Classic Advertising and Consulting Models Are Shifting — To Clients’ Benefit

With the possible exception of consumer apps, no market has exploded in the new millennium quite like marketing technology.

When chiefmartec.com started reporting on the space in 2011, it counted around 150 solutions. Today, it reports around 7,000. Put another way, 2018’s martech landscape contains more software products than those of 2011 through 2016 combined.

Like the app boom, however, martech madness has produced its fair share of growing pains. Marketers are struggling to understand the solutions available to them, much less how to use them or how to connect them to their other marketing efforts.

CMOs Are Buying; Marketers Aren’t Biting

The confusion around martech solutions hasn’t stopped CMOs from spending big money on them.
According to a Marketing Technology Industry Council report, the average B2B company spends somewhere between 10 and 19 percent of their budget on marketing technology. Software and tech companies spend even more, averaging 20 to 29 percent.

Despite the money being spent, however, few marketing teams are getting the most out of their tools. While the average enterprise uses a whopping 91 marketing cloud services, just 3 percent of marketers told communication firm Walker Sands that they’re getting the full value from their tools.

What explains the extraordinary gap between martech spending and actual use? While multiple trends may be to blame, the primary one is a proficiency gap. While 75 percent of marketing executives consider themselves proficient with martech, a Wipro Digital report found, just 6 percent say the same about their team members.

Compounding the proficiency challenge is one of marketing culture. Most marketers would much rather be developing a fresh campaign than learning new tech tools. The Marketing Technology Industry Council study found that 80 percent of surveyed marketers ranked learning or using martech software as one of their least favorite things to do.

The other trend in play is one that likely stems from the first two. Because few marketers are familiar with martech (and they don’t particularly want to learn), many find themselves stuck at the implementation stage. Although the Walker Sands study showed leadership-level blocks to martech adoption, such as budget and executive buy-in, decreasing year-over-year, it found a double-digit increase in those citing implementation or integration challenges.

The truth is, CMOs are struggling to spend their way out of internal martech issues. Agencies, for their part, are seizing the opportunity.

Agencies Are Joining Forces

Because almost all large companies have a marketing team, the agency model is built around supplementing skills that those corporations can’t or don’t want to develop in-house. But martech is just as new to digital and advertising agencies as it is their corporate partners; as a result, they’ve had to turn to niche firms to tackle the tech side of their creative campaigns.

That skill vacuum at corporations and larger agencies has sparked a trend that shows no signs of burning out: mergers of traditional ad agencies with their digital peers. For example, in 2013, WPP acquired Bottle Rocket, a Dallas-based mobile marketing software firm known for building NPR and NatGeo apps. Although WPP’s acquisition caught the marketing world’s attention, what shocked it was digital agencies like Deloitte doing the reverse: acquiring creative firms like Heat, a hotshot agency with video, social, and digital components. What Deloitte calls “creative digital consulting” is effectively the same model as WPP’s, where a traditional ad agency and a tech consulting partner join forces to provide services that are more than the sum of their parts.

Will clients continue to seek out all-in-one agencies? Firms large and small seem to think so. Omnicom Group, one of the world’s largest marketing services and advertising agencies, recently acquired Credera, a boutique management and technology consulting firm based in Dallas. According to Credera President Justin Bell, single-service marketing firms are missing a lot of opportunity: “Marketing initiatives can no longer be siloed. They must integrate with an organization’s broader technology architecture and leverage insights to be successful.”

After a move away from agencies of record toward niche firms, the marketing world may finally be coming full circle. Companies struggling to make sense of marketing technologies are asking their advertising partners for help, but those traditional agencies know they need the expertise of martech startups to meet their clients’ full needs. If the spate of acquisitions is any sign, it’s an arrangement that’s here to stay.