Digital agencies – why are we scared of performing?

Why do digital agencies offer complete resistance to ROI or performance based models of marketing? Instead why are agencies and Internet companies adopting ‘soft bullying’ methods to increase digital spends and increase revenue?

There has been a recent glut of press releases and statements made about how marketers would be substantially increasing the spends in their marketing budgets for the digital medium.

Forester recently released a report which said said that marketer spend on Interactive is expected to grow to $55 billion by 2014. Impressive analysis and seemed quite logical, What no published story about the report mentioned, was that possibly TV would possibly grow to.

Along with this report there was a commentary started in the digital marketing space in India – with experts suggesting that the digital spends would increase from 1-2 % to 10% and beyond. The major problem with this type of posturing is that the agencies and Industry bodies are speaking independently, and not with the client views in mind. Within this same report (Source: afaqs.com) FMCG marketers have raised their concerns with the digital medium primarily being one of reach and internet access, and that is one reason with which even I am apt to agree with – despite no amount of soapbox speeches from the IAMAI – when the country classifies 256kbps as broadband, I am concerned.

The aforementioned Forester report was actually considering the US Market, and it is that market which a lot of digital agencies draw a comparison to when making these requests for increasing budgets. Digital ad spends are higher in the US and UK, but so are campaign delivery channels and vectors. Digital is not limited to the Web and the mobile, and in-fact is drawing more budgets because it has integrated with traditional methods of advertising. Another critical aspect is that the cast majority of consumers overseas do live their lives digitally, this is still not true of us in India.

But coming back to Performance based models of marketing – these same US and UK markets with the 10 – 15% spends on digital have adopted performance based models for digital and from their are rolling it to their other channels.

Digital agencies and publishers though fight a ROI principle and want to avoid talking about it (In two years in this industry I have worked on only 1 ROI based campaign, 2 others I could not do do to a lack of publisher clarity) A publisher, will not even provide you with clear traffic numbers and delivery rate on properties, so that even if as an agency you are taking the entire delivery risk, you are not able to perform. Surprisingly enough CPC based publishers are amongst the worst here, the numbers they provide you are on such a wide scale, that the pure maths that is a CPC campaign becomes a quadratic equation that you probably need Wolfram alpha to solve.

So why is there this great aversion to numbers, why don’t we as marketers put out the correct facts – with the necessary caveats – rather than running campaigns on best effort basis.

The Internet’s best feature is that it is quantifiable – Is that what we marketers are scared of?

Full disclosure: I work in the digital advertising industry, with a digital agency. At the same time I would like some practices within this industry to change – for the better.

One thought on “Digital agencies – why are we scared of performing?

  1. Most digital agencies in India only superficially understand the technology, and see it as an enabler of effective communication to consumers. The fact that they wanted to grow too fast, mimic US / UK success stories and become millionaires overnight drove them away from the fundamentals. Serious effort was never put into ensuring the infrastructure was bullet proof, instead what was put up is a long shot from what marketers in USA / UK would call standard. In the presence of these critical issues, it is almost impossible for a publisher, and hence an agency to pitch “real RoI based campaigns / marketing activities”.

    The hollowness with which it began is now plaguing the digital industry in India, with clients struggling to justify their digital spends and agencies “soft bullying” them.

    For the players in the Indian digital industry this is as much an opportunity as it is a serious issue.

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