3 things digital agencies must improve to survive

Maybe it is risky to write a critical article about our industry, but I believe that pretending digital agencies in 2017 are doing a fantastic job is a bigger risk. It also wouldn’t fit our company culture at Ydigital Asia to ignore the elephant in the room.

2017 has already put a lot of pressure on digital agencies. Ad fraud, transparency issues and the rise of ad blockers are some of the topics that agencies (and publishers) should face with a constructive mindset and this is where the chain falls off. We have seen some, but still not enough, reaction to this so far. Silencing the problem away may be comfortable now, but it could also be the first step to extinction.

Clients give agencies lot trust and power and with great powers comes greater responsibility. In this case, responsibility translates into securing the highest possible ROI for clients.

Maybe we are afraid of addressing problems because we don’t have all the answers, but if we don’t have the courage to work on issues together, then where does it leave agencies and clients? Lack of pro activeness is just one problem digital agencies have. Add to this a limited business understanding, lack of transparency and mediocre skills and you have the recipe for disaster that even the dinosaurs would have seen coming.

1. Limited business understanding

Having talked to clients and seen pitches from several competitors, it blows my mind how narrow minded and over promising most digital agencies are. There seems to be a lack of interest in getting to know client business. Over the years, we have seen focus from “traffic” to “conversions” and a few even dares to talk about “quality conversions”. Better, but still not enough. Too few agencies analyze customer lifetime value across products and segments. They don’t pay attention to what happens between the client’s marketing and sales team when a lead is generated. I'm not saying all clients need a complete digital transformation, but the least we can do is ask the critical questions that will move clients in the right direction.

2. Lack of transparency

This is a big one. The majority of proposals and monthly reports we have come across the last years only show top line numbers. One can only guess why media agencies don’t break down their numbers in full transparency. I advise clients to demand to see report examples and KPI breakdowns before engaging a digital agency. If they don’t offer full transparency, there is probably a reason.

3. Mediocre skills

This is not only an agency challenge, it’s a Southeast Asia trend. There is a huge lack of digital talent. In Q1, Ydigital took over three client accounts from incumbent digital agencies. Two accounts from local players and one from a global agency. Across the board, conversions on Youtube, Facebook and Google improved between 50% and 300% while media buy remained the same or even decreased.

What agencies can do

In crisis management theory, any company has four options
• Deny the problem
• Stay quiet and hope the problem goes away
• Address and solve issues
• Pre-empty strike by bringing topics up before they become issues

The trend we see is that most agencies pick option one or two. I get it, it’s human behavior. It is less risky to avoid the tough talk, but allow me to make a comparison for context. The saying “it’s like peeing your pants” is a general saying in Denmark where it’s cold. Translated what it means is that peeing your pants may keep you warm for a while, but you will reach a tipping point where it gets cold, real cold! I’ll give the same advise to agencies I would give to a human; don’t pee your pants. Instead, address issues in constructive manner even if it costs you short-term business. I believe honesty will pay back in the long run.

Peter Haarmark
Ydigital Asia
CEO

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