Digital transformation and the codes for growth: what it means to agencies

Marketers are seeing their organisations undergoing massive transformation from the impact of digital.

Businesses, through marketing and brand departments, no longer have to find a reason to do something digital. This is a change defined by consumer appetite for engagement, with each other as well as with brands and businesses, in ways that suit their needs at that very moment.

Engagement is now characterised by speed, through the use of technology that's increasingly a part of consumers' lives.

In this post, I'll look at how agencies need to adapt and evolve in order to help their clients transform their businesses.

Econsultancy's US VP of Research, Stefan Tornquist, presented 'The code for growth' at this year's Adobe Summit in Salt Lake City, Utah.

Part of what he presented was the amalgamation of a year's work by Econsultancy and Adobe looking at 'The Progression of Agency Value' across Europe, Asia and the US.

Here, he outlined a potential change for agencies from delivering services, through engagement to guiding transformations.

In his presentation he highlighted the following codes:

• Integrate for them (clients)…and with them (clients).
• Be masterful at the little things that make collaboration work.
• Move them from a thousand points of confusion to a single platform.
• Shift resources ahead of clients' wants (or needs).
• Be great at finding truth in data. 
• Introduce a culture of testing and teach the organisation how to improve.
• Orient around digitally native, targeted and frequent creative.
• Capitalize on the long arc of service. 

These over-arching codes for growth can be interpreted in different ways; they are hidden in the detail and yet staring us in the face.

Marketers are seeing their organisations undergoing massive transformation due to the impact of 'digital'. Marketers and brand guardians no longer have to find a reason to do something digital.

This is a change defined by consumer appetite for engagement, with each other as well as with brands and businesses, in ways that suit their needs at that very moment. Engagement is now characterised by speed, through the use of technology that's increasingly a part of consumers' lives.

Marketers, and therefore businesses, are struggling to keep up with the changes that digital brings.

More specifically, this struggle involves increases in:

• The number of customer touchpoints.
• The number of technologies offered to marketers and businesses.
• Budgeting considerations and conflicts.
• The number of specialist and generalist agencies available to hire or retain.

As the 'internet of things' progresses, connections with the consumer are further dissipated; more devices, more touch points, more responses, more data, more interactions and engagements. All of this feels like less control for the marketer and business.

With this in mind it's going to be imperative that businesses respond in real time.

In this new world of modern marketing (see the Modern Marketing Manifesto), it's going to get harder for agencies, that have been used to buying media, to respond in a timely fashion, unless they either:

• Employ relatively sophisticated marketing automation, to deal with the required flow of content and data, and forge closer links to the client, to maximise that flow.

Or

• Become highly specialised, and connect with each other as well as their clients.

If you're a generalist (full service) agency you're going to need to increase your resource exponentially. You'll need to get bigger and bigger as you employ staff with the specific skills needed to compete with specialist agencies.

These specialist agencies can be smaller, faster, more agile and innovative since they're not constrained by structure and hierarchical process. Their focus is on the value they provide, not the media they buy. 

At Econsultancy, we often get asked by clients and agencies about Digital Excellence - what is it? And how do you achieve it? Excellence comes, initially, from specialism, not generalism.

It's not just about digital knowledge; it's about its application to meet business and customer needs, not media needs. This is fundamentally about educating everyone in the agency about the nature of the 'value' it provides to client organisations. In order to be agile, those involved need to know how they have an impact on that value.

What is clear is that agencies are going to need to change. They're on a digital transformation curve themselves, it's just that many of them don't realise it yet.

Antony Mayfield made some great points at a recent Google Firestarters event about agencies being the prisoners of their business models. Often an agency's positioning goes something like this:

• We're a the-answer's-Advertising now-what's- the-question-agency.

Or

• The-answer's-Social Media now-what's-the-question-agency, etc., etc.

What you sell – or mostly sell – magically becomes the answer to any challenge the client sets you. That is unless you start asking questions of what you're doing and how what you do assists in defining the value you provide.

The real issue here (or code) is how an agency sees where it adds value aligned to what the business is trying to achieve.

Businesses are finding they need to move faster due to the competition outpacing them, restrictive budgets, lack of skills or resources to better understand not just digital channels but also the commercial value of driving customer interaction and engagement.

Adding insult to injury, talent is moving to start-ups or to management consultancies, who can offer better packages and often better working environments or flexible working.

Most clients talk about change in their business in some form, sometimes it's organisational change brought about by M&A or a new CEO - total change across the organization driven from the top down.

Other times it's Technological change brought about by the implementation of a new platform or technology; and sometimes it's strategic change brought about by market forces.

Rarely does the discussion include cultural or behavioural change at the forefront. We need to consider how organisations can educate the entire workforce about conferring value and what that means to business operations.

Technology has itself matured. Marketing technology is either already stitched together through APIs, or the rise of single platforms that offer integration, allowing a business to be more agile and innovative.

Clients often they still approach everything from a technology perspective, they rarely think about the most important component of all - people.

'Buy the platform and slot the people in place'. Shouldn't it be 'figure out the required tasks that add value and then go find the platform(s)'?

The key 'code' here is that people are a company's greatest asset. We've been used to technology as the focus of attention, the Holy Grail, but that's now starting to shift to the brains behind the machine.

It's 'the end of the beginning', sometimes referred to as the second wave, the maturity of digital itself.

The real-time agency

Some organisations have already figured out what skills they should insource and what skills they should outsource, and much of this is aligned to the transformations and restrictions they are experiencing.

Once you realise that real-time is key to your business, the flow of content and data becomes imperative, as is the ability to be found and shared, and being able to pinpoint the value of those interactions. As a client's agency, if you can't help them meet this requirement then they're likely to do it themselves or engage with others who can.

We all know about digital being a disruptor. For advertising agencies, the first phase of this was the shift in budgets away from historically offline channels such as TV.

Now the shift of client budget is toward owned and earned media rather than paid media, and agencies can count on not just clients doing it themselves, but management consultancies muscling in on their turf, too.

Some of these have real business insight through financial data that agencies do not. Agencies can therefore see even bigger transitions in a downward spiral of their paid media fees.

With always-on, never ending interactions, and the stitching together of smaller ideas to create one continuous idea or experience, campaign-based media is being beaten down. It's going to be hard for some agencies to shift mentality quickly enough to recognise the real opportunities. 

Wheel of disruption

Brian Solis in his new book, What's the future of business? highlights a wheel of disruption, where he defines a triangular model of 'real-time', 'mobile' and 'social' as the biggest trends in technology's impact on a business or market.

Solis states that the problem is that organisations aren't designed to be adaptive, they're designed to optimise efficiencies and process, meaning that they don't recognise or respond to the real opportunity.

He goes on to say that the real focus should be on the development of a formal system that measures impact and prioritises resources around it accordingly.

If you've read Econsultancy's Organisational Structures and Resourcing Best Practice Guide you'll know that there's some congruence with this point of view, reflected in the rise of 'hub and spoke' team models and the ascendancy of the Product Manager.

Solis also highlights 10 priorities for meaningful business transformation, namely: leadership, vision, strategy, culture, people, innovation, influence, localisation, intelligence and philanthropic capitalism.

What's interesting here is that technology doesn't get mentioned; that's because it's an enabler, a tool, not the solution to digital transformation.  Look again and you'll see that people factor highly; leadership, culture, people, influence, intelligence.

Importance of people

Scott Brinker refers to "technology being more than infrastructure — it is business capabilities". He makes clear that we need to look at "individuals and actions over process and tools", and "respond to change rather than following the plan". 

That's about being agile and innovative and that's more about people than technology. The 90/10 ten rule is useful here – 90% investment in intelligent resources and 10% in tools and services.

So if it's all about people and value, what does that actually mean?

At Econsultancy, over the last 10 years we've been assisting both clients and agencies, globally, to 'shift'; helping them define their own required capabilities and value from a standpoint of Digital Excellence.

We developed a maturity model for digital marketing and ecommerce that has three stages of maturity; emergent, managed and optimised, and has three pillars; people, process and tools, with heavy emphasis on people, enabled by tools (technology) and the processes that hook the two together.

Alongside our maturity model we developed capability frameworks and fundamental frameworks. Having at first developed capability frameworks for digital channels we quickly realised that a channel focus was not going to assist businesses that were starting to market and sell across multiple channels. 

So we developed fundamental frameworks that identified the core knowledge requirements and task capability for any channel. We use these when we undertake digital gap analysis or capability assessments. We started to think about what core tasks or functions are aligned to value (business goals).

Influence, experience and value

According to web analytics author Avinash Kaushik, business optimisation (read value) in the digital world requires mastering three things:

• Influence: reaching the right people at the right time with the right message.
• Experience:delivering remarkable customer experiences in all channels.
• Value: recognising the economic value in all customer interactions.

If you subscribe to this approach then you'll also realise why organisations have started to look at new roles to support the CMO (Chief Marketing Officer).

As relationships between businesses and their customers fragment still further, the CMO in the modern marketing will need to work with new senior roles, like the CXO (Chief Experience Officer), CCO (Chief Customer Officer) and the CMT (Chief Marketing Technologist). These people will need to be informed by agencies of the changes that will affect them most. 

If people are an organisation's most valuable asset, why do we spend such little time educating them in what's key to keeping that business ahead of the competition?

The same can be said of agencies; how much effort should be put into ensuring everyone understands the fundamentals of where they are going to add most value? It's not just about creating an experience, you need to understand what the value measure is, and your part in it.

The overarching code for growth can broadly be termed 'digital transformation'. Agencies' place in clients' digital transformation is identifying where they add value, not leading by technology but by the skills of individuals who truly understand the value they bring through collaboration, agility and excellence. 

Econsultancy currently has a range of services available that can help guide organisational change, business restructuring and digital transformation strategy. 

To enable delivery of your digital vision (or help you shape that vision) we've designed a comprehensive approach to tackle your transformation, covering everything from strategic operational issues, down to specific marketing functions, we will work with you to achieve digital excellence.