Study: More Regional Ad Agencies Budget for Digital Specialists

The following article was written by Jay Friedman, chief operations officer of Goodway Group, and appeared in the January 17 edition of Ad Age Agency News.

This month we published the results of a study detailing the state of "going digital" within regional agencies around the U.S. The study asked 12 questions and was answered by 90 agencies, up from 74 in 2010.

The fact that we have two years of comparative data also allows us to see how the mindset around core digital-media needs has shifted year over year. Some results are expected, but many are truly astounding. What's more interesting is different people will find the results astounding for different, and sometimes opposite, reasons.

Responses to each of the 12 questions are fascinating, but I've chosen three of the questions to highlight here with the hope you'll read the full study as well.

In 2010, 26% of agencies said clients "weren't asking for" digital media. That dropped to 4% this year as it appears marketers who felt this way a year ago may have realized digital is a requirement, not an option. The fact that "budgeting to hire and train a new staff member" shot from 14% to 51% from 2010 to 2011 shows us regional agencies now have realized that digital media may be so complex that existing staff with different backgrounds and expertise will not naturally become digital-media experts. Or it could be the costs of learning on the job are too great.

We predict the major "aha!" in 2012 will be that budgeting to hire just one staff member will not be enough. Social content, web development, analytics, SEM and display are all significantly different subspecialties within digital. Still, most agencies do not have the budget or need to hire full-timers in each of these areas.

If you ask people who have been working in display (online, mobile, video) for a while about the notion of click-thru-rates as a metric of success, they will most likely scoff at it.

Real ROI, effective cost per action, and brand lift are often considered more meaningful metrics for success. Forty-eight percent of those surveyed view CTR as the primary metric for success while another 20% view CPM. This data shows that regional agencies are still in the introductory learning stage of digital media.

If you're a digital veteran, you may remember working on your first several campaigns and eyeing the CTR as the campaigns progressed. You may have gotten excited about a rising CTR only to feel a bit empty when a campaign finished: "Great, we got lots of clicks, but does that really mean we succeeded?"

Since many agencies (and likely their clients) are focusing on CTR and CPM to define success, it's not surprising how the next question plays out, "How successful would you rate your past digital campaigns?" Only 2% of regional agencies rated their past campaigns as "very successful" because they and their clients have not established healthy metrics for campaign success.

This study culminates with the final question, "In terms of agency business priorities, where would you say 'going digital' falls?" Last year, 71% answered it was either their top priority or one of the top few. This year 59% said, "We'd like to, but we're not in a hurry." What happened?

We believe this de-prioritization is the result of the combined experiences and lessons from the areas we've described above. This is especially true because in the beginning we all thought, "It's just another medium. It can't be that different." This obviously has not proven out.

Programmatic digital buying and the expertise needed around it are a world apart from the spots and dots of traditional media. These inaccurate expectations combined with the challenges of campaign metrics could certainly lead agency owners and top executives to rethink speeding headfirst into their next digital project.

Having spoken with hundreds of regional agencies across the country, one thing I can definitively say is these agency owners and top executives are incredibly smart and will figure this out in short order. But like any new subject, having a great teacher can be the best path. As regional agencies lean on vendors and other industry experts, we expect to see a hockey-stick-like understanding of digital and how it fits into the entire media picture.

(Source: Jay Friedman, Advertising Age, 01/17/12. The full study is available here.)