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Are Tech Firms Taking Over Digital Agencies and Madison Avenue?


With the explosion of digital initiatives over the past couple of years the worlds of advertising, marketing and technology have been on an undeniable collision course. Creative strategies that would once have taken months to execute are now live and kicking within seconds. Publishing technology has been overhauled and democratized, lucrative advertising brokerages are being automated and the analytics necessary to understand buyer response and sentiment has leaped into the forefront.

In this digital world, technology firms that once sold exclusively to IT departments are starting to come face to face with marketing. Similarly, traditional creative agencies are now having to get their heads around not just what new technology promises, but the new marketing and sales paradigm it enables.

But who’s taking over what?

To many in the traditional agency world, the problem is pretty straightforward: “the big tech firms are trying to take us over.”  But the truth is marketing department customers have simply embraced digital more quickly and enthusiastically than traditional agencies. This is particularly true when it comes to measurement and analytics, but more on that later. Further compounding the problem, traditional agencies who wade into digital often bolt it on as an extension of their capabilities but no independent voice inside or outside the organization. This leads to frustrating project failure, communication difficulties, and a trail of dissatisfied clients.

On the flip side, consider the recent rash of creative and digital agencies acquired by major IT system integrators. In the past couple of years Accenture, IBM, & Deloitte have each spent hundreds of millions of dollars acquiring multiple agencies. PWC, KPMG, McKinsey and EY though have also made agency acquisitions.

However, it is our opinion tech firms really have little interest in the creative work that agencies undertake. Sadly, many of the creative folks at acquired agencies will likely learn soon just how low on the totem pole they sit in the tech world. Some are already questioning the basic logic and efficacy of the combined creative and tech model and wondering if they will ever really work. It’s still early days, but we’ve seen these acquired entities remain essentially separate from the parent companies’ core tech businesses. As a result, customers may engage major tech consultancies seeking end-to-end creative to tech implementation, only to find disjointed and dysfunctional internal operations. The tech firms have more than enough money to see them through years of bumpy roads and more than enough money to continue their agency buying spree.

It’s all about the data

What the tech firms are really after is to get more involved in the ownership, automation, management and analysis of customer and commerce data. After years of disappointment from the promise of ‘Big Data’ tech firms have now focused in on customer data as the next holy grail. What is clear is even though petabytes of customer data exist, until now it has been poorly leveraged, at best. Mining via advanced analytics and applying artificial intelligence is not something creative agencies have the skills, technology and, in many cases, the interest in doing. Tech firms, on the other hand, do have those skills and can’t wait to get their hands on the data.

There’s no clear answer, but there is hope

So what does this all mean for if you are a customer looking to engage a creative agency? Apart from the obvious “these are interesting times” comment until things settle down, it’s worth continuing to see tech firms as tech firms, regardless of the creative agencies they have acquired. One stop shops for tech and creative services sound good, but may not yet be capable of truly delivering on the promise. If your approach to marketing and customer engagement is evolving and the weight of your financial investment leaning more toward the data science approach and away from a primary emphasis on creative work. In that case, the tech firms may be well worth looking at more closely. Contact us if you’d like more advice on how to select the right type of firm for your upcoming implementation.


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