Red Bull

Why Boutiques are Kicking Your Ass

Kicking the ass of traditional agenciesJeremiah Owyang today made a lot of boutique social media agencies very happy with his new report showing how smaller specialty agencies are wiping the floors with larger agencies in average yearly social media budgets.  Since Owyang often gets applause when he advises brands not to hire “gurus and ninjas” to run social media, has he been proven wrong by his own report or is there something else going on here?

The Altimeter report concludes that smaller agencies aren’t winning because they’re “ninjas” but perhaps a few other reasons, such as:

  • Smaller agencies have a “specialized skillset” that larger agencies haven’t focused on
  • Traditional agencies are too “campaign focused,” which has proven not to be effective
  • Not being rooted in outdated measurement, smaller agencies are better at measuring engagement
  • Larger agencies won’t “get their hands dirty” and get directly involved in the stakeholder engagement that is driving a lot of the larger budgets

While a few of these may be true, there is a larger issue at play as well.  The average annual spend difference for “mature” brands is only a matter of around $150k/year between the traditional agencies and the boutiques that are kicking their ass.  A $200k contract from someone like P&G may be a big deal to a small agency with 8 employees but JWT isn’t going to even get on the call for that much money.  We’re still talking about table scraps here in relation the larger chunks of budget being applied to advertising and other channels.

The good news for the larger agencies is that the work still stinks and has very little business impact.  If you look at even the comparably small resource allocations that the top ten Facebook pages are requiring to keep their “Like” numbers high, it would be hard to make a good business case for brands like Red Bull and Coca-Cola to repeat that again next year.  The reality is that brands are budgeting for social media just enough to keep them from looking stupid for not spending on social media.

Brands continue to dabble in ways that appear to be much bigger than they really are.  The new Ford Explorer got launched within Facebook to a flurry of applause from the social media echochamber but the launch still paled in comparison to even the smallest television campaign.

The real test of who is winning this battle for social media mindshare will be when the agencies are the ones who are mature and start pitching and winning pieces of business that rival the marketing outlays in other channels.  When brands start ponying up for the bigger ideas and the average size of these contracts begin to gain a digit or two, then we will finally see who is trusted with the beloved social media.  Until then, I’d be hesitant to count out the big agencies until you start to dangle a larger carrot for them to chase.

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