Is There Still a Reason for Digital Agencies at SXSW?

Increasingly, Brands Are Connecting Directly With Startups

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Ask a digital-agency executive about why he or she went to SXSW this year and you're likely to hear a version of the following:

"I got to put a face to an email signature."

"Unlike CES, this is an event I actually enjoy attending."

By placing artists, musicians, filmmakers, technologists, journalists, venture capitalists, agency executives and all kinds of hangers-on in the same proximity, SXSW is conducive to serendipity and creativity in a way that can't be replicated.

Yet, many at SXSW this past weekend questioned whether digital agencies needed to be a part of that eclectic mix at all. Now that startup tech has the undivided attention of the world's largest brands, many felt that digital agencies' role as the mediation layer between the two is quickly diminishing. While brands and startups viewed their need to attend SXSW as self-evident, they felt digital agencies were there to try to prove their relevance.

The general sentiment among tech entrepreneurs at SXSW was that we're experiencing "the beginning of the end" for digital agencies. Brands have started to use startup technology to bring their marketing in-house, thus lessening their reliance on digital agencies, they said.

One entrepreneur and angel investor said digital agencies are starting to suffer a disruption similar to what the music industry experienced in the late '90s. Soon, digital shops will be relegated solely to marketing, just like the once-major record labels, he said.

Tech entrepreneurs boasting about bringing an industry to its knees is as tired as SXSW veterans bemoaning that the Austin-based festival just isn't what it used to be. But as brands are increasingly interested in working directly with ad-tech companies and social-marketing platforms, a digital agency's role in the process has become less clear.

"Clients are certainly smarter these days," Adam Kleinberg, CEO of interactive agency Traction, said. "But we are experts at being strategic and we're objective. Startups like to have a sense of hubris, but they're point solutions."

That doesn't mean that agencies aren't experiencing a sea change similar to those facing all other sectors of the media industry. The rate of technological advancement and adoption on display at SXSW has meant agencies need to be more open to collaborating with clients and third parties (like startups), Mr. Kleinberg said.

Facebook and Google have said they would take business away from digital agencies for years, but that's yet to take place, according to Kyle Bunch, group director for R/GA's Austin office. Still, he too sees a need for agencies to evolve into more collaborative entities.

"The old model was 'How do we scare our clients into using us each year,'" Mr. Bunch said. "What we need to do is work with startups to make the pie bigger rather than fight over the same slice."

Some digital agencies made it a point to use SXSW as a way to showcase their own tech savvy and combat the perception that they can't innovate as fast as the startups prematurely dancing on their graves. Brooklyn-based digital agency HUGE, for example, hosted a four-day crash course in computer programming at SXSW this year. Students included Michael Aaron, former COO at social-media agency Attention, and MIT mechanical engineering student Amy Lam.

Other digital agencies see brand interest in SXSW as a net positive for the industry. According to David Berkowitz, director of emerging media at digital agency 360i, the proliferation of tech brands needs digital agencies more than ever.

"There isn't necessarily one big thing for brands to focus on but rather diving into what a hundred different people are working on," he said. "That requires filtration and curation, and that's precisely where great agencies shine; weeding out the noise and tuning their clients into what matters for them."

Nearly everyone on 6th Street the past four days shilled their app, platform or solution to anyone who would listen. And while some were great, the majority lacked. And, for now at least, determining between the two is the space where agencies are best poised to operate.

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