Download Millward Brown Digital Agencies 2016

Digital Agencies 2016
Are You on Track or Are You Lagging Behind?
WEB
Introduction
There has been a lot of noise about digital marketing in the last few
years, and almost every company around the world feels the need to
deal with this. In order to satisfy their clients, digital agencies must
often decide between the client’s expectations and the limitations of
their own business. What are their plans for 2016? What tools and
solutions will they mainly be offering their clients? What are their
struggles? Do their clients understand digital marketing well, and to
what extent are they cooperative? And how much are the agencies paid
for digital services? Is your agency on track or is it lagging behind?
We surveyed a random sample
of more than 300 senior
managers and directors of
digital agencies in ten
countries across three
continents. These
decision-makers are no
freshmen. With an average age
of 39 years and responsibility
for 30+ employees, they offer a
strategic view of their needs,
their clients’ needs, and the
industry’s trends.
Highlights
• The vast majority of digital agencies plan to hire new people and invest
more money in software in 2016.
• At this moment, it is primarily the agencies that are deciding about the
brands and products their clients use.
• Web development, analytics, email, social media, and content marketing are
still the core businesses of most agencies.
• As for the solutions and tools, content management systems and social
media management solutions are the most recommended, though the
bigger agencies are also suggesting e-commerce, CRMs, and automation
platforms to their clients.
• Although the majority of agencies feel that there are lots of competitors in the
market, it seems that it is mostly the clients that concern them. Clients want
to use digital marketing but don’t understand it properly and usually expect
lots of work for little money.
• The representatives of digital agencies believe that success lies in a better
understanding of digital marketing from the client’s side. Nevertheless,
employees are also expected to understand tasks better.
• The average price of one project varies a lot. Regarding the betterperforming agencies, a project costs twice as much when compared to the
rest. Relative to the others, agencies in Australia and New Zealand charge less
while those in the US charge more.
Kentico’s Digital Marketing Trends Survey
02
Plans for 2016 —
Strategies for
Success
So, Who Are the Agencies?
Throughout this report, we are comparing above- and below-average agencies.
This definition is based on self-evaluation, where managers described their
agencies as performing better or worse than the industry, taking into account the
region in which they mainly operate. Although self-evaluated, the definition also
reflects their turnover in 2015. While revenue was approximately $4.5 million in
above-average agencies, it was “just” $1.9 million in below-average agencies.
Which Activities Does Your Agency Plan to
Do Next Year?
less likely <
50 40
30
> more likely
Degree of Likelihood (%)
20
10
0
10
Hire more people
Invest more money in software
20
30
40 50
Australia, together with New
Zealand, seems to be the most
progressive region. Agencies
there are planning to outsource
work more and will change
their CMS/digital marketing
platform more often than
agencies in other regions.
Other agencies, especially in
the UK and Czech Republic, do
not plan such significant
changes this year.
US
United Kingdom
Invest more money in hardware
Outsource work more
Acquire another company
Australia
New Zealand
Benelux
Czech Republic
Change CMS/digital marketing platform
Merge with another company
Kentico’s Digital Marketing Trends Survey
03
The Growing
Season
The vast majority of digital agencies plan to hire new people and invest more
money in software in 2016. The growing and more profitable agencies plan to
make even more significant changes. They are more likely to hire new people and
invest in both software and hardware, as well.
81% Hire more people
66%
71% Invest more money in software
62%
63% Invest more money in hardware
55%
68%
52% Outsource work more
46%
55%
45% Acquire another company
34%
44% Change CMS/digital marketing platform
33%
36% Merge with another company
26%
90%
76%
50%
50%
42%
The majority of business representatives across all regions believe that all of
these changes will increase the efficiency of their work significantly. Those that
plan to hire more people, invest more money in both software and hardware, and
change their CMS/digital marketing platform have especially high hopes.
91%
89%
86%
81%
82%
86%
79%
80%
71%
63%
52%
45%
44%
36%
Hire more
people
Invest more Invest more Outsource
money in
work
money in
hardware
more
software
Kentico’s Digital Marketing Trends Survey
Above-average agencies
Below-average agencies
Acquire
another
company
Plans for 2016
Expected increased efficiency
The orange columns show the
percentage of agencies that
plan to do these activities in
2016, and the yellow columns
refer to the percentage of
managers from these agencies
that believe that such changes
will increase the efficiency of
their agency‘s work.
Change
Merge with
CMS/digital another
marketing company
platform
04
The Landscape
of Digital Agencies:
Tools and Solutions
Web development, analytics, email marketing, social media marketing,
and content marketing are still the core businesses of most agencies.
Loyalty programs, customer communities, remarketing, and
gamification are the least demanded and, therefore, the least provided
services.
Personalization and Automation?
Agencies Aren’t There Yet
Solution that is more typical
for below-average agencies
Web Analytics
Web Development
Core
Business
Social Media Marketing
Graphic Design
Email Marketing
Content Marketing
50%
60%
Solution that is more typical
for above-average agencies
Application Development
SEO
40%
Personalization of Online Content and Offering
Video Advertising (online)
Gathering and Analyzing Online Customer Data
30%
Mobile-specific Marketing
Marketing Automation
Online Display Advertising
Search Ads
20%
% of above-average agencies that offer the service
On average, 38% of agencies offer digital marketing personalization, and 31%
provide marketing automation (lead nurturing) to their clients.
Remarketing
Customer Reviews and Community
Gamification
Loyalty Programs (online)
10%
20%
30%
40%
50%
% of below-average agencies that offer the service
Kentico’s Digital Marketing Trends Survey
05
The Most
Recommended
Solutions
As for the specific software and solutions, web and mobile analytics, content
management systems, social media marketing, and email marketing solutions
are the most recommended…
58% Web and Mobile Analytics
51%
63%
58% Web Content Management Platform
50%
63%
50% Social Media Marketing
49%
50%
48% Email Marketing Solution
43%
50%
40% E-commerce Platform
29%
46%
40% Customer Relationship Management Software
30%
45%
35% Marketing Automation/Integrated Marketing Software
25%
32% Testing and Optimization Tools
26%
23% Lead Scoring
16%
20% Personalization Software
11% 25%
Above-average agencies
Below-average agencies
40%
35%
26%
…though the bigger agencies also suggest e-commerce, CRMs, and automation
platforms to their clients.
These are the solutions most recommended, besides the traditional Top 4 —
CMS, email, social, and analytics. We expect them to be the future competitive
means for agencies. As their prices get lower, smaller clients will be able to afford
them.
Kentico’s Digital Marketing Trends Survey
06
The Marketing Landscape:
Building Expertise
Who Knows What’s Best?
Clients Listen to Their Agencies
At this moment, it is primarily the agencies that decide about products.
According to managers, less than a quarter of their clients suggest or choose the
software and cloud solutions themselves. The rest are driven by the agency
providers. This estimate is universal for all agencies, regardless of their size or
region.
77% of solutions are based on agency recommendations
Solution Adoption by Agency Clients
Open source or in-house-developed solutions are not on the decline — in-house
solutions seem to be less popular only in the UK — but commercial solutions
prevail. They are used more often, not surprisingly, by the best performing
companies across all regions.
However, a significant number of agencies fear that open source software is insecure
(20–33%, depending on the solution) or inadequately supported (17–26%). That is
more than double the average number for commercial solutions. Interestingly, it is
the smaller agencies that are more critical.
49% prefer in-house-developed software
67% prefer commercial software
54% prefer open source software
All-in-one vs. Best-of-breed?
According to the agencies, 60% of their clients prefer a more universal, therefore,
all-in-one solution across all regions.
60% prefer all-in-one solutions
Kentico’s Digital Marketing Trends Survey
07
Struggles?
Usually with Clients…
Although the majority of agencies feel that there are lots of competitors in the
market, it seems that it is mostly the clients that concern them.
Clients want to use digital marketing but do not understand it well (78% agree).
They also expect a lot of work for little money (78%) and acquire many digital
marketing tools but do not use them (73%). It seems that less successful agencies
have a tendency to blame their clients for not understanding digital marketing
and for wanting a lot for little money.
80% “We have a lot of competitors”
78%
82%
78% but don’t understand it well”
75%
84%
78% “Our clients expect lots of work for little money”
75%
83%
“Our clients acquire many digital
73% marketing
tools but don’t use them”
72%
58% “Our agency doesn’t have enough clients”
56%
51% “Our agency doesn’t have enough quality employees”
51%
47% “Most of the projects aren’t completed on time”
47%
47%
of the projects aren’t effectively
44% “Most
managed or executed by employees”
43%
45%
41% “Most of the projects aren’t profitable”
39%
42%
“Our clients want to use digital marketing
Kentico’s Digital Marketing Trends Survey
Above-average agencies
Below-average agencies
75%
62%
52%
08
The Point of View
Depends on the Region
There are interesting differences between specific regions regarding specific
attitudes. Managers in the Czech Republic complain more about clients that
expect lots of work for little money, but are significantly less critical in terms of
the number of clients, the timely completion of projects, profitability, and
(comparable to the UK) the quality of their employees. On the other hand,
managers in Australia and New Zealand complain more about their own
employees and the size of their clients’ portfolios.
disagree<
50 40
> agree
Degree of Agreement (%)
30
20
10
0
10
20
30
40 50
“We have a lot of competitors”
“Our clients want to use digital marketing but don’t understand it well”
“Our clients expect lots of work for little money”
“Our clients acquire many digital marketing tools but don’t use them”
“Our agency doesn’t have enough clients”
“Our agency doesn’t have enough quality employees”
“Most of the projects aren’t completed on time”
“Most of the projects aren’t effectively managed or executed by employees”
“Most of the projects aren’t profitable”
Kentico’s Digital Marketing Trends Survey
09
Achieving
Greater Success?
It’s All About People!
Contributed to greater
success significantly more
Contributed to greater
success significantly less
1
40%
50%
2
e
Th
30%
20%
Which of theseaspects could have realistically
helped you minimize loss? (% agree)
When considering the last significant success and loss, it is clear that the
representatives of digital agencies believe that success lies in understanding
digital marketing from the client’s side more thoroughly. If clients better
understood what they needed, the profitability of their projects would increase
significantly. On the other hand, employees are also expected to understand the
tasks better. Deeper cooperation would be beneficial.
p
t
at h
og
te
rea
cc
r su
1
ess
3
4
3
5
2
6
7
4
5
7 6
80%
20%
40%
60%
Which of these aspects contributed to success? (% agree)
50%
Above-average agencies have even higher expectations of their employees in
terms of understanding their tasks. Below-average agencies believe in cheap
labor more.
1
40%
2
Above-average agencies
agree significantly more
Below-average agencies
agree significantly more
No significant difference
1
2
30%
3
3
4
5
20%
Factors helping to minimize loss,
according to above-average agencies (% agree)
Our clients knowing what
they need
Our employees understanding
the task well
Our clients being cooperative
The use of Agile methodology
The use of cheaper labor
High range of functionalities
High popularity of tools and
digital marketing
6
7
4
6
5
7
Our clients knowing what
they need
Our employees understanding
the task well
Our clients being cooperative
The use of Agile methodology
The use of cheaper labor
High range of functionalities
High popularity of tools and
digital marketing
10%
20%
30%
40%
50%
60%
Factors helping to minimize loss, according to below-average agencies (% agree)
Kentico’s Digital Marketing Trends Survey
10
Project-oriented Work
Fully in Place
How Many Projects?
On average, agencies undertook 42 projects in 2015. There is little difference
between above-average (44 projects) and below-average agencies (37 projects),
but significant differences can be seen among specific countries. US, Australian,
and New Zealand agencies are at the top, while European companies completed
far fewer projects.
US
45 projects
United Kingdom
35 projects
Australia
New Zealand
51 projects
Benelux
34 projects
Czech Republic
24 projects
How Long Does It Take?
The average length of a project also varies slightly according to the country.
While one project usually takes four months, the average in Benelux is seven
months.
US
4 months
United Kingdom
4 months
Australia
New Zealand
5 months
Benelux
Czech Republic
7 months
2 months
Kentico’s Digital Marketing Trends Survey
11
Projects Usually Take
Longer than Estimated
A third of the agencies admit that projects usually take longer than estimated.
This applies more to above-average agencies (39%). Comparatively, US agencies
are doing much better — a quarter of their managers declare that their projects
usually take longer.
US
26% projects
United Kingdom
40% projects
Australia
New Zealand
53% projects
Benelux
39% projects
Czech Republic
Based on open questions, the
managers suggest that the
reasons for project delays can
usually be found on the client’s
side — specifically, by not being
sure of what they really want, a low
awareness and understanding of
digital marketing tools, and
changing requirements.
“The client does not provide the necessary
materials in a timely fashion, and the client
changes their mind and dramatically alters
the project halfway through.”
7% projects
Above-average Agencies Are More Likely
to Use Agile Methodologies
66% Above-average agencies
41% Below-average agencies
Using Agile methodologies might be one of the reasons for success, since
above-average agencies are more likely to use them. This especially applies to
the Australian and New Zealand region.
US
54% projects
United Kingdom
64% projects
Australia
New Zealand
76% projects
Benelux
38% projects
Czech Republic
57% projects
Kentico’s Digital Marketing Trends Survey
12
Clients Pay
for Expertise
Services are charged most commonly according to the project’s costs (75%), but
half of the agencies also charge according to an hourly rate. Charging for projects
based on Agile development is a practice yet to be used widely. The numbers
suggest that there are some discrepancies in how agencies charge their clients.
0
10
50%
according to an hourly rate
75%
according to project cost
12%
according to an Agile approach
20
30
40
Above-average agencies use an
hourly rate more often. This
way of charging is used
significantly less in Benelux
and the Czech Republic.
Hourly rate
55% Above-average agencies
41% Below-average agencies
50
Project cost
76% Above-average agencies
74% Below-average agencies
60
70
80
90 100
Agile development
14% Above-average agencies
8% Below-average agencies
Hourly rate
Project cost
Agile development
The average hourly rate is $190. While above-average agencies charge
$225 per hour on average, below-average agencies charge $105.
$105
$190
Kentico’s Digital Marketing Trends Survey
$225
13
Who Gets the Most?
UX and Graphic Designers Are Paid Best
In general, UX and graphic designers are paid better per hour than developers
and marketers. This difference is even more evident in outperforming agencies.
10
$31
Developer
$30
Marketer
$35
UX Designer
$35
Graphic Designer
15
Developer
$31 Above-average agencies
$32 Below-average agencies
Marketer
$31 Above-average agencies
$27 Below-average agencies
UX Designer
$37 Above-average agencies
$30 Below-average agencies
Graphic Designer
$37 Above-average agencies
$31 Below-average agencies
Average Wage per Hour (USD)
20
25
30
Developer
35
40
Hourly wages are almost
equally distributed among all
specializations in the US, while
there are significant differences
in other regions. You would be
lucky if you were a UX designer
in Australia or a graphic
designer in Benelux!
Marketer
UX Designer
Graphic Designer
Kentico’s Digital Marketing Trends Survey
14
How Do
Average Prices for
Projects Vary?
With better-performing agencies, the price for a project is twice as
much, compared to the rest. Agencies charge the most in Australia and
New Zealand, but charge surprisingly less in the US, considering the
higher wages of their specialists.
$135,000 project price for above-average agencies
$65,000 project price for below-average agencies
$105,000
US
United Kingdom
$125,000
Australia
New Zealand
$190,000
Benelux
$140,000
Czech Republic
$29,000
According to managers, the majority (76%) of projects are profitable, regardless
of the performance and region.
76% profitable projects
Kentico’s Digital Marketing Trends Survey
15
The Factors
That Lead to More Projects
You now know that the below-average agencies have a higher tendency to blame
their clients for not understanding digital marketing and for wanting a lot for
little money. But the problem is likely due to weaker cooperation between
agencies and clients, especially in terms of knowledge sharing. Agencies have to
be able to clarify all issues and explain all uncertainties before the project starts.
Maybe that is why the above-average agencies have even higher expectations of
their employees in terms of understanding the tasks. This could also explain why
the majority of the agencies plan to hire new people.
As for the solutions, web and mobile analytics as well as content management
systems will be recommended the most to clients this year, especially by the
above-average agencies. This suggests that these solutions will be crucial for
greater success — one of the reasons why the majority of agencies plan to invest
more money in software. Those that plan to change their CMS/digital marketing
platform have especially high hopes in terms of work efficiency.
If you are one of those agencies that are looking for a better CMS/digital
marketing platform, the time is now.
And remember — the majority of clients ask for an all-in-one solution!
Kentico’s Digital Marketing Trends Survey
16
How Do We Know This?
About the Research
Millward Brown surveyed more than 300 senior managers and directors of
digital agencies across three continents. Responses were collected from an
invitation-only online B2B research panel in December 2015.
Millward Brown is a worldwide marketing research and consultancy agency that
adheres to the ESOMAR rules on data collection and publication. For more
information, please visit www.millwardbrown.com.
About Kentico Software
Kentico Software provides an all-in-one CMS, E-commerce, and Online
Marketing platform that drives business results for companies of all sizes, both
on-premise or in the cloud. Founded in 2004, Kentico is a Microsoft Gold
Certified Partner headquartered in the Czech Republic with offices in the US, UK,
Netherlands, and Australia. Kentico has 1,000 digital agency partners and
powers more than 25,000 websites across 100 countries. Customers include
Gibson, Twinings, Ingram Micro, Mazda, Kingspan, Hunter Fan, Starbucks, and
Allergan.
© 2016 Kentico Software