Conducted by SoDA in partnership with Econsultancy, the 2015-2016 Digital Outlook Study reveals some intriguing – and challenging - trends wielding an impact on the future of marketing and the creation of digital experiences.
An increasingly complex ecosystem of brands, agencies and consultancies are ushering in a new era of disruption and change in the industry. The rise of consultancies in digital services and a more pronounced trend toward clients bringing digital work in house are just two of the salient findings from this year’s study.
Even the use of the word “digital” to describe this research study, our industry and our organization – SoDA – continues to incite debate amongst SoDA’s leadership and member companies around the world. As you may know, our organization is called SoDA and its letters originally stood for the Society of Digital Agencies. For the past few years, many of our members have been saying that “digital” is no longer a relevant word. In short, they argue that given the ubiquity of digital it’s now a distinction without a difference.
Our current name (SoDA - The Digital Society) was adopted in early 2014. It represents a move away from the use of the term “digital agency” to describe our membership and is a nod to the pervasiveness of technology in our personal and professional lives. It’s also a good compromise given that so many of our members no longer classify themselves as “agencies.” Yes, there are many amazing agencies in SoDA’s ranks, but also incredibly talented design studios, digital product development shops, experience design firms, elite production companies and the list goes on and on.
While the debate over the term “digital” ensues, one thing is clear. Senior business leaders have never been more interested in this global study. In fact, this year a record 88% of respondents were key decision makers and influencers (C-Level, Senior Executives, VPs and Directors) with annual marketing budgets ranging from US$5M to over US$100M.
In this year’s study, there was an uptick in the percentage of clients indicating they were decreasing their marketing spending on agency partners charged with managing and executing digital initiatives. That figure was up 7% in relative terms vis-à-vis 2014. About one in seven client respondents indicated they were decreasing their marketing spends with digital agencies this year. The result is arguably due to three key trends:
- The commoditization of some types of digital work
- The increasing prominence of programmatic media buying
- The ongoing trend of client insourcing
The spending news, however, is not all doom and gloom by any stretch of the imagination. Two in three client-side respondents also revealed they were increasing their spending on non-marketing-related digital products (including platforms, applications and tools to better service their end customers and to facilitate the work of their employees).
Clients in 2015 are also feeling tremendous pressure to understand and leverage emerging technology trends in order to innovate their operations as well as the products and services they offer to their customers. In fact, expertise in emerging trends is now the No. 1 skill clients most value in their agency partners, up from a distant 3rd position in 2014.
Agencies and production companies – particularly those who invested early in innovation labs and product incubators – are reaping the benefit of clients’ acute need for emerging tech expertise. They’re also increasingly bringing their own IP directly to market.
For the first time, the 2015 SoDA Study segments the benefits engendered by innovation labs based on the number of years the labs have been in operation. Some extremely salient differences begin at the 3+ year mark.
In this year’s study, we’ve also segmented the results on a number of other key variables (by region, by size of agency and by ownership structure). Some fascinating findings emerged as we sliced the data in a more nuanced manner this year. For example, shops under 200 FTEs predominate for design and development initiatives, while larger agencies lead the pack in areas such as media and analytics.
As a non-profit organization, SoDA offers this research study to deepen the community’s understanding of macro-level trends shaping our industry and to identify potential windows of opportunity for companies to thrive within this era of disruption. We hope you find value in the insights revealed and we welcome your feedback on future editions.