New media channels and data raise agency profits
Brands and direct and digital marketers get candid about the challenges and opportunities
Now that the recession is arguably over, direct marketing agencies are in an especially fortunate position. Given their efficiency and accountability, they're poised for success in the data driven digital marketing revolution — and business is finally beginning to grow, according to many agency heads. At this time last year, the chief executives at direct and digital agencies were cautiously optimistic as revenues began to gain ground after the recession.
This year, as Direct Marketing News interviewed executives at many of the leading firms, the message we heard over and over again was one of growth.
Growth does not come without its challenges. Agencies these days are expected to do more with existing resources. “Shrinking budgets in some markets are causing media shifts, as are so-called ‘digital dimes from direct dollars' where channel spending may shift, but the amounts spent on each channel are not the same,” says Gary Skidmore, president of direct marketing at Harte-Hanks. “Clients simply expect more for less.”
More than half of marketers are asking agencies to look for ways to cut costs internally this year, according to the Association of National Advertisers' sixth annual spending survey published in April. Marketers are asking agencies to create marketing platforms that address strategic goals, rather than simply designing campaigns. From CRM, e-commerce and database management to mobile and social media platforms, RFPs now require that agencies build out platforms that take a long-term approach.
“Marketing that is a set of campaigns bearing no relation to the consumer context no longer breaks through,” says Daniel Morel, CEO of Wunderman. “We are learning how, when and where to engage consumers through their conversations, experiences and passions,” Morel adds.
Christa Carone, CMO of Xerox Corp., says that agencies need to take “a cross-media approach to more relevant and customized programs that are less about selling to customers and more about engaging them to start the sales cycle.” For Xerox, this means “using our marketing insights and data to define more personalized approaches that really cuts through the clutter.”