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6 | Top 100 Digital

6 | Top 100 Digital Agencies 2015 State of the industry Amy Rodgers works on the research team at Econsultancy producing industry-leading research, briefings and best practice guides for the digital marketing industry. Amy particularly focuses on research for the North American markets, in addition to assisting with UK research and managing the Econsultancy Case Study Database. You can follow her on Twitter @A_Rodgers. Fee incomes are continuing to rise in an industry striving to prove its value in the face of insourcing by clients, and battling to hire the talent and skills to match the aspirations of a technology-driven marketplace. Econsultancy’s Senior Research Analyst, Amy Rodgers looks at industry trends over the past year. In the past year, the total fee income of the Top 100 has increased by almost 15%, up to nearly £1.7 billion, while the average fee income for agencies listed has gone up by 25%. This growth is consistent with the optimism we reported in 2014, when more than three-quarters (77%) of agencies said they were ‘very optimistic’ about the next 12 months. This positive outlook has continued into 2015, with 74% saying they are very optimistic this year and more than a quarter of the Top 100 projecting their fee income to rise by 30% or more over the year. The gap between the top of the table and the rest remains wide, however. The top five agencies hold 29% of the fee income of the entire Top 100. These agency behemoths are full-service digital machines, producing work admired across the industry. Established agencies have in recent years been joined by large technology and consulting companies, with both IBM and Deloitte Digital retaining or improving on their top 10 rankings. The biggest agency, having grown by 16% since last year’s report is SapientNitro, which has led the Top 100 since 2007 when it operated as Sapient. Now with an impressive £165.4 million in fee income, SapientNitro continues its growth under the new parentage of Publicis Groupe, who bought the agency for $3.7 billion earlier this year as part of a recent aggressive acquisition strategy. The average projected fee income increase for the next 12 months across the Top 100 this year is 21%. Attaining and sustaining this level of rapid growth across the 100 requires continual hiring and retention of talent. However, as with previous years, recruitment is by far the biggest challenge faced by digital agencies: competition is high and people with the right mix of talent, skills and experience are increasingly hard to come by. As mentioned by one agency: ‘There is a shortage of great digital strategy, UX and other specialists across the UK, particularly in consulting and at large agencies where operating at scale on big transformative programmes requires a particular type and calibre of person.’

Top 100 Digital Agencies 2015 | 7 “The past 12 months has seen a healthy shift in talent from agency-side to client-side.” The dynamic nature of the digital marketing industry, with its constantly shifting trends of consumer behaviour and technological innovation, produces an environment in which marketers are continually chasing and competing for the attention of consumers. Winning this race often comes down to having talented and, importantly, innovative employees who have the skills and experience to drive change and maintain agility within organisations. This applies to both client-side and within agencies, with pressure particularly high in the latter where clients expect (and are paying for) specialist skills and creative ideas that don’t exist in-house. Agencies are continually competing to retain these clients, up against myriad other parties, as described by one entrant: “As a digital agency, you’re not just competing against other digital agencies, but also advertising and creative agencies, technology companies, business consultancies, the digital giants of Google and Facebook and sexy-sounding startups from Silicon Valley to Silicon Roundabout. That’s an exceptionally tough landscape in which to compete for clients and attract the talent necessary to succeed.” An agency’s battle does not end there. Competition lies beyond other agencies and tech vendors, in the form of the clients themselves. Client understanding of digital marketing techniques and strategy has been improving in recent years, and the new entrant into the competitive mix is the clients’ increasing in-house expertise. This has caused significant discussion over the last 12 months, particularly in areas like programmatic buying (discussed further by David Moth later in this report), analytics and insight. Clients are asking more searching questions of agencies than they have previously been capable of, and are increasingly moving functions in-house which had previously been managed exclusively by agencies. This in turn exacerbates the agency recruitment challenge, with agency talent moving to the clientside, noted by one member of the Top 100: “The past 12 months has seen a healthy shift in talent from agency-side to client-side. As clients increase their in-house capabilities, agencies need to raise their game to add value. Agencies will need to be smarter.” “The top five agencies hold 29% of the fee income of the entire Top 100.”

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