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2011 Digital Production Outsourcing Outlook

January 31, 2011

More on our outsourcing survey results!

When we asked respondents to look ahead, three-fourths of respondents (75%) already plan to outsource digital production projects in 2011.

As consumers continue to increase the time they spend across a rapidly growing number of digital devices and channels, many marketers and agencies are facing not only heightened demand for digital innovation, but the growing technical complexity to build, maintain and measure digital initiatives in an environment of restricted marketing budgets. After evaluating their total cost of service, many in-house and external agencies alike have turned to digital production outsourcing partnerships in order to stay efficient, profitable and, most importantly, relevant in today’s digital era.

Respondents also indicate that agency management is the key driver behind digital production outsourcing initiatives (48%), followed by the production department (40%) and clients (27%). While the majority of respondents seek third party outsourcing partnerships within the United States in 2011, nearly one-fourth (23%) are considering outsourcing partnerships outside of the United States.

This survey tells us that the tipping point is approaching – where digital production is beginning to look more like print production –and perhaps even television production – and will become increasingly specialized as it becomes more complex.  Because of this, digital production outsourcing is maturing and becoming mainstream, as we’ve learned through our survey results this month.  

Consider how a digital production partnership could benefit your business this year. For more details on our survey results, check out this press release.

Outsourcing Challenges

January 26, 2011

As we shared earlier this week, digitalArbor recently concluded a survey of marketers and agency executives at agencies and corporations across the United States.

79% of respondents have outsourced digital production, with the majority of work being completed domestically.

When asked about issues, many respondents experienced significant challenges in the process. Timing, and issues with time-consuming mistakes, leading to trouble meeting key client deadlines, was the number one challenge that 57% of respondents said have experienced, followed by quality issues (35%) and partners that didn’t truly understand the business’ needs or processes (29%).

We also asked what respondents looked for in a outsourced partner. Interestingly, although missed timing was considered the biggest challenge, fastturnaround was NOT considered one of the most important attributes of an outsourced digital production provider. This suggests that while “speed” is not an initial priority, many marketers and agency executives have been frustrated with their outsourcing partners’ effectiveness after delays, missed deadlines or similar issue occurs.

An overwhelming majority of respondents (89%) indicated that lack of in-house resources was the primary reason for outsourcing digital production projects, with very few indicating that shifting budgets to strategic resources (6%) or improving agency margins (5%) were primary drivers.

We’ll explore the 2011 digital production outsourcing outlook later this week. Stay tuned!

Our Digital Outsourcing Survey Results Are In!

January 24, 2011

digitalArbor recently concluded a survey of marketers and agency executives at agencies and corporations across the United States. Although there have been plenty of 2011 marketing prediction studies and reports published in recent weeks as we enter the New Year, we tried to take a slightly different approach. We set out to learn more about the “little secret” many companies and agencies have been keeping, production outsourcing. Over the next few days, we’ll share the results with you.

To help shed some light on this topic, while understanding that many agencies do not want their participation to be well known, we anonymously polled in-house marketers and external agency executives across more than 16 industries. The respondents worked with clients across a range of industries, financial services (36%), retail (25%), healthcare (24%) and consumer technology (22%) markets.

We asked a range of questions to learn more about what their production strategies past and anticipated. We asked about outsourcing experiences and partnerships, what has been successful – and what haven’t worked so well.

The primary reason that agencies and corporations turn to outsourcing is to access skills and resources they do not have in house (89%). The majority of respondents have turned to outsourcing for non-creative project elements, such as digital production, operations and maintenance, which according to the a recent 4A’s report, can account for up to 60 percent of total campaign effort. The top three outsourced digital projects include website development (77%), digital display ad banner and rich media development (63%) and e-mail marketing (44%). Other commonly outsourced projects include microsites and landing pages (35%), Web operations and maintenance (34%), social media applications (30%), mobile marketing (23%) and application and tool integration (20%). Stay tuned for the next post on key outsourcing challenges.

In 2011, Global Brands Think Small

January 10, 2011

As we enter a new year, we’re seeing several major trends emerge in the digital marketing space.  Over the next few weeks, I’d like to share my thoughts on several of these, and would welcome your comments and additional insights.

The first thing I’d like to discuss is the question “does size matter?”  Although the answer is sometimes yes, we see a growing trend of large marketing corporations turning to smaller agencies for creative or specific channel leadership.

We have also seen several related trends – very senior creative directors leaving long-established roles at large agencies to join or establish small shops. The reasons may vary in the exact words used, but the trend is that innovators or creatives want to be unencumbered by large agency complexities and politics. For example, after just two years as chief creative officer at the New York office of Saatchi & Saatchi, Gerry Graf left the Publicis Groupe shop to start his own agency, saying, “There’s a type of creative agency that I want to make, and it’s not going to happen here. So, I’ve got to leave to make it.”

Former Crispin Porter + Bogusky executive John Winsor recently opened Victors & Spoils in Boulder, Colo., which has virtually no staff and “operates on the principles of crowdsourcing.”  Since its launch last year, Victors & Spoils has brought in major accounts including General Mills, Harley-Davidson, Oakley and Virgin America.

Facing issues with procurement, cost structure and lack of innovation, large agencies are struggling to keep pace with the rapidly changing digital landscape. Danielle Sack, in her recent Fast Company piece “The Future of Advertising,” explains that many CMOs are now shunning “agency of record” relationships – the long-term, retainer-based deals that have been the bread and butter of full-service firms. Many are shifting to smaller firms that are generating big ideas, yet operating with minimum overhead by outsourcing non-creative elements such as digital production, which can account for up to 60 percent of total campaign effort.

Take Google for instance – AdAge reports that the company is increasingly entrusting marketing projects to a collection of smaller outfits, like Johannes Leonardo and Big Spaceship out of New York and Cutwater, Goodness Mfg., Muhtayzik/Hoffer and Muhtayzik/Hoffer on the West Coast. The “Tech Titan” seems to favor the smaller, and often more nimble, creative firms that have an easier time keeping pace with its product/services marketing needs.

As we move forward into this new era of advertising, I suspect we’ll see more and more of this happening. Danielle Sacks paints an interesting picture of the potential future of our industry, saying, “It’s easy to imagine a new advertising ecosystem of pods built around industry stars who have left their lumbering institutions behind. The holding companies will still exist, but around them could emerge a chaotic pattern of startups, independent talent, and connectors who thrive with minimum overhead … It would be harder work, with fewer assistants and fewer million-dollar paydays. But this smaller business would be aloft on its new creative potential rather than sinking under the weight of its past.”

The challenge for small digital shops is how to execute on a large scale for the large clients now engaging them.  A growing number of these agencies are turning to outside partners with specific implementation skills and cost control. And in turn, a growing number of these outsourced partners are leveraging near shore and off shore talent.

Former U.S. Army Chief of Staff, General Eric Shinseki, may have said it best when he remarked, “If you don’t like change, you’re going to like irrelevance even less.”

Outsourcing: Flexibility, Cost Reduction, Access to Key Skills and Experience – But Can it Work?

December 16, 2010

Have you ever outsourced digital development? Freelancers, local shops, near shore/offshore? If so, we want your opinion!

Many in-house agencies are leveraging near shore resources to reduce the cost of digital implementation without compromising speed or quality. If you are currently outsourcing digital production – or are considering it for 2011 – we’d like to hear from you. Please take a moment to share your opinions by completing this brief survey. It should only take a couple of minutes. PLUS, all participants can enter into a drawing to win an Apple iPad.

Click here to begin the survey.

Thanks in advance for your participation and be sure to check back soon when we share the results of the survey.

Welcome!

December 7, 2010

Welcome to the new digitalArbor blog! There is tremendous change going on in digital advertising and marketing that is shaking up the agency world.  I hope to engage you in conversation about the digital marketplace, and more specifically, about the challenges in balancing the competing demand for digital innovation and relevant creative content with the seemingly endless demand for cost reduction from clients and margin from agency leadership.

The ANA estimates that 74 percent of agency compensation arrangements are labor-based fees, and according to a recent 4A’s report, the highly complex nature of digital programs makes it the most labor-intensive medium in the advertising industry – with production accounting for up to 60 percent of total campaign effort. This is precisely the foundation on which digitalArbor was built.

If you’re not familiar with digitalArbor, let me take a moment to introduce you. Our passion is helping agencies and companies address the competing tensions between the fast-growing need for digital innovation, and increasing demand for relevant creative versions and the increasing technical complexity of skills to build, maintain and measure digital initiatives in an environment of increasing cost sensitivity.

We saw these two competing macro trends  (innovation and cost control), combined with the relentless corporate focus on cost and agency leadership focus on margin, as creating a massive demand for a high-quality, creatively sensitive, low-cost production solution.  Looking forward, we saw an exponentially growing demand for creative versioning and digital content to address the search to display disconnect and meet a growing consumer demand for marketing and advertising messages and content more relative to their needs.

Having led the creation of a near-shore enabled production business model at Digitas (Prodigious), we identified a large gap in the marketplace that we could fill by providing a low-cost digital marketing and advertising production services solution that was sensitive to agency creative processes without compromising quality or speed.

digitalArbor’s  near-shore digital production capabilities offer creative agencies and marketing corporations dramatic cost savings and rapid scalability when it comes to quickly developing digital marketing and advertising  content – websites/landing pages,  banner/display ads, email campaigns, social media and other digital content and communications.

Having spent more than 10 years as a senior leader of a very large digital agency that grew out of a top direct marketing firm, I have led through and lived through dramatic digital growth, the burst of the bubble and the ongoing changes and challenges of the digital space. In this space, I hope to create a dynamic conversation about changes and developments in digital marketing and how it is driving change in the agency world. I will also address the growing digital production outsourced model, the challenges, the key success factors and anywhere else the conversation is led. Please join in!

Robert Willms

CEO, digitalArbor