The number of advertisers working with no agency support has increased for the second successive year, with 13 per cent now managing the process in-house according to the 2014 edition of The Soda Report.
Collated by Soda, the voice of the digital agency and production community, the report includes Soda’s annual digital marketing outlook survey of the changes taking place across the industry.
According to the findings (collated from 736 respondents) after years of growth half of those surveyed plan to keep digital budgets level in 2014, though there has been a notable rise in non-marketing related initiatives including data, mobile and product innovation with one in three clients increasing budget spend in these areas.
Rather than looking for a traditional agency of record clients now appear to be seeking specialised digital services, with nearly 70 per cent of clients believing that being seen as an early adopter is key or important to their brand positioning.
“Clients are doing more digital in-house than ever. But increasing levels of sophistication and elaborate in-house digital teams do not have to translate into diminished revenue for digital agencies. The opportunity is in data, mobile and product innovation – areas of high demand,” said Chris Buettner, Soda, executive director and managing editor of The Soda Report.
More than 50 per cent of agencies revealed that they still think advertisers lack digital talent, highlighting gaps in paid-, earned- and owned-media strategy. User experience was also identified as the biggest gap on the client side with 77 per cent of agency respondents citing it as a weakness.
All agreed that creativity was most important, but after that clients and agencies do not see eye-to-eye with clients rating product and service innovation second. Agencies, however, rated this fourth and claimed customer-centred marketing for clients should rank in third place but clients scored it fifth in terms of priority.
Almost two thirds (60 per cent) of clients surveyed said their digital agency was either excellent or good at evaluating digital trends for practical use. Though nearly one in three agency respondents (29 per cent) said they do not offer any training on current or emerging trends and technologies.
The report’s findings suggest that the top reason for clients leaving was that their needs had outgrown what the agency could deliver (27 per cent), agencies pointed to new client management as the number one reason (39 per cent) and ranked failing to deliver client needs in fourth position.
However, the outlook is bright for agencies that can offer the services clients need, with successful agencies seeing more buy-in from clients, with growth in retainer-based work up 21 per cent and significant agency investments up 28 per cent.
The 50 per cent of agencies that had invested in incubators also reported success with talent retention and new business wins also up.
Buettner added: “Digital agencies that provide the core value trinity: creative marketing, innovation, and expertise in emerging trends and opportunities, can more deeply embed themselves in internal client teams, build stronger digital expertise across marketing and customer experience, and continue to prosper in 2014 and 2015.”
The Soda Report was conducted in partnership with Econsultancy, digital marketing outlook is based on a global sample split between advertisers and agencies, which represent a total annual marketing spend of $2.4bn.