The 2016 Marketing Technology Landscape Supergraphic, an industry snapshot created by Ion Interactive cofounder and CTO Scott Brinker, charts 3,874 solution providers — that’s more than double the 1,876 companies featured in last year’s graph. A March 2015 research report by IBISWorld found that there are 193,634 marketing consulting businesses in the U.S. alone. And Ad Age tracks more than 900 marketing and advertising agencies for its various ratings.
Although the number of prospective marketing partners is cresting toward a tidal wave, the categories by which they’re defined are muddying. Tech providers are offering more consulting services; agencies are building their own technology tools and assisting with implementation and strategy; and consultancies are advising on data-driven creative and technology selection.
According to the IBM Institute for Business Value’s Redefining Markets study, a majority of chief marketers are preparing for this change. About two thirds (67%) of the 723 global CMOs polled expect industry convergence to impact their business in the next three to five years, and 60% expect to see more competition from industries outside their own.
“Everyone is moving to the same place,” notes Matt Goddard, CEO of R2integrated, “but they’re coming at it from different areas of strength.”
This industry convergence presents both pros and cons for all parties involved. On one hand, it signals mass innovation, states Chris Lynch, senior director and head of product marketing for Oracle Marketing Cloud. Jennifer Polk, research director for Gartner, adds that the shift opens the door for acquiring new tools and talent, which can strengthen companies’ offerings.
On the other, organizations on both sides of the equation are now competing with businesses they hadn’t in the past, adds Lisa Henderson, MD, client services for Epsilon. Additionally, she explains, trying to integrate these disparate solutions can be a challenge.
Most of all, this convergence makes choosing a marketing partner more complex than ever before.
But as marketers become more accountable for driving business outcomes and leading digital transformation, their need for outside collaboration becomes imperative. Indeed, today’s CMOs are tasked with creating customer-obsessed experiences, advises Sheryl Pattek, VP, CMO, and principal analyst for Forrester Research.
To do so, they need to look beyond customer acquisition, she says, and focus more on retention and
loyalty. This involves generating universal customer profiles, she adds, that span across multiple touchpoints and every stage of the buyer journey.
So, how can marketers choose the right partners to enable these end-to-end customer experiences? It starts with careful consideration of how well each potential partner’s capabilities align with marketers’ needs and goals.
Here’s a summary of the current state of the industry for technology vendors, agencies, and consultancies, and what marketers should consider when assessing each one.
For years marketers have had two main options when selecting marketing technology: Purchase a marketing suite or invest in a selection of niche tools in such areas as advanced analytics and campaign management.
Each path has tradeoffs — and both have the added considerations of today’s new product launches and increased acquisitions as smaller companies combine and larger ones fill holes in their offerings.
Marketing suites, in some cases, might not offer the top-of-the-line solution; however, the tools are already integrated, so implementation and data transportation tend to be fairly seamless. Plus, many of today’s cloud platforms allow marketers to plug in solutions they’ve already invested in and create their own personalized stacks, Lynch notes.
Best-of-breed solutions, contrastingly, allow marketers to leverage advanced and in-depth capabilities and avoid what Ion Interactive’s Brinker describes as “vendor lock-in.” Yet, integrating individual tools can be tricky, often creating a complex infrastructure that can be difficult to manage and derive insights from. Having several disparate point systems can lead to additional expenses and “lost opportunity,” Henderson says.
“I say lost opportunity because you end up with a lead management system that doesn’t talk to your email system that doesn’t talk to your [CRM] system, so you can’t really create that cohesive customer experience,” she confirms. “A lot of times when companies consolidate their technology it’s because they’re trying to wring out some costs. And often, by consolidating, they’re absolutely able to do that.”
The optimal choice between the two approaches, Pattek shares, depends on the CMO’s objectives and alignment with the CIO. However, it’s not who a company works with that matters, she explains; it’s how well that vendor can integrate into a company’s ecosystem and deliver the desired results.
“It’s not about making a vendor choice,” she adds. “It’s about having the right strategy to deliver the customer engagement capabilities you want to deliver.”
Crossing the line
That’s why some vendors are finding that it’s in their best interest — in terms of growth and retention — to help their clients with everything from strategy and implementation, to optimization. This is where technology vendors start to cross into other partners’ turf.
“We have a vested interest to make sure that we’re earning that business year-over-year, and to make clients successful, whether that’s through our services or working with partner agencies or systems integrators,” Lynch says.
These days many agencies are building their own in-house tools, such as CRM technologies, presenting an opportunity for some customers to bypass tech vendors altogether. This option won’t be ideal for every marketer, though. Polk points out that the majority of agencies’ resources, focus, and talent is dedicated to satisfying clients’ strategic and creative needs. So, they’re not usually as well-positioned to constantly evolve their tools.
“You do see that some agencies develop proprietary technology,” she explains, “but it really doesn’t match what tech vendors bring to the table.”
Eric Stahl, SVP, product marketing for Salesforce Marketing Cloud, agrees that the skillset needed to build software is completely different than the skillset needed to leverage it and run campaigns. And, from his perspective, it’s not an either-or choice.
“You don’t go with an agency or a tech provider,” Stahl notes. “You have to figure out what platform makes sense for you and then you have to find a partner who can help you implement and run that platform.”
Back to basics
Adobe Marketing Cloud VP Suresh Vittal echoes Pattek’s advice that, when selecting a technology partner, marketers should identify what business problem they’re trying to solve and how they want to start tackling it. Indeed, Lynch adds that marketers should start with their end goal in mind and outline which people and technologies should be responsible for each element needed to achieve that objective.
Once that’s set, Lynch says, marketers need to set KPIs and tie each of their core marketing activities to revenue generation. Then, marketers need to ask their vendors how they intend to help.
“Don’t invest in a partnership unless you’ve clearly identified the success criteria,” Vittal suggests. “Then, periodically review your metrics to ensure your investments are on track to drive success within your organization.”
Another way to simplify the vendor-selection process: slow down. Marketers don’t need to have their entire technology stack worked out right away. Peter DeLuca, head of marketing technology for OgilvyOne, advises marketers to start small, growing gradually based on their short-, medium-, and long-term goals.
He also stresses the importance of having internal alignment around the company’s overall goals. Silos or breaks in communications can result in companies running ad hoc initiatives just because they have the tools to do so, instead of performing activities that ladder up to an overall business objective, he notes. Plus, he says having everyone in alignment can help marketers identify gaps in their technology stack or strategy. It’s also possible to have too many tools. To avoid this, Lynch urges marketers to separate the nice-to-haves from the non-negotiables in terms of which tools will help to generate the most revenue; then, assess whether the nice-to-haves could add future value.
And, of course, whichever solution a company chooses, it must be able to integrate with other tools the marketing team is using.
Choosing the right agency
Selecting the ideal marketing agency can be as difficult as choosing the right technology vendor. Just as vendors are evolving their approaches and offerings, so too are agencies. Plus, what constitutes as an agency is evolving, making the selection process for marketers more challenging.
The term “agency” is broad, Forrester’s Pattek notes. From branding and creative to CRM and digital, there are myriad firms that consider themselves an agency. Creative agencies are often the dominant player in the mix. The IBM Institute survey finds that 45% of marketing respondents have a global creative agency as their lead firm, compared to 29% who have a boutique creative firm and 26% who have a digital agency as their lead partner.
According to Forrester’s Q3 2015 Global Lead Agency Online Survey, marketers work with an average of six
different agencies, including global creative companies, media firms, boutique agencies, and digital service providers.
But the lines between traditional brand agencies and digital agencies are blurring, Pattek notes. As marketers become more focused on tracking the entire customer journey, agencies are changing their roles and skillsets to offer the ability to help.
According to Lorna Feeney, co-chief creative officer, North America, for IBM Interactive Experience, there are three areas agencies need to be proficient in today: creativity and design, strategy, and technology — all of which data must power. The latter can help or complicate matters. When it comes to technology, marketers need a partner that can help with system integration, Polk explains. A growing number of agencies offer this service.
Agencies can also assist with identifying which solutions marketers need in the future, she notes, and how they can leverage their current stack to drive execution and results. In some cases an agency can act as a neutral party that can help IT keep marketing’s objectives in mind, as well as provide a customer-facing perspective, Polk adds.
Even if marketers don’t get technology or tech-related services from their agencies, they should look for an agency well-versed in what marketers can accomplish using technology.
“Would you hire somebody to build a car who has never driven a car?” R2integrated’s Goddard asks. “The reality is you wouldn’t do that; so why would you do that with your marketing?”
Time for the triple threat
So how can marketers find an agency that offers the ideal mix of data-driven creativity and design, strategy, and technology or technical expertise? Polk offers several pieces of advice. First, it’s important to assess how well an agency can work with other agencies and partners, such as consultancies and tech providers, Polk advises. But marketers working with multiple partners need to take responsibility for the success of those relationships by providing clear direction and thoroughly outlining each partner’s role, she adds. This is especially crucial today considering how much overlap there can be in partners’ offerings.
In addition, Polk encourages marketers to assess how conservative or edgy they want their agencies to be. Marketers also need to decide whether they want a firm that’s familiar with their sector or one that doesn’t usually work in their category, so it is more likely to bring new ideas and push them out of their comfort zone.
Some marketers have shifted to insourcing for all or part of their agency-related needs. Goddard asserts that more companies are insourcing digital activities due to the always-on nature of the channel. Indeed, Polk notes that insourcing lower-value activities can help marketers manage costs and scale their functions. Plus, she adds, finding the right technology and talent to perform basic digital activities — such as social media management — is a lot easier than it used to be.
Still, there are drawbacks to insourcing. Internal agencies are more likely to know their category and brand better, but tend to be more doers than long-term strategic thinkers, notes Margaret Murphy, president and COO of Olson. OgilvyOne’s DeLuca adds that agencies have more well-rounded experience learning from examples of multiple customers failing or succeeding.
“Agencies see so many different examples of customers doing it well, customers doing it wrong,” he continues, “and that experience will never be something that can be replicated at a single company.”
Regardless of which way marketers decide to go, they have to structure their agency partnerships to align with creating and maintaining cohesive, end-to-end customer experiences — experiences designed from the customers’ point of view.
“We’ve got big brands that say, ‘I have an email department; I have a direct mail department; I have a social media department; I have a dot-com department; I have an in-store department.’ And the consumer replies, ‘That’s not how I think about you. I want to buy your product when I want your product,’” Murphy says. “A brand is trying to say, ‘I need an agency for this; I need an agency for that.’ Corporate brands are going to go under a major overhaul in the next 10 years because they have to start thinking and acting like consumers, as opposed to thinking and acting like a P&L department.”
As marketers become more focused on the customer, and on creating cross-channel, end-to-end customer experiences, their need for partners who can assist with this grows. One partner with a history of driving transformation across an entire business is the consultancy.
Indeed, there are services — such as technology implementation and strategy development — that many consultancies offer to help marketers redefine their processes and solve business problems in ways that interconnect with other parts of their organizations.
These offerings can be a boon to marketers, but they’re becoming a source of dismay, as well. The reason: Many full-service agencies are also adopting these capabilities, making it more difficult for some marketers to select the right partner to provide them. These business models coming together create disruption, Forrester’s Pattek points out.
“Each of the main players on the agency and consultancy sides are trying to have the best solution for customers and buying the capabilities they lack to try and be a one-stop shop,” she says.
So when it comes to choosing a consultancy, Gareth Schweitzer, cofounder and president of Kelton Global, advises marketers to ensure that the firm can actually tie their services back to the overall consumer need.
“Can they provide clarity of solution or clarity of information that answers the question you began with,” he asks, “so that whatever direction you pursue next you feel totally comfortable that it’s grounded in the world of your customer? Because with the investments that marketers make now, there’s a lot of insecurity about whether creative campaigns are grounded on a true consumer need or the whim of a creative.”
Schweitzer adds there are three core attributes marketers should expect consultancies to provide: delivering insights quickly, consolidating these insights into a narrative that can easily be shared with non-researchers, and helping clients understand what these insights mean for their business and brand direction.
For some marketers, having one partner provide those core insights may not be enough. Traditional consultancies recognize this and have been adding other disciplines, such as design and creative, insights and analytics, digital, and design, to meet marketers’ changing expectations, as well as to help shorten the time frame between strategy and activation.
“There’s a lot of pressure from clients to get more out of their partners,” says Michael Dunn, CEO and chairman of Prophet. “And there’s a lot more pressure for agility and speed, as well. A lot of times what’s been required to deliver some of that agility and speed is for businesses to try and blend capability areas that used to be the distinct domains of different kinds of competitors.”
Indeed, Dunn says Prophet is an example of how consultancies are making internal changes to keep pace with marketers’ accelerated go-to-market demand. Eight years ago, 95% of Prophet’s client-facing staff members were traditional strategy consulting resources, Dunn notes; today, fewer than 60% of its people serve as strategy resources. Plus, strategists are expected to be creative, he adds, and creatives are expected to leverage strategy.
Still, there are notable differences between modern agencies and consultancies, Dunn shares. Agencies, he explains, tend to think more in the short term and aren’t always able to connect an initiative to a bigger shift that’s happening within the business and its strategy.
Consultancies, he stresses, try to solve businesses’ overarching problems and create a cohesive strategy that takes into account big-picture factors, such as experience requirements, competitive differentiation, and pricing demands.
“It isn’t just about a better digital marketing campaign or a different SEO strategy,” he confirms.
Despite these differences, Dunn advises marketers not to get too caught up in the consultancy and agency labels when selecting partners. Instead, he encourages marketers to identify their core problems and then select the partner that has a proven record of solving them.
Then, he says, “Push them hard.” Ask to meet the people working on the account and look for evidence such as case studies that proves their offerings aren’t just “smoke and mirrors,” he advises.
Of course, the marketing industry never stands still, and the question of what’s next for these three industry partners remains. Gartner’s Polk predicts that they’ll continue to converge and acquire companies.
“We’re going to continue to see consulting firms, creative agencies, and more technically and strategically led agencies using acquisitions as a way to fill in the gaps in their capabilities as they try to become more well-rounded,” she stresses.
As for companies that are resistant to change? It’s progress or perish.
“We’re going to go through something like an Ice Age, where the ones that won’t change how they do business will be frozen out and the unexpected ones — who focus on the future, how business works, and how consumers work — are going to be the successful ones,” IBM Interactive Experience’s Feeney says.
And even though there may be no perfect partner, having the right people and processes in place can be a good start, DeLuca notes.
“With so many options out there and with such a broad spectrum of different categories of technology, you’re never going to find someone who knows everything about every single category and every single platform,” he says. “But getting the right people and resources in place who understand enough about the core categories and the core platforms to speak intelligently about it goes a long way.”