Why being a good agency is no longer enough to retain your clients by Roy Dewell, net ways UK
Table of Contents BACKGROUND... 2 EVIDENCE... 2 PRESSURES ON MARKETING... 2 HOW THIS WILL AFFECT AGENCIES... 3 REASONS FOR NEED TO CHANGE... 4 REALITY CHECK... 4 POSSIBLE SOLUTIONS... 5 CONCLUSIONS... 7 CONTACTING NET WAYS... 7 1 Why being a good agency is no longer enough to retain your clients July 2009
Background Working in a marketing agency has always been demanding. You need to provide your clients with great designs which deliver their message to the right audience; an understanding of the right way to use the channels where the message will be carried; and all this done at competitive prices supported by effective account management. However, with the advent of a plethora of digital channels this has become even harder. Do more with less. Not the same old same old. Companies are being affected by the credit crunch and a world wide recession is hitting every sector. Marketing departments are not exempt from these pressures. They have less to spend and are being asked to deliver more. So it is understandable if they are being even more careful and diligent in the way that they spend their budgets. And, they are starting to demonstrate an added reluctance to continue with their existing agencies, especially those that have not taken leadership roles in these current economic times. There is clear evidence of a frustration that Internet projects, particularly Web sites, are not delivering the expected benefits, and much of the blame is being directed, rightly or wrongly, to existing agencies. Evidence There is ample anecdotal evidence in the reduction of spend with agencies and the increased rate at which companies change or even drop agencies. There is also more researched evidence available in documents such the CMO report Marketing Outlook 2009 which collected the findings from the Marketing departments of over 650 companies. These findings are consistent with reports from Analyst companies such as Gartner and Forrester. In this paper all the results are taken from the above CMO report to provide a coherent view of the pressures being discussed. Pressures on marketing Like most departments, marketing has less money to spend in 2009. 50% of departments reported cuts in their budget 24% reported that their budget was frozen or not increased in line with inflation. Yet companies demand that even on reduced budgets marketing will either hold or even grow their market share. 2 Why being a good agency is no longer enough to retain your clients July 2009
Surprisingly, a majority of marketing departments expressed the opinion that this is a realistic goal: 48% of marketers have a senior mandate to grow or retain market share. 44% are looking to lower costs & improve go to market efficiencies 81% believe this is a realistic & attainable mandate. As in most departments the spend on programs is higher than the spend on personnel (59% against 41% in the CMO research) so it is likely that most of the savings will be taken from the spend on programs, particularly as only 36% of departments reported an anticipated reduction is staffing as a result of the budget changes. How this will affect Agencies The following chart reports the percentage of marketing departments that will change their agencies. This is the highest number in recent years and particularly shows the perceived need to change agencies involved in Web and interactive marketing. What agency changes do you plan to make in 2009? 3 Why being a good agency is no longer enough to retain your clients July 2009
Reasons for need to change The CMO report details a growing dissatisfaction with the results from web/internet programs particularly in the area of converting web visitors to customers. According to the CMO Council 2009 Report, a majority of marketers are growing their online marketing capabilities and improving performance measurement. However, over 35% are questioning the value and quality of visitors, are failing to convert visitors to leads, or are struggling quantifying the value of online marketing spend. How do you rate your online marketing performance capability? Finally, 32% of respondents specifically reported that limited insights and lack of knowledge of new media solutions is a major issue. Reality check At this point it is worth checking from other sources to determine if this lack of satisfaction with web site conversions can be justified. Marketing departments are paying for focussed and segmented email shots to bring the right people to their web site. Through intelligent use of advertising, banner ads, Google AdWords and increasingly Search Engine Optimisation potential customers are being brought to the web site. 4 Why being a good agency is no longer enough to retain your clients July 2009
But when the people, who obviously have some interest in the offering on the web site, visit the site the conversion rate on commercial web sites is between 1% and 4%. So where the marketing department would like a sale, or sign up to a service (i.e. web site is not just a free information site) at least 96% of the unique visitors leave without completing the transaction for which the site was developed, and media was spent to get them there. Apart from making sure the sites are reasonably well designed and have good navigation until now there has been little marketing can do to affect the conversion rate apart from offering discounts, etc. which all have a cost. The up hill battle to renovate the website is just too great at this time! Viewed from this point you can appreciate why marketing departments feel frustrated. They spend a lot of time, money, and effort to drive traffic to increasing less effective websites. Possible solutions New technology has emerged aimed at converting web visitors into customers or maximising the sales opportunities when existing customers connect to a web site. Specifically net ways CAPPTURE Pop Ins (www.cappture.com), CAPPTURE Connect, and CAPPTURE e Leads (www.net ways.com) are proven, affordable, and easy to implement solutions which are designed to deliver such benefits as increasing sales and lowering the cost of customer acquisition. These on demand solutions can be implemented in a matter of days and involve minimum disruption to on going processes. They can be added by agencies to existing web sites or could be used by agencies and marketing departments to make tactical responses to the need to improve conversion, and ultimately, ROI of web campaigns. They also provide a wealth of reporting to allow marketing to better understand how their campaigns are working. And as the diagram below from the CMO report shows there is a willingness on the part of marketing to spend money on these types of marketing automation solutions. 5 Why being a good agency is no longer enough to retain your clients July 2009
What new marketing automation solutions do you intend to deploy in 2009? Further responses in other sections of the report show that: 53% intend to grow and develop their expertise and reporting for on line and the Web 39% expect an increase in spend on Web/Interactive activities. 60% of departments plan to spend up to $100k on tactical technology developments. Using these affordable and on demand solutions can significantly improve the results from Web sites (or email campaigns) without the need for any technical support and avoiding the risks associated with developing new unproven solutions. Experience elsewhere shows that when implemented by the agency as a pro active service for the marketing department (but of course charged out to that department) they enhance the reputation of the agency with the marketing department. 6 Why being a good agency is no longer enough to retain your clients July 2009
Conclusions The spend of marketing departments with agencies is being affected by budget reductions and the general impact of the credit crunch. However, there is evidence of a growing dissatisfaction with the poor conversion rate of web visitors and the lack of meaningful reporting which is leading to a larger than appropriate increase in the removal of existing agencies. To succeed in this environment, agencies must provide better value and innovative, leading, services which specifically addresses theses particular problems and opportunities for their clients. Marketing departments do not always have the required knowledge and expect their agencies to be fully up to speed on these solutions. There are easy to deploy and affordable proven technologies available which will help to resolve these issues, and there is an acceptance by marketing that they should increase spending in this area. Successful agencies will embrace these types of solutions to avoid becoming part of the growing percentage of agencies which are being dropped by clients because of reasons not directly related to their design ability. Contacting net ways For more information about net ways and their products, specifically CAPPTURE Connect and CAPPTUE e Leads please contact: United Kingdom: Roy Dewell rdewell@net ways.com North America: Chris Van Buskirk cvanbuskirk@net ways.com Europe: John Staub jstaub@net ways.com or visit our web site at www.net ways.com. For more information about CAPPTURE Pop Ins, please visit www.cappture.com and try our live demonstration on your own website. 7 Why being a good agency is no longer enough to retain your clients July 2009