Over the past couple of years, the digital landscape in South Africa has shifted dramatically. We’ve seen international advertising players invest in the market, snapping up many of our leading digital marketing agencies and consulting firms to strengthen their presence in Africa, writes Andre Steenekamp.
At the same time, some smaller agencies have merged to create larger players, and traditional ad and marketing agencies continue to build their digital skills bases. And there is also more and more talk about large corporations bringing digital activities such as social media and analytics back in-house rather than depending on external agencies for operational muscle and strategic guidance.
What is the future, then, for the few independent agencies that remain? Are they also to be swallowed in their entirety by the large agencies and the big multinationals? Or do they still have unique value to offer to the market?
Understanding digital engagement
Our view – as an independent agency, albeit being partially owned by a larger entity – is that specialist agencies still have an important role to play. Born as digital natives and focused on the local market, some agencies do not only understand the technology but also how it applies to African businesses and consumers.
But to remain relevant, such agencies must show how they can add value for their clients in terms of skills and expertise. In addition to understanding international practices and the technology, they need to be in touch with the needs of the local consumer. The local-first touch is something that many agencies risk losing once part of an international conglomerate.
They also must be willing to be accountable to their clients. This demands that they provide the market with more and more sophisticated metrics for measuring success. Over time, this has meant evolving from providing data about hits and click-throughs to deeper measurements of customer engagement.
Digital specialists have grown up with this sort of accountability, where traditional agencies have relied on more imprecise and infrequent measurements of their success.
Is outsourcing dead?
Yes, some might reply, but why can’t in-house teams do this as well as a specialist agency? The simple answer is that building in-house teams is more expensive and less effective than strategically partnering with the specialists. The overheads of building a digital team are massive – especially if you start to think about recruiting programmatic buying, Web analytics or search experts.
In a market where companies are cutting back on salaries, few can afford to hire expensive specialists in digital marketing and technology to manage the demands of today’s complex business environment. Do you really want a junior or an intern running you social media accounts, or someone with the experience and judgement to make good business decisions? Can a jack of all trades in-house offer the same depth of skill as a specialist consultant in fast-changing and complex areas such as search and social media?
The benefit of working with external agencies in digital is that they’re up to date with the latest trends and technologies, right across industries. By contrast, internal teams often become inwardly focused, and lose touch with the market.
Brand and marketing managers should own the digital strategy, but there’s no reason to spend masses of money building the technology and operational skills when outside organisations can deliver it more affordably and efficiently.
Independent agencies have a role to play in the market, but that role is evolving as brands build up internal skills and as their expectations of their suppliers evolve. We believe that the skills of one should complement the other, with internal and external teams partnering on both strategy and execution.
In future, we’ll see some interesting models evolve. Perhaps it will become common for agencies and brands to run staff exchange programmes so that each side can understand the other a bit better. Ideally, both parties should focus on their core business areas and sets of expertise, an approach that should deliver the best ROI for the brand.
Andre Steenekamp is CEO of 25AM
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