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Slowdown a boom time for digital agencies?

Shrinking adex has shifted media spending of leading brands towards digital. Despite the lull in the market, digital agencies — both on the creative and media side — are full with client briefs. finds out how the slowdown, a bane for traditional media, has turned out to be a boon for new-age digital agencies

The economic slowdown may have affected several sectors but for digital agencies, it is turning out to be more business and better margins. In the last one year, brands have reduced their adex on print and TV and turned to the cost-efficient digital medium where they are finding better ROI.

Brands have started spending more on programmatic advertising, where they can track every penny spent. Some companies are taking the native advertising route to build brand image among their TG.

Amandeep Singh Kochar

Amandeep Singh Kochar, BD, VMLY&R, said, “The economic slowdown is showing some initial signs of brands becoming conservative in their advertising spend, but on the other hand, they are betting big on the festive season to revive their sales. Since digital as a medium gives marketers a good tracking on their spend and attribution, we see them turn more towards digital to give them a bang for their buck.”

Himanshu Arya

Himanshu Arya, Founder and CEO, Grapes Digital, said, “Digital agencies are definitely facing more work pressure than before. Since the budgets have got adjusted, it's a double pressure situation. Some clients have made an increase in their budgets on digital, whereas some reduced their overall budgets amid the economy slowdown. So far, it has been mixed reactions.”

Rikki Agarwal

Rikki Agarwal, Co-founder, Chief Business and Operating Officer, Blink Digital, said, “When there is a cut in budget, digital gains because it doesn’t need the same amount of investment as TV, which turns very beneficial for us. We haven’t seen any impact as of now. Most budgets have already been aligned for Diwali.”

Blink Digital has seen a solid increase this year compared to last year.

Speaking on the growth of digital, Kochar said, “We are all looking forward to a great festive season. This depends on whether the current economic slowdown is more of cyclical in nature or structural.”

Jaipal Singh

“While there is a lot of conversation around the slowdown, the actual impact is still to hit the brands. The upcoming festive season is a litmus test for the market and any real impact will be measured after that,” said Jaipal Singh, AVP, Client Servicing, Dentsu Webchutney.

For Grapes Digital, this year’s business is slower than last year. The agency is expecting a 15-20% business growth in e-comm, beauty and FMCG categories and even lesser from the remaining categories.

Creativity and ROI go hand in hand on digital

According to Kochar, today’s consumer is completely connected with digital communication; the requirement is of creating a real ‘Connected Consumer Experience’.

“Digital-first agencies that operate data, technology along with creativity and commerce build brand experiences that are successful. Such agencies are uniquely poised to lead these conversations as they bring end-to-end perspective on the business challenges in the competitive marketplace,” he said.

According to Agarwal, this is a great way to show clients that digital can impact business. “As a digital agency, we need to really work on making hard-working creatives with proper media planning so that it impacts business of the client,” he said.

According to Singh, technology-enabled platforms are being increasingly adopted by brands for better targeting and contextual messaging. “Brands today are looking for efficient platforms on digital, which are not cheaper in cost. They have also started to understand the importance of data analytics leading to better efficiency in media spends,” he said.

According to Arya, expectations of brands are on the rise but their budget is less. “We are taking smarter calls and trying to drive better value for money.”

Kochar said brands are very keen to explore and implement digital solutions that work on models that drive real business results, which are more towards precise targeting; optimising customer acquisition costs and up their customer lifetime values. “The concept of cheaper services in terms of assets can be true to an extent, but they are more interested in innovative solutions that deliver sales. Brands’ demand today is shifting towards ROI-driven marketing,” he said.

Competition intensifying in digital

The slowdown might be profitable for the digital agencies but it is also leading to an intense competition among agencies in order to be the first preference of brands.

According to Singh, brands look for hardworking solutions on digital. Detailed conversations about efficiency cause brands to have more confidence in the medium. “Such conversations have led to clients entering into longer duration contracts with us and the relationships are maturing to more strategic-level interactions,” Singh added.

Because of the high level of competition among agencies, the brands are seeking maximum return on investment. “The boardroom is making marketers more answerable towards revenue and growth. We see this as a great opportunity because we have always been pushing clients to allow us to work with them and answer these questions,” he said.

Arya said, “Competition is getting tough and margins are getting thinner. Overall business strategy, innovation and next-level creativity are the only way to sustain margins.”

“Cheapest agency may not be a smart client option but it's not just the cost but the overall value that an agency brings on board. Volumes are definitely controlled and overall pessimism can be seen in budget planning,” he says.

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