Digital creative agencies are traditionally known for being disruptors. But they’re the ones now being disrupted.

Today, agencies are striving to succeed in a highly-complex, tech-driven ecosystem comprised of consultancies, product design studios, venture labs, and in-house teams, according to the findings of the latest annual SoDA Digital Outlook Report released by the Society of Digital Agencies (SoDA). In this increasingly challenging environment, the report suggests that companies and business leaders embrace collaboration, agility, transparency, speed, and a deep commitment to customer experience.

All of that is easier said than done, of course. “Clients are expecting end-to-end solutions, the agencies are fighting the consultancies, and everybody seems to be racing towards the middle,” says Wesley ter Haar, SoDA board member and founder and COO at global creative agency MediaMonks (left in the above photo). “That’s a difficult spot for a lot of people.”

In the interview below, ter Haar shares his views on the state of the industry and where it’s headed.

The SoDA Digital Outlook Report for 2018/2019 is out. Do you feel like it is an accurate reflection of the state of the industry?

Yes, it feels like everybody is racing to the same spot, so it’s getting as compressed and condensed as I think it’s ever been. I think we are seeing that reflected in some of the SoDA numbers, but also in the general turmoil in the network part of our industry. There are a lot of new lines of competition, because of everything that has been blurring over the last few years.

What is happening in the industry that is making 61 percent of agency leaders re-evaluate their business model? Is this healthy?

It is healthy in the sense that your hand is being forced because so much has changed in terms of how clients expect their businesses to be serviced. While it’s not helping people sleep well at night, I do think it is healthy. It’s no longer just about the work we do, but also how our clients expect us to execute that work.

The report says 30 percent of digital agencies are working with voice, AI, and physical experiences. Is this a stretch for shops who built their reputations on websites and apps?

There is definitely growth there. You just need to be hyper-aware this is that decision-making point where you have to decide if you are going to go after something. If so, is that actually going to be a long-term, scalable, commercial opportunity?

The Googles, Facebooks, and Amazons of the world are going to solve a lot of the heavy lifting, and we will be working with APIs like we have always done. Anything impacting at scale will not need custom solutions in time.

Why do 70 percent of client-side marketers list “brand differentiation through innovation” as the single most important strategic factor driving success for their business?

Right now innovation is a shiny thing. It’s more about the perception of innovation and getting PR around something rather than it being genuinely innovative. For example, I don’t think it necessarily means that you did a cool AR project, or that you have a chatbot. Real innovation is more about working out the opportunity that these new platforms have and then matching it against our products, services, and business.

Real innovation lies in learning how to start matching your products and services to evolve with user behavior. You have to be aware that, although innovation work doesn’t always return an instant ROI, the most important thing is what you learn from it.

Marketing automation was listed as the top emerging technology for 2019. How are creative-led agencies involved in this?

I think it’s an opportunity more than a risk. Marketing automation used to be stuck with the IT integration side of the business. There was a lot of heavy lifting and, in some cases, it was seen as too far a reach for creative shops. Today, with some of the APIs, a creatively-oriented company can add in what they are great at, which is understanding user behavior and adding a level of empathy to what is possible from an engineering perspective. They can leverage the platforms for more of a user story that actually resonates at a much higher level than the integration partners were able to do.

Marketing automation should be an underlying data set with an ability to target that makes the user experience better. So much marketing automation goes with the lowest common denominator and doesn’t add any actual value. It’s either creepy or underwhelming.

As an industry that differentiates on creativity, why is there this shift towards "strategy, data, and technology” which has traditionally been the backbone of consultants who have entered our market?

There will always be shops that focus on that and there is an interesting conversation around whether you need to be literate when it comes to strategy and data, or a specialist. I do think a lot of the SoDA agencies needed to extend into some of these things so they could have a recognizable conversation with clients. It's not just the things we do, but also about making those things something people will buy, which means it needs to meet these industry expectations. The sweet spot is the mix between the practicality of being a smaller, digital-first indie shop and knowing how best to use the data.

Your company, MediaMonks, has announced it is combining production with content, data, and media. What is behind this big shift, and are you worried that this is going to change the culture of the company?  

As an industry, there has been so much focus on making everything quicker and cheaper. We are aware of that and trying to get past those issues. More and more it is about the effectiveness of the work and showing that we impacted the bottom line. To do that well, we think there needs to be an extension into media and data because it closes the loop. We can create the work, we can place it, we can measure it. It gives us more ownership. When we get learnings about the impact of a piece of work, we can bring that back into our next projects.

The second part is that our business is talent-driven, and it is always going to be about people doing good work. There is the recurring question we ask ourselves: “How big can you get before you become bad at what you do?” I think adding that element of measurement is going to be interesting for our current and future talent.