Even thought the digital domain is still growing fast, the size of the market is going to be shrinking for a considerable amount of digital agencies. This is a prediction of mine and let me elaborate on it. I believe that there are two winners in the digital agency field in the future – those who concentrate on a niche and can sell bulk solutions for a very cheap price, and those who provide very high value unique and tailor made solutions for clients. The agencies that are now concentrating on the middle-market, not cheap nor very unique are going to be in trouble.
Companies creating general digital assets – namely websites, eCommerce sites, and apps – are going face harsh competition from the cheap bulk producers, which I will call Marketing as a Service (MaaS) companies. Similarly as the Software as a Service (SaaS) producers, they provide marketing communication oriented solutions over the web, in contrast to traditional solutions you buy to “own” and run on your own servers.
These MaaS companies can offer you a dozens of Facebook apps for $29/month, amazing looking websites for $66/year, a fully functioning eCommerce presence for 99$/month, or a custom iPhone apps in matter of minutes. How do you compete with these offers? You can’t unless you go high end, tailor-made, and start adding incremental value.
Here are some MaaS brands to get acquainted with:
North Social:
North Social provides a myriad of Facebook apps for a fixed monthly fee, starting from 19 dollars. I built a sweetstakes app for Skyr FMCG brand in an afternoon with little more than Photoshop skills and gathered 2000 more fans in no time – cost $29 a month.
AppMakr:
You can create apps for mobile phones in no time with AppMakr. Add tabs, such as RSS feeds, photos, geo locations and then customize the look and feel. When making iPhones apps you have to remember that Apple needs to approve your app for it to appear in the App Store, so when sending the publication request remember to highlight benefits to user and the size of the potential audience.
BandPages by RootMusic:
Take a look at the BandPage app of VETO on Facebook or Redrama’s equivalent. Nice, right? And, completely free – these Fb apps are free for all artists, only a plus version with additional features costs (an unbearable) $1.99 a month. Here’s an introduction video from the company RootMusic:
Shopify:
Fully functioning eCommerce store fronts for under a hundred dollars a month from Shopify.
Cargo:
I built a website with Cargo. It requires no skills and no money, unless you want to have it on your own URL or use advanced CSS, then $66/year. There are so many nice and varied designs that soon it is impossible to think of how we used to pay tons of money for general websites. It took me a total of 4 hours to compile a website. Cargo works great if you have visual content photos or videos. Currently, you have to apply to get an invite.
As I see the point of using white label services or apps as a good investment for some companies, I highly doubt that they will overturn the benefits of custom/bespoke services.
As you emphasize on your Cargo page, you are specialized in campaigns, campaigns, campaigns. For this, a short lived iPhone app that just parses RSS feeds or a generic Facebook app to to play your tracks might do the trick.
But what I believe, that using an ever increasing amount of your advertising budget to produce your own digital services that actually help your customers or provide some lasting value (not for just a burst) is the way to go. E.g. I like the ideas presented here: http://forrester.typepad.com/groundswell/2011/03/invest-10-of-your-advertising-money-in-serving-and-cultivating-customers.html
By: Mikko Kiviniemi on May 5, 2011
at 9:37 am
Mikko: You can white label some of the services mentioned, and I see that becoming more popular in the future. For example Starbucks uses North Social apps as white label apps.
Still, you are absolutely right – many companies still go for the bespoke services – but digital agencies have to try harder and add substantially more value by going to the other end of the spectrum, that’s why I also see the up-scale end growing. Middle-market is in my opinion going to be shrinking…
By: Sami Salmenkivi on May 5, 2011
at 9:59 am
That will hopefully get better now that companies are forced to more and more read into analytics and not just receive PDFs monthly sourced from Google Analytics from their tech vendor
But I think the niche point you bring up is great, it just seems that here domestically many digital shops view the market as to small to specialize and brand themselves into a niche as there’s still loose cash to be made from designing Facebook Pages (for a current example). I see a big gap between current digital agencies and truly specialized shops, like MK&C, with a market share to be made for the brave individuals!
By: Mikko Kiviniemi on May 5, 2011
at 10:41 am
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