That's what Forrester learned in an online survey of 98 agencies representing a cross-section of size and specialty, plus interviews with leaders of an additional 30 agencies and 10 major marketers. Here are some key findings of the 2011 North American Agency Landscape Survey:
Digital doesn't define an agency, it enables it. You'd be hard-pressed to find an agency that doesn't do some digital work. PR firms digitize influence through social media. Creative agencies make viral videos to build buzz. Promotions agencies build virtual events and conferences.
- Digital agencies are highly competitive, but not every agency is built to lead brand strategy. Fewer than half (47%) of agencies said that brand strategy and positioning are core competencies. So it's no surprise that when big marketers like SC Johnson & Son and MetLife put hundreds of millions of dollars of work up for review, they choose time-honored agencies like Ogilvy & Mather, BBDO/Proximity, and CP&B to lead the charge. The role of lead agency is changing dramatically, depending on the complexity of a client's needs. Marketers are experimenting with new models of orchestration where digitally-native agencies play point for the brand, as Digitas will do for Team Sprint.
Agencies will evolve in more dramatic ways. Most traditional agencies have figured out that bolting-on digital talent doesn't work. The challenge is embedding digital across the agency's core capabilities. But that 's proving to be disruptive. While agencies unanimously agreed that they must reinvent their business models, 96% say that agencies must be more open in their approach to sourcing content, creative and new ideas. WPP, for instance, has created a model for marshaling agency resources across the holding company, whereby 30 clients are led by a WPP point person, rather than a single agency entity. New ventures like Victors & Spoils are experimenting with leaner staffing models that use a crowd-sourced creative department.
Digital agencies face an identity crisis. Digital marketing is where the growth is . Forrester forecasts that in just five years, U.S. marketers will spend $77 billion on interactive marketing -- as much as they will spend on TV in 2011. It will get harder for pure-play digital agencies to differentiate their offering, as every agency goes digital. In a survey of 174 marketing executives conducted by RSW/US, only 33% of marketers think that digital agencies will survive long-term in their current state. In a more mature market, digital agencies will have two options: carve out a unique position and elevate their strategic role to marketers, or specialize capabilities to stay on the cutting edge of technologies and media platforms. Digital agencies that try to do it all will dilute their core competencies; those that focus on mature digital services will simply become commoditized
Marketers have hit digital adolescence, too. It's hard to be confident that you have all the right agencies doing all the right things when every agency is digitizing services. Many marketers revert to yesterday's model for agency management, which stunts the growth of agency relationships and retards development. Instead, marketers must embrace this period of change and grow alongside their agency partners. If the level of marketer-agency interaction at CES this year was any indication, this could be the start of the wonder years instead of the blunder years.