Are digital agencies becoming obsolete?

Last week PwC launched its very own digital hub called The Experience Center to help clients “accelerate digital innovation and transformation”.

The experience centre and its offerings (which sounded a whole lot like what digital agencies today have to offer) has also invested in hires from backgrounds such as Masters of Fine Arts. In a statement it said, along with core understanding of digital offerings, creativity was also a priority for PwC’s new digital unit.

A statement from PwC read:

"The Experience Center Talent group is spread across 31 cities globally, and includes creative directors, strategists, technologists, designers, engineers, product managers, developers and more. As likely to hold a Masters of Fine Arts as they are an MBA, the Experience Center team provide clients with the imagination and creative skills to create new products, services, and solve problems, combined with the deep industry and business expertise to deliver those transformative ideas to market."

While large professional services and IT consulting firms making a move into the digital services is not new with the likes of IBM, Accenture, McKinsey, KPMG and Deloitte already making big strides in the arena, where consultancy services might have historically lost out on was their lack of creativity.

Most consulting firms are generally focused on improving the customer experience through digital transformation, design thinking, marketing automation and analytics-related services. However with PwC now hiring those with a creative brain, are digital agencies then left with no point of differentiation of their own?

(Read also: Competitor alert: Agencies are you ready? and Are agencies irreplaceable?)

Prantik Mazumdar, managing partner of Happy Marketer was of the view that consultancy services and IT giants who venture into this space for the time being, have a different approach to digital than traditional agencies.

Traditional agencies are generally more focused on creating campaigns to drive awareness and sales in the short term. Digital agencies are still more right brain oriented and work closely with the marketing teams alone. They are driven by a creative idea and the associated media plans to amplify the reach of the campaign.

Consulting firms, on the other hand tend to be more left brain in their approach. Their scope of work could entail working with departments such as marketing, sales, customer service, HR, finance and such.

“Agencies predominantly comprise of ‘Mad Men’ whilst consulting firms are filled with ‘Math Men’. In the future, we might just see the emergence of new age digital firms that inherently integrate both approaches right from the start,” said Mazumdar.

Nonetheless, CEOs of digital agencies should be alert, argued Tripti Lochan, CEO of VML.

“This trend is something that all digital agency CEOs should worry about," she said adding that she believes agencies still have a unique differentiation. With business transformation being centred the customer, what once used to be a short lived digital marketing initiative is now becoming a holistic corporate strategy led by CMOs who best understand the consumers.

“And who understands the CMO and brand building using digital channels better than digital agencies?” she said.

According to Lochan, Consulting companies have a value-proposition where they can go to clients and offer to handle their strategy, consulting, execution, product distribution, supply-chain management, tax filing and financial management but not many clients might bite into this bait as the risk of working with a consultancy service is still too big, she explained.

How can agencies survive the game?

To maintain their own, and survive the game, agencies need to learn from consulting firms how to create frameworks that talk to business ROIs, while maintaining their differentiation of brand building.

The latter is an area which will take consulting agencies some time to grasp, said Lochan. This is especially because of the acquisition route that consulting agencies are adopting, such as Accenture buying design agency Fjord to expand its digital and marketing capabilities and Deloitte buying mobile agency Ubermind.

“The acquisition route will have its own problems of integration and require a coherent decisive strategy that is not an easy path for accountants and creatives to tread,” said Lochan.

(Read also: Deloitte Digital's regional launch: What does it mean for the industry?)

Nonetheless, the move into digital is a natural progression and will continue to happen as consumer interaction with brands across digital and mobile channels continue to rise.

“Bridging the gap between marketing and digital technology is at the top of the agenda for the C-suite today. Transforming the enterprise to one that has digital at its core for communication, efficiency and innovation is a must and consulting companies are really looking to get a piece of the pie when it comes to digital transformation,” said Lochan.

Mazumdar added while currently the market still has enough bandwidth to accommodate both agencies and consulting firms, it is only a matter of time before the two areas merge.

It would be in the agency world’s best interest to up their game and align their offering to their client's business goals.

“Agencies need to build capability organically or through acquisitions that allow them to be more data-driven and provide solutions that impact their client's marketing funnel beyond just awareness and consideration. It is time that agencies counter attack and protect their turf by reinventing themselves," Mazumdar said.

(Photo courtesy: Shutterstock)