customer experience strategy, and ecommerce solutions. Strategy Services And Innovation Are Key Differentiators Because agencies are mature in terms of digital development and implementation, their approach to strategy dictates which providers will lead the pack. Agencies that can provide strategy services and innovation capabilities position themselves to successfully deliver digital services to their clients. Access The Forrester Wave Model For Deeper Insight Use the detailed Forrester Wave model to view every piece of data used to score participating vendors and create a custom vendor shortlist. Access the report online and download the Excel tool using the link in the right-hand column under Tools & Templates. Alter Forrester s weightings to tailor the Forrester Wave model to your specifications. Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA USA Tel: Fax:

2 January 27, 2015 The Forrester Wave : Digital Agencies In China Strategy And Execution, Q The Eight Agencies That Matter Most And How They Stack Up by Xiaofeng Wang with Frederic Giron, Luca S. Paderni, and Zhi Ying Ng Why Read This Report In Forrester s 30-criteria evaluation of the strategy and execution capabilities of digital agencies in China, we identified the eight most significant agencies BlueDigital, Isobar, OgilvyOne, Possible, Proximity, Razorfish, VML IM2.0, and Wunderman in the category and researched, analyzed, and scored them. This report details our findings about how well each vendor fulfills our criteria and where they stand in relation to each other to help marketing leadership professionals select the right partner for their digital marketing strategy and execution. Table Of Contents Digital Agencies Become Strategic Partners For Marketers In China Global Players Are Still The Main Full-Service Digital Agencies In China Digital Agencies In China: Evaluation Overview Evaluation Criteria Target Strategy And Implementation Capabilities Digital Agencies Differentiate In Strategy Services And Innovation Agency Profiles Notes & Resources In the fourth quarter of 2014, Forrester interviewed and evaluated the services of eight agencies: BlueDigital, Isobar, OgilvyOne, Possible, Proximity, Razorfish, VML IM2.0, and Wunderman. Related Research Documents The Forrester Wave : Innovation Agencies, December 8, 2014 Select The Right Interactive Agency In China February 21, 2013 Leaders Strong Performers Contenders 8 Supplemental Material 2015, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please clientsupport@forrester.com. For additional information, go to

3 The Forrester Wave : Digital Agencies In China Strategy And Execution, Q Digital Agencies Become Strategic Partners For Marketers In China According to Forrester forecasts, by the end of 2014, China would have 670 million Internet users and the online penetration rate would reach 48%. 1 To reach these online consumers and engage with them, marketing leadership professionals in China need more digital marketing support from their agencies. As such, digital agencies play a more important role than ever, as they: Manage a rapidly growing digital marketing budget. Forrester forecast data indicates that spending on online advertising in China has almost doubled over the past two years from $9.2 billion in 2012 to $18.1 billion in 2014 and will double again by 2017 to reach $38.1 billion. 2 Leading agencies in China are seeing an increasing shift of ad budgets from traditional media to digital so these agencies must support more complex digital marketing plans and campaigns. 3 Expand to a broader spectrum of digital services. With the rapidly evolving digital landscape in China, digital agencies are constantly adding new digital services including social marketing, mobile marketing, customer experience strategy, customer relationship management (CRM), and ecommerce that go far beyond web development and online advertising campaigns. Get more involved in shaping clients business strategy. Digital is core to the future of virtually all businesses, and China is no exception. 4 Digital agencies are helping to accelerate their clients transformation into digital businesses by providing business consulting services and perspectives on ideas, business challenges, and emerging technologies. Global Players Are Still The Main Full-Service Digital Agencies In China There are hundreds of digital marketing service providers in China, but many of them offer just a handful of services or even just one. Global digital agencies are still the primary players offering a full range of digital services in the market. As we look at the overall digital agency landscape in China, we see three main types of players emerging: Large global agencies with a large and mature local presence. Digital agencies operating under the umbrella of large global agency groups like IPG, Omnicom, Publicis, and WPP have already been present in China for decades and have strong experience in serving both international and local clients. For example, OgilvyOne China was established in 1999 as the first 4A digital agency in the country, with a balanced portfolio of 50% local and 50% global clients. 5 It s also common for a global agency to acquire or merge with a local one. For example, VML acquired a local agency IM2.0 and now operates in China as VML IM2.0. Global agencies that still need time to develop a presence in China. Other global agencies have a much shorter history in China than OgilvyOne. For example, Possible China has only been in the market for three years; the majority of its business comes from global contracts.

4 The Forrester Wave : Digital Agencies In China Strategy And Execution, Q Local agencies that are more vertically focused. Few local digital agencies provide full digital services, like BlueDigital does. Most such as social marketing agency Social Touch and mobile marketing agency Domob focus more on one or a few particular services. Digital Agencies In China: Evaluation Overview To assess the state of the digital agency market in China and see how agencies stack up against each other, Forrester evaluated the strengths and weaknesses of top full-service digital agencies doing business in the country. We selected eight agencies BlueDigital, Isobar, OgilvyOne, Possible, Proximity, Razorfish, VML IM2.0, and Wunderman for our evaluation because each (see Figure 1): Offers a full range of digital services. To qualify as a full-service digital agency that does marketing and strategy, agencies had to have at least seven of the following nine services: digital strategy, web development, technology architecture and support, creative (advertising) services, /crm, analytics, media planning and buying, search marketing, and emerging media. Demonstrates understanding of the Chinese market. To determine which agencies understand China s ever-changing digital landscape and complicated consumer market and the unique needs of local clients, we only selected agencies that have been operating in mainland China for three years or more. Excels in both client retention and acquisition. To ensure that we included agencies with positive momentum, we only selected those with a client retention rate above 70% and for which 20% of their clients were newly acquired in 2013.

5 The Forrester Wave : Digital Agencies In China Strategy And Execution, Q Figure 1 Evaluated Agencies: Agency Information And Selection Criteria Vendor BlueDigital Isobar OgilvyOne Possible Proximity Razorfish VML IM2.0 Wunderman Date evaluated Vendor selection criteria Selected agencies must offer at least seven of the following nine digital services: digital strategy, web development, technology architecture and support, creative (advertising) services, /crm, analytics, media planning and buying, search marketing, and emerging media. Selected agencies must have been operating in mainland China for more than three years. Selected agencies must have a client retention rate of at least 70% and have acquired at least 20% of their customers during Source: Forrester Research, Inc. Unauthorized reproduction or distribution prohibited. Evaluation Criteria Target Strategy And Implementation Capabilities After examining past research, user need assessments, and vendor and expert interviews, we developed a comprehensive set of evaluation criteria. We evaluated vendors against 30 criteria, which we grouped into three high-level buckets: Current offering. To gauge each agency s capabilities in developing and measuring digital programs, we reviewed their strategy, development and execution, measurement and analytics, emerging media, and account management services. For each major criterion, we evaluated their processes and methodologies, staff and skills, tools, and overall client ratings. Strategy. We also looked at each agency s forward-looking business strategy to assess its potential capability in meeting clients demands over the next two to five years. We evaluated the strength of each agency s management teams, company vision, product and services road map, discovery and innovation initiatives, focus (key industries or audience types), and reach (geographic presence).

6 The Forrester Wave : Digital Agencies In China Strategy And Execution, Q Market presence. We evaluated revenues, revenue growth, employee base, and the commitment and sophistication of client reference accounts. Digital Agencies Differentiate In Strategy Services And Innovation The evaluation uncovered a market in which agencies are competent in digital marketing implementation and strive for differentiation in their approach to strategy and innovation capabilities (see Figure 2): OgilvyOne, Isobar, and Razorfish lead the pack. Each of these agencies has a proprietary strategy framework OgilvyOne s Dave, Isobar s Did, and Razorfish s BNT that helps clients find the connection between understanding consumers and overcoming their own business and transformation challenges. They have also invested in product and technology innovation, such as OgilvyOne s innovation unit K1ND and its Internet of Things client projects; Isobar s creation of musicons (a new music-sharing technology on WeChat); and Razorfish s two dedicated social hubs in Shanghai and Wuhan. VML IM2.0, Wunderman, and BlueDigital offer competitive options. These three agencies cover many of the major criteria well, but not as consistently as the Leaders. They do excel in specific areas and successfully differentiate themselves: VML IM2.0 s has found success in crafting localization strategies for foreign brands; Wunderman has strengths in the automobile industry and CRM; and BlueDigital has increased its execution capabilities by acquiring specialist agencies and tech vendors that would expand its digital service capabilities. Proximity and Possible are still growing their operations in China. These two agencies have less experience in China and are smaller in both company size and revenue. But they do have clear strategic approaches: Possible focuses on ecommerce and Proximity on its data lab and creative intelligence. This evaluation of the digital agency market in China is intended to be a starting point only. We encourage clients to view detailed product evaluations and adapt criteria weightings to fit their individual needs through the Forrester Wave Excel-based vendor comparison tool.

7 The Forrester Wave : Digital Agencies In China Strategy And Execution, Q Figure 2 Forrester Wave : Digital Agencies In China Strategy And Execution, Q Strong Risky Strong Bets Contenders Performers Leaders OgilvyOne Current offering VML IM2.0 Wunderman Proximity BlueDigital Possible Isobar Razorfish Go to Forrester.com to download the Forrester Wave tool for more detailed product evaluations, feature comparisons, and customizable rankings. Market presence Weak Weak Strategy Strong Source: Forrester Research, Inc. Unauthorized reproduction or distribution prohibited.

8 The Forrester Wave : Digital Agencies In China Strategy And Execution, Q Figure 2 Forrester Wave : Digital Agencies In China Strategy And Execution, Q (Cont.) Forrester s Weighting BlueDigital Isobar OgilvyOne Possible Proximity Razorfish VML IM2.0 Wunderman CURRENT OFFERING Strategy Development and execution Measurement and analytics Emerging media capabilities Account management 50% 35% 10% 25% 25% 5% STRATEGY Company vision Strength of management team Product and services road map Discovery and innovation Focus and reach 50% 40% 5% 25% 20% 10% MARKET PRESENCE Clients Financials Internal resources 0% 40% 30% 30% All scores are based on a scale of 0 (weak) to 5 (strong). Source: Forrester Research, Inc. Unauthorized reproduction or distribution prohibited. Agency Profiles Leaders OgilvyOne. This agency leads for its high level of competence across all major criteria in particular strategy, measurement and analytics, account management, and emerging media capabilities. OgilvyOne has a wide array of proprietary frameworks, tools, and models for strategy, development, and analytics and dedicates resources to innovation. It also provides clients with a higher level of integrated services via Neo@Ogilvy and Social@Ogilvy. Isobar. This agency has excellent development and execution capabilities to complement its strengths in account management, strategy, analytics, and emerging media capabilities. Isobar excels in mobile marketing and focuses on innovation by developing tools, models, and new technologies such as musicons. Razorfish. This agency has strong capabilities in development and execution, strategy, account management, and emerging media capabilities. Razorfish differentiates itself via its strong focus on building and operating an ecommerce platform for its clients, generating a healthy 30% of its revenue from this line of business.

9 The Forrester Wave : Digital Agencies In China Strategy And Execution, Q Strong Performers VML IM2.0. This agency s current offering is just as strong as those of the Leaders, especially in account management, strategy, development and execution, and analytics. But its product and services road map is not as specific, focusing on a few verticals such as fast-moving consumer goods. Wunderman. This agency has fine capabilities in strategy, development and execution, and analytics but is less competitive in discovery and innovation. Wunderman has a strategic focus on the technology, automotive, and luxury goods verticals. BlueDigital. This is the only native Chinese digital agency in this Forrester Wave evaluation. BlueDigital has strong account management skills and good development and execution capabilities but is less competitive in strategy and emerging media capabilities. Contenders Proximity. This agency has fine capabilities in development and execution and analytics and received strongly positive client feedback on its strategy. However, Proximity is less strong when it comes to account management and emerging media. Possible. This agency has good development and execution capabilities, but it has room to improve in its strategy, client management, analytics, and emerging media capabilities. Possible has only been present in China for three years and focuses on ecommerce service in the country. Supplemental Material Online Resource The online version of Figure 2 is an Excel-based vendor comparison tool that provides detailed product evaluations and customizable rankings. Data Sources Used In This Forrester Wave Forrester used a combination of two data sources to assess the strengths and weaknesses of each solution: Agency surveys. Forrester surveyed vendors on their capabilities as they relate to the evaluation criteria. Once we analyzed the completed vendor surveys, we conducted vendor calls where necessary to gather details of vendor qualifications. Client reference calls. To validate product and vendor qualifications, Forrester also conducted reference calls with three of each vendor s current customers.

10 The Forrester Wave : Digital Agencies In China Strategy And Execution, Q The Forrester Wave Methodology We conduct primary research to develop a list of vendors that meet our criteria to be evaluated in this market. From that initial pool of vendors, we then narrow our final list. We choose these vendors based on: 1) product fit; 2) customer success; and 3) Forrester client demand. We eliminate vendors that have limited customer references and products that don t fit the scope of our evaluation. After examining past research, user need assessments, and vendor and expert interviews, we develop the initial evaluation criteria. To evaluate the vendors and their products against our set of criteria, we gather details of product qualifications through a combination of lab evaluations, questionnaires, demos, and/or discussions with client references. We send evaluations to the vendors for their review, and we adjust the evaluations to provide the most accurate view of vendor offerings and strategies. We set default weightings to reflect our analysis of the needs of large user companies and/or other scenarios as outlined in the Forrester Wave document and then score the vendors based on a clearly defined scale. These default weightings are intended only as a starting point, and we encourage readers to adapt the weightings to fit their individual needs through the Excel-based tool. The final scores generate the graphical depiction of the market based on current offering, strategy, and market presence. Forrester intends to update vendor evaluations regularly as product capabilities and vendor strategies evolve. For more information on the methodology that every Forrester Wave follows, go to Integrity Policy All of Forrester s research, including Forrester Wave evaluations, is conducted according to our Integrity Policy. For more information, go to Endnotes 1 Source: Forrester Research World Online Population Forecast, 2014 To 2019 (Global). 2 Source: Forrester Research Online Display And Search Marketing Forecast, 2014 to 2019 (Asia Pacific). 3 A major proportion of advertising budgets is shifting from TV to online video. See the July 16, 2013, Marketers Embrace The Power Of Digital Video In China report. 4 The digital economy is no longer about doing something old such as selling or promoting products in a new way. The swift and metamorphic impact of digital disruption will overhaul products, invert category economics, and redefine customer relationships. See the March 7, 2013, How To Organize For The Digital Future report. 5 Source: OgilvyOne China company introduction ( id=3551&items=1).

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