Millward Brown Digital Agencies 2016 - Kentico CMS · money in so˜ware in 2016. The growing and more profitable agencies plan to make even more significant changes. They are more

Are You on Track or Are You Lagging Behind?

Digital Agencies 2016

WEB

Introduction

Kentico’s Digital Marketing Trends Survey 02

There has been a lot of noise about digital marketing in the last few years, and almost every company around the world feels the need to deal with this. In order to satisfy their clients, digital agencies must o�en decide between the client’s expectations and the limitations of their own business. What are their plans for 2016? What tools and solutions will they mainly be o�ering their clients? What are their struggles? Do their clients understand digital marketing well, and to what extent are they cooperative? And how much are the agencies paid for digital services? Is your agency on track or is it lagging behind?

Highlights• The vast majority of digital agencies plan to hire new people and invest more money in so�ware in 2016.

• At this moment, it is primarily the agencies that are deciding about the brands and products their clients use.

• Web development, analytics, email, social media, and content marketing are still the core businesses of most agencies.

• As for the solutions and tools, content management systems and social media management solutions are the most recommended, though the bigger agencies are also suggesting e-commerce, CRMs, and automation platforms to their clients.

• Although the majority of agencies feel that there are lots of competitors in the market, it seems that it is mostly the clients that concern them. Clients want to use digital marketing but don’t understand it properly and usually expect lots of work for little money.

• The representatives of digital agencies believe that success lies in a better understanding of digital marketing from the client’s side. Nevertheless, employees are also expected to understand tasks better.

• The average price of one project varies a lot. Regarding the better- performing agencies, a project costs twice as much when compared to the rest. Relative to the others, agencies in Australia and New Zealand charge less while those in the US charge more.

We surveyed a random sample of more than 300 senior managers and directors of digital agencies in ten countries across three continents. These decision-makers are no freshmen. With an average age of 39 years and responsibility for 30+ employees, they o�er a strategic view of their needs, their clients’ needs, and the industry’s trends.

Plans for 2016 —Strategies forSuccess


So, Who Are the Agencies? Throughout this report, we are comparing above- and below-average agencies. This definition is based on self-evaluation, where managers described their agencies as performing better or worse than the industry, taking into account the region in which they mainly operate. Although self-evaluated, the definition also reflects their turnover in 2015. While revenue was approximately $4.5 million in above-average agencies, it was “just” $1.9 million in below-average agencies.

Which Activities Does Your Agency Plan to Do Next Year?

Australia, together with New Zealand, seems to be the most progressive region. Agencies there are planning to outsource work more and will change their CMS/digital marketing platform more o�en than agencies in other regions. Other agencies, especially in the UK and Czech Republic, do not plan such significant changes this year.

US

United Kingdom

AustraliaNew Zealand

Benelux

Czech Republic

Degree of Likelihood (%) > more likelyless likely <

Invest more money in so�ware

Invest more money in hardware

Outsource work more

Acquire another company

Change CMS/digital marketing platform

Merge with another company

50 40 30 20 10 0 10 30 40 5020

Hire more people

The Growing Season


The majority of business representatives across all regions believe that all of these changes will increase the e�iciency of their work significantly. Those that plan to hire more people, invest more money in both so�ware and hardware, and change their CMS/digital marketing platform have especially high hopes.

Hire morepeople

Invest moremoney inso�ware

Invest moremoney inhardware

Outsourceworkmore

Acquireanother

company

ChangeCMS/digitalmarketingplatform

Merge withanother

company

Plans for 2016Expected increased e�iciency

Above-average agenciesBelow-average agencies

The vast majority of digital agencies plan to hire new people and invest more money in so�ware in 2016. The growing and more profitable agencies plan to make even more significant changes. They are more likely to hire new people and invest in both so�ware and hardware, as well.

81% Hire more people

71% Invest more money in so�ware

63% Invest more money in hardware

52% Outsource work more

45% Acquire another company

44% Change CMS/digital marketing platform

36% Merge with another company

The orange columns show the percentage of agencies that plan to do these activities in 2016, and the yellow columns refer to the percentage of managers from these agencies that believe that such changes will increase the e�iciency of their agency‘s work.

90%66%

76%62%

68%55%

50%34%

50%33%

55%46%

42%26%

81%

71%63%

52%45% 44%

36%

91% 89% 86%82% 79%

86%80%

The Landscapeof Digital Agencies:Tools and Solutions


Web development, analytics, email marketing, social media marketing, and content marketing are still the core businesses of most agencies. Loyalty programs, customer communities, remarketing, and gamification are the least demanded and, therefore, the least provided services.

Personalization and Automation?Agencies Aren’t There YetOn average, 38% of agencies o�er digital marketing personalization, and 31% provide marketing automation (lead nurturing) to their clients.

Solution that is more typicalfor above-average agencies

Solution that is more typicalfor below-average agencies

20%

30%

40%

50%

60%

% o

f abo

ve-a

vera

ge a

genc

ies

that

o�e

r the

ser

vice

20% 30% 40% 50%10%Loyalty Programs (online)

Gamification

Remarketing

Customer Reviews and Community

Gathering and Analyzing Online Customer Data

Video Advertising (online)

Mobile-specific Marketing

Search Ads

Marketing Automation

Online Display Advertising

Web Analytics

Social Media Marketing

Web Development

Email Marketing

Graphic Design

Content Marketing

CoreBusiness

SEO

Application Development

Personalization of Online Content and O�ering

% of below-average agencies that o�er the service

The Most RecommendedSolutions


…though the bigger agencies also suggest e-commerce, CRMs, and automation platforms to their clients.

These are the solutions most recommended, besides the traditional Top 4 — CMS, email, social, and analytics. We expect them to be the future competitive means for agencies. As their prices get lower, smaller clients will be able to a�ord them.


63%51%

63%50%

50%49%

50%43%

46%29%

45%30%

40%25%

35%26%

26%16%

25%11%

As for the specific so�ware and solutions, web and mobile analytics, content management systems, social media marketing, and email marketing solutions are the most recommended…

58% Web and Mobile Analytics

58% Web Content Management Platform

50% Social Media Marketing

48% Email Marketing Solution

40% E-commerce Platform

40% Customer Relationship Management So�ware

35% Marketing Automation/Integrated Marketing So�ware

32% Testing and Optimization Tools

23% Lead Scoring

20% Personalization So�ware

The Marketing Landscape:Building Expertise


Who Knows What’s Best?Clients Listen to Their AgenciesAt this moment, it is primarily the agencies that decide about products. According to managers, less than a quarter of their clients suggest or choose the so�ware and cloud solutions themselves. The rest are driven by the agency providers. This estimate is universal for all agencies, regardless of their size or region.

77% of solutions are based on agency recommendations

Solution Adoption by Agency ClientsOpen source or in-house-developed solutions are not on the decline — in-house solutions seem to be less popular only in the UK — but commercial solutions prevail. They are used more o�en, not surprisingly, by the best performing companies across all regions. However, a significant number of agencies fear that open source so�ware is insecure (20–33%, depending on the solution) or inadequately supported (17–26%). That is more than double the average number for commercial solutions. Interestingly, it is the smaller agencies that are more critical.

49% prefer in-house-developed so�ware

67% prefer commercial so�ware

54% prefer open source so�ware

All-in-one vs. Best-of-breed? According to the agencies, 60% of their clients prefer a more universal, therefore, all-in-one solution across all regions.

60% prefer all-in-one solutions

Struggles?Usually with Clients…


Although the majority of agencies feel that there are lots of competitors in the market, it seems that it is mostly the clients that concern them.

Clients want to use digital marketing but do not understand it well (78% agree). They also expect a lot of work for little money (78%) and acquire many digital marketing tools but do not use them (73%). It seems that less successful agencies have a tendency to blame their clients for not understanding digital marketing and for wanting a lot for little money.

80% “We have a lot of competitors”

“Our clients want to use digital marketing but don’t understand it well”

78% “Our clients expect lots of work for little money”

“Our clients acquire many digital marketing tools but don’t use them”

58% “Our agency doesn’t have enough clients”

51% “Our agency doesn’t have enough quality employees”

47% “Most of the projects aren’t completed on time”

“Most of the projects aren’t e�ectively managed or executed by employees”

41% “Most of the projects aren’t profitable”


82%78%

84%75%

83%75%

75%72%

62%56%

52%51%

47%

45%

47%

43%

42%39%

78%

73%

44%

The Point of ViewDepends on the Region


Degree of Agreement (%) > agree disagree<

There are interesting di�erences between specific regions regarding specific attitudes. Managers in the Czech Republic complain more about clients that expect lots of work for little money, but are significantly less critical in terms of the number of clients, the timely completion of projects, profitability, and (comparable to the UK) the quality of their employees. On the other hand, managers in Australia and New Zealand complain more about their own employees and the size of their clients’ portfolios.

“Our clients want to use digital marketing but don’t understand it well”

“Our clients expect lots of work for little money”

“Our clients acquire many digital marketing tools but don’t use them”

“Our agency doesn’t have enough clients”

“Our agency doesn’t have enough quality employees”

“Most of the projects aren’t completed on time”

50 40 30 20 10 0 10 30 40 5020

“We have a lot of competitors”

“Most of the projects aren’t e�ectively managed or executed by employees”

“Most of the projects aren’t profitable”

Achieving Greater Success?It’s All About People!


When considering the last significant success and loss, it is clear that the representatives of digital agencies believe that success lies in understanding digital marketing from the client’s side more thoroughly. If clients better understood what they needed, the profitability of their projects would increase significantly. On the other hand, employees are also expected to understand the tasks better. Deeper cooperation would be beneficial.

Above-average agencies have even higher expectations of their employees in terms of understanding their tasks. Below-average agencies believe in cheap labor more.

20%

30%

40%

50%

Whi

ch o

f the

seas

pect

s co

uld

have

real

istic

ally

help

ed y

ou m

inim

ize

loss

? (%

agr

ee)

20% 40% 80%Which of these aspects contributed to success? (% agree)

60%

20%

30%

40%

50%

Fac

tors

hel

ping

to m

inim

ize

loss

,ac

cord

ing

to a

bove

-ave

rage

age

ncie

s (%

agr

ee)

20% 40% 60%10% 30% Factors helping to minimize loss, according to below-average agencies (% agree)

50%

Contributed to greater success significantly more Contributed to greater success significantly less

Our clients knowing what they needOur employees understanding the task wellOur clients being cooperativeThe use of Agile methodologyThe use of cheaper laborHigh range of functionalitiesHigh popularity of tools and digital marketing

Above-average agencies agree significantly more Below-average agenciesagree significantly moreNo significant di�erence

Our clients knowing what they needOur employees understanding the task wellOur clients being cooperativeThe use of Agile methodologyThe use of cheaper laborHigh range of functionalitiesHigh popularity of tools and digital marketing

23

1

2

3

4

5

6

7

1

2

3

4

5

6

7

45 7 6

The path to greater success

21

3

7 46

5

1

Project-oriented WorkFully in Place


How Many Projects?On average, agencies undertook 42 projects in 2015. There is little di�erence between above-average (44 projects) and below-average agencies (37 projects), but significant di�erences can be seen among specific countries. US, Australian, and New Zealand agencies are at the top, while European companies completed far fewer projects.

US

United Kingdom

Australia New Zealand

Benelux

Czech Republic

How Long Does It Take?The average length of a project also varies slightly according to the country. While one project usually takes four months, the average in Benelux is seven months.

US

United Kingdom


Benelux

Czech Republic

51 projects

45 projects

34 projects

35 projects

24 projects

5 months

7 months

4 months

4 months

2 months

Projects Usually TakeLonger than Estimated


A third of the agencies admit that projects usually take longer than estimated. This applies more to above-average agencies (39%). Comparatively, US agencies are doing much better — a quarter of their managers declare that their projects usually take longer.

US

United Kingdom


Benelux

Czech Republic

Based on open questions, the managers suggest that the reasons for project delays can usually be found on the client’s side — specifically, by not being sure of what they really want, a low awareness and understanding of digital marketing tools, and changing requirements.

“The client does not provide the necessary materials in a timely fashion, and the client changes their mind and dramatically alters the project halfway through.”

Above-average Agencies Are More Likelyto Use Agile MethodologiesUsing Agile methodologies might be one of the reasons for success, since above-average agencies are more likely to use them. This especially applies to the Australian and New Zealand region.

US

United Kingdom


Benelux

Czech Republic

66% Above-average agencies41% Below-average agencies

53% projects

39% projects

26% projects

40% projects

7% projects

76% projects

38% projects

54% projects

64% projects

57% projects

Clients Pay for Expertise


Services are charged most commonly according to the project’s costs (75%), but half of the agencies also charge according to an hourly rate. Charging for projects based on Agile development is a practice yet to be used widely. The numbers suggest that there are some discrepancies in how agencies charge their clients.

50% according to an hourly rate

75% according to project cost

12% according to an Agile approach

Above-average agencies use an hourly rate more o�en. This way of charging is used significantly less in Benelux and the Czech Republic.

Hourly rate55% Above-average agencies41% Below-average agencies

Project cost76% Above-average agencies74% Below-average agencies

Agile development14% Above-average agencies8% Below-average agencies

The average hourly rate is $190. While above-average agencies charge $225 per hour on average, below-average agencies charge $105.

Project cost

Agile development

0 10 20 30 40 50 60 80 90 10070

Hourly rate

$225$190$105

Who Gets the Most?


UX and Graphic Designers Are Paid BestIn general, UX and graphic designers are paid better per hour than developers and marketers. This di�erence is even more evident in outperforming agencies.

$31 Developer

$30 Marketer

$35 UX Designer

$35 Graphic Designer

Average Wage per Hour (USD)

Developer$31 Above-average agencies $32 Below-average agencies

Marketer$31 Above-average agencies $27 Below-average agencies

UX Designer$37 Above-average agencies $30 Below-average agencies

Graphic Designer$37 Above-average agencies $31 Below-average agencies

Hourly wages are almost equally distributed among all specializations in the US, while there are significant di�erences in other regions. You would be lucky if you were a UX designer in Australia or a graphic designer in Benelux!

Marketer

UX Designer

Graphic Designer

10 15 20 25 30 40 35

Developer

How Do Average Prices forProjects Vary?


With better-performing agencies, the price for a project is twice as much, compared to the rest. Agencies charge the most in Australia and New Zealand, but charge surprisingly less in the US, considering the higher wages of their specialists.

$135,000 project price for above-average agencies

$65,000 project price for below-average agencies

According to managers, the majority (76%) of projects are profitable, regardless of the performance and region.

76% profitable projects

US

United Kingdom


Benelux

Czech Republic

$190,000

$140,000

$105,000

$125,000

$29,000

The FactorsThat Lead to More Projects


You now know that the below-average agencies have a higher tendency to blame their clients for not understanding digital marketing and for wanting a lot for little money. But the problem is likely due to weaker cooperation between agencies and clients, especially in terms of knowledge sharing. Agencies have to be able to clarify all issues and explain all uncertainties before the project starts. Maybe that is why the above-average agencies have even higher expectations of their employees in terms of understanding the tasks. This could also explain why the majority of the agencies plan to hire new people.

As for the solutions, web and mobile analytics as well as content management systems will be recommended the most to clients this year, especially by the above-average agencies. This suggests that these solutions will be crucial for greater success — one of the reasons why the majority of agencies plan to invest more money in so�ware. Those that plan to change their CMS/digital marketing platform have especially high hopes in terms of work e�iciency.

If you are one of those agencies that are looking for a better CMS/digital marketing platform, the time is now.

And remember — the majority of clients ask for an all-in-one solution!

How Do We Know This?

© 2016 Kentico So�ware

About the Research Millward Brown surveyed more than 300 senior managers and directors of digital agencies across three continents. Responses were collected from an invitation-only online B2B research panel in December 2015.

Millward Brown is a worldwide marketing research and consultancy agency that adheres to the ESOMAR rules on data collection and publication. For more information, please visit www.millwardbrown.com.

About Kentico So�ware Kentico So�ware provides an all-in-one CMS, E-commerce, and Online Marketing platform that drives business results for companies of all sizes, both on-premise or in the cloud. Founded in 2004, Kentico is a Microso� Gold Certified Partner headquartered in the Czech Republic with o�ices in the US, UK, Netherlands, and Australia. Kentico has 1,000 digital agency partners and powers more than 25,000 websites across 100 countries. Customers include Gibson, Twinings, Ingram Micro, Mazda, Kingspan, Hunter Fan, Starbucks, and Allergan.

Documents

Millward Brown Digital Agencies 2016 - Kentico CMS · money in so˜ware in 2016. The growing and more profitable agencies plan to make even more significant changes. They are more