Transformation in digital agencies: What I learned as an Agency of the Year judge

Digital agencies are going back to their roots and rediscovering their inner geek—and that's a very good thing. There is renewed focus and investment in time and resources to build up technical capabilities, to explore, understand and help customers make use of emerging and converging technologies.

While the rest of the world talked about digital transforming what they do, the digital industry itself is a high-velocity industry with new technologies emerging, not-yet-old technology turning obsolete and convergence trends driving the integration of mobile and digital use cases, not to mention the integration of digital into offline systems and processes.

Digital agencies need to understand technology and help customers harness it effectively. The ones at the top of their game will master it.

Expanding the ecosystem

As the boundaries of what is digital, what is mobile and what is omnichannel start to blur, so too are the players the agencies are partnering with. The range of partnerships, tieups and other strategy alignments digital agencies are lining up to expand their capabilities bear this out.

Gone are the days of the straightforward licensing and reselling of solutions to customers (the migration to cloud services has put paid to some of that revenue as well). Today, agencies may run their own innovation labs, actively participate in the startup scene to keep tabs on new developments and source for new services from early-stage companies. Some might even go as far as to incubate startups or encourage their own employees to take on intraprenuerial pursuits. They are forming unconventional partnerships that infuse them and the industry with new thinking, new ways of looking at problems and new solutions.

The digital agencies do so in response to the changes in the industry. In so doing the agencies themselves are changing, and the kinds of conversations they can have with customers will also be changing.

As this ecosystem continues to develop, the digital agency of today will not look like the digital agency of tomorrow.

Data as currency

Tiffani Bova (@Tiffani_Bova), a VP and distinguished analyst at Gartner shared this chart on Twitter on what are the top investment areas CEOs and senior executives expect to make to improve their business over the next five years.

The top three choices are all about digital: Digital marketing, ecommerce and customer experience management, where the adoption of digital technology and the usage of digital channels now feature prominently. Greasing these engines is data. The explosive growth of data powers more and more sophisticated digital execution, which in turn generates even more data for us to process.

With digital moving closer to the core of the marketing organization and for some companies, the core of their business, the data that can be accessed through digital channels will increasingly be considered not just for optimizing digital marketing itself but also for generating insights to inform the overall business.

Along with the investment in technical capabilities, digital agencies are also building up data-analytics capabilities. They are building data and analytics practices to actively manage and make sense of the marketing (automation) solutions, the range and the amount of data we can now collect.

The ability to help customers develop insights from data will in the short term be a differentiating factor and in the longer term be a prerequisite to stay in play. Forward-looking agencies have their eye on where the industry will be going.

Digital unicorns

According to eMarketer's Global Media Intelligence Report, Asia Pacific, released in September, digital ad spending in Asia Pacific this year will grow by 18.3 per cent over 2013 and is expected to grow more than 50 per cent from this year's figure by 2018. Mobile ad spending in Asia Pacific nearly doubled this year and will triple this year's figure by 2017. The digital industry is growing much faster than we can acquire digital talent—hence the talent shortage that gave rise to the term the "digital unicorn".

The only solution is a broad-based approach to grooming and developing talent. Digital agencies are building future pipelines of talent by building bridges with schools and universities. They are evangelizing to the young, drawing people to the industry and building the talent pool which we will all draw from. They are building their current bench strength by investing in their own people with a mix of formal and informal training. As befitting an industry that is constantly changing, the motto is training, retraining, cross-training and a culture of continuous learning.

Judging this year's entries has been incredibly invigorating. There is tremendous energy coursing through our industry. I am as excited to be in digital today as when I first dived into it many years ago.

I look forward to congratulating this year's Agency of the Year winners—and the digital industry for its achievements this year and in the years yet to come.

Wynthia Goh (@verydeepsleep) is director of digital and social for SAP Asia Pacific & Japan