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Digital Agencies: Time to Deepen Your Ecommerce Expertise

“They aren’t creative.” That’s the common retort from digital agency executives, when asked why they don’t see management consultancies and systems integrators (SIs) as competitive threats. This is despite the fact that consultancies and SIs are acquiring or building digital experience capabilities, and are competing directly with agencies for projects that just two years ago would not have hit their radar screens. This is also despite the fact that though the agencies themselves may possess creativity in spades, it still isn’t sparing them from the trend of big clients moving their creative work in-house. Unilever’s U-Studio, for example, now serves over 20 countries, and delivered over $1 billion in savings in agency fees in the first half of 2017.

It’s high time that marketing and advertising agencies realize that they don’t have a lock on creativity, and that to stay relevant for today’s companies, they need to augment their creative capabilities. This does not just mean being able to implement content and digital marketing strategies and technologies. It also means helping customers to see substantial returns on their investment in those strategies and technologies. This means connecting the content to the transaction. And as more and more brands, both B2C and B2B, sell their products and services online, they are looking for a partner that can help them to make the content-to-transaction connection.

Why? Well, one of the biggest, if not the biggest, challenge for retailers and brands today is understanding customer journeys from initial discovery to purchase. This is an operations and process challenge made more complex now that customers use multiple touchpoints and methods of interaction: for example, in-store shoppers are equipped with mobile devices, and voice is becoming more common in the search and order process with advent of intelligent assistants like Amazon Alexa and Google Assistant.

In addition, as more purchases move from one-time to subscription, the customer lifetime value (CLV) is becoming more important. In the consumer realm, everything from meals to clothes to razor blades can now be purchased via a subscription. In business, more and more companies are buying software as a service (Saas) than one-time licenses.

Maintaining a healthy growth rate and profit margin for a subscription business regardless of whether it is B2C or B2B requires the right mix of new and returning customers. Returning customers have a lower cost of sales and their behavior over time can yield valuable insight for future product and service development. What’s more, as brands grow and mature, they become increasingly dependent on customer loyalty for their growth.

There are signs via recent M&A activity that more agencies and SIs are realizing the need to better serve their customer’s need to connect content to transactions:

  • VML has purchased Rockfish Digital; both firms are part of the WPP network. Founded in 2005, Rockfish calls itself a “digital innovation partner” and focuses on both digital marketing and digital retail and CPG. The company is headquartered in Cincinnati, Ohio and has five other offices across the U.S.
  • CapGemini purchased LYONSCG. LYONSCG, founded in 2003, is headquartered in Chicago and has six other U.S. offices as well as one in London, UK and a delivery center in Kiev, Ukraine. LYONSCG’s key customer segments are retailers and brands, and the firm has vendor partnerships are with Salesforce, hybris, and Magento.
  • Accenture Interactive has announced plans to acquire Altima, a Paris-based agency with 350 employees in eight offices around the world.  Commerce vendors with whom Altima partners include hybris, Salesforce, Magento, and Sitecore.

As we enter 2018, expect more of this consolidation to continue. Customers need this content to transaction expertise blended with creativity, and those agencies that do not adjust to this need do so at their peril.

Need help finding the right agency that understands both commerce and content? Please contact us. We’ll also be at the Gilbane Digital Content Conference  this year in Boston on November 28-29: check out the panel we’re moderating on Commerce, Content, and Conversion.

 

 

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