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Digital Marketing Trends Implications for Agencies by Augustine Fou
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Digital Marketing Trends Implications for Agencies by Augustine Fou


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Traditional advertising agencies are not well suited for thriving in the new digital world because the skills and expertise still pertain more to traditional advertising needs. Highly specialized …

Traditional advertising agencies are not well suited for thriving in the new digital world because the skills and expertise still pertain more to traditional advertising needs. Highly specialized digital disciplines require specialists, but those are too expensive and rare to maintain on full time staff. So the agency model must also adapt to the times.

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  • 1. Augustine Fou- 1 - Digital Marketing Trends, Implications for Agencies - 1 - Dr. Augustine Fou December 2013
  • 2. Augustine Fou- 2 - Trends 1. Brands/clients take tasks in-house (e.g. in-source social media, analytics, and digital media buying) 2. Shift from commission to fee-based compensation 3. Shift from AOR (agency-of-record) to project basis 4. Procurement departments involved in sourcing 5. Production work (e.g. HTML coding, graphic design) no longer profitable for large agencies due to lower cost alternatives (e.g. small firms) and globalization 6. Trend towards analytics and big data and away from just “creative” (which was an agency stronghold) 7. Trend towards specialization and maintaining a roster of specialists that can be used on as-needed basis.
  • 3. Augustine Fou- 3 - Source: ANA via eMarketer, Sept 2013 Brands Use In-House “Agencies” - 3 - 56% have already started moving work in- house to save costs
  • 4. Augustine Fou- 4 - Source: ANA via eMarketer, Sept 2013 What In-House “Agencies” Do - 4 - • Magazine ads • Social media • Online display ads • Search engine marketing • Newspaper ads • Search engine optimization • Mobile advertising • Out of home advertising • Radio advertising • Tv advertising • Social Media • Display Ads • Search Marketing • Search Optimization • Mobile Ads Are being done in house because they can buy direct or use ad networks themselves.
  • 5. Augustine Fou- 5 - Buying Direct from Facebook Source: AdAge RBC Capital Survey September 2013 More clients/advertisers are buying direct from Facebook (similarly with Google Adwords, Twitter, etc.); so the “buying power” rationale is no longer valid, or will be less so going forward,
  • 6. Augustine Fou- 6 - Changed from 70% commission and 30% fee to 81% fee and only 5% is commission; Increasingly clients add in performance clauses Fee-based Compensation Source: Association of National Advertisers
  • 7. Augustine Fou- 7 - Performance-based Incentives Source: Adweek, August 2013
  • 8. Augustine Fou- 8 - Procurement Involvement Source: Assoc. of National Advertisers, via MarketingCharts June 2013
  • 9. Augustine Fou- 9 - IDC Study April 9, 2013 An IDC study has found sweeping changes in how mobile display advertisements are sold, with Facebook, Pandora and Twitter successfully wresting away control from advertising networks over the last year. “In display ads, the era of ad network dominance has come to an end,” IDC said. “New mobile ad budgets flow more easily into the coffers of publishers than into those of networks.” “Mobile display ads accounted for US$1.7 billion of spending in 2012, up from $700 million the year before. IDC expects mobile advertising spend to reach $7 billion this year, up from $4.5 billion in 2012.” Source: IDC April 9. 2013
  • 10. Augustine Fou- 10 - Specialization Rules Source: SoDA 1H 2013 Digital Marketing Outlook
  • 11. Augustine Fou- 11 - Trend Toward Specialization “The last few years has seen the dramatic rise of small, niche specialists in various digital disciplines like paid search, organic search optimization, mobile marketing … Unfortunately this has led to the current situation – dozens of agencies working on various parts of marketing projects and little coordination among them. What is needed is better digital strategy, or a strategy to begin with, so that the different digital activities “row in the same direction” and synergize to drive business impact.” Source: ClickZ “The Agency-Client Relationship is Forever Changed” by Augustine Fou
  • 12. Augustine Fou- 12 - So What? “These large, irreversible changes in the marketplace are having correspondingly large and permanent impacts on traditional agencies and their holding companies. The relic agency model no longer works efficiently in the new digital world and new forms of revenue and streamlined operations are called for. Agencies that cannot evolve and innovate like this will not be able to survive.” Augustine Fou- 12 - - Dr. Augustine Fou
  • 13. Augustine Fou- 13 - Dr. Augustine Fou – Digital Consigliere “I advise clients on what to in-source and what to out-source to vendors and agencies. I also help them set up metrics to measure the impact and efficiency of the tactics deployed.” FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM) MCKINSEY CONSULTANT CLIENT SIDE / AGENCY SIDE EXPERIENCE PROFESSOR AND COLUMNIST ENTREPRENEUR / SMALL BUSINESS OWNER PHD MATERIALS SCIENCE (MIT '95) AT AGE 23 ClickZ Articles: Slideshares: LinkedIn:
  • 14. Augustine Fou- 14 - Related Articles Percent of Ecommerce from Mobile By: Augustine Fou, March 27, 2013 Smartphone Penetration Exceeds 50 Percent By: Augustine Fou, Mar 21, 2013 Publicis Omnicom – Bad for Clients Shareholders and Agency By: Augustine Fou, July 2013 Search Kicks Display Ads in Effectiveness By Augustine Fou, April 2012 Digital is a Philosophy By: Augustine Fou, March 31, 2011 Augustine Fou- 14 -