Digital Agencies: Channel Ally or Existential Threat?

By Kimberly King

There’s a missing piece in the partner marketing ecosystem. I’m talking about digital agencies — firms that specialize in next-gen design and analytics.

We saw large-supplier adoption of the model pick up steam in 2016; IBM alone purchased three digital agencies within a six-week time frame last year and bundled them into its iX division which, according to IBM, exists “at the intersection of business, art and technology.” Larger suppliers are purchasing companies with digital footprints and branding expertise because they know they need to close the gap between their current sellers and the direction for 2017 and beyond.

AdWeek recently discussed how traditional agencies are scrambling to counter the trend of consulting and IT firms adding marketing services by “launching practices to provide business-transformation counsel to help clients more effectively compete for customer dollars in the digital age.” Distributors are using advanced marketing services to attract and keep top partners. No matter where you sit, digital is a critical part of the go-to-market strategy.

Channel companies looking for significant growth – and to be perceived as thought leaders – need to take note. These agencies have come up with a way of doing business that’s not just different, but arguably more efficient than how a typical partner marketing team operates. These firms often have relationships with lines of business and are adept at talking to the new economic power brokers: The CMO, CDO, VP of sales — any line of business or brand manager that now controls budget that used to fall under IT.

Historically, partners have sold to the technology buyer, not to the line of business. Digital agencies have shuffled the deck and shifted the manner of selling.

The appeal of these agencies is that they can speak to technology as well as to design and branding. By utilizing digital agencies, suppliers will transform how they operate in the channel in two ways: They will sell a vision or digital journey, rather than a product, and they will support extended ecosystems. To that end, a digital agency supports related brands and companies in a way that a regular channel partner often cannot or will not.

A traditional partner would need a vendor to train its staff on a product and then demand a generous margin, among other requests; however, the digital-agency partner aims to sell the product in a different, more meaningful way, with a stronger focus on the end-customer experience.

After 20 or 25 years of working with partners, this is revolutionizing the status quo for suppliers.

A technology company and its channel partners know how to sell products. Digital agencies understand digital and social media footprints — the communication funnels that connect client companies with end customers. They get how to differentiate clients from competitors, and they can provide insight into new avenues of revenue and new ways of connecting with the end customer. In this way, digital agencies help make businesses better and support longevity and growth.

Bottom line: Digital agencies are jockeying for position. Their success will hinge on the relationships they develop with vendors. Technology companies do not have enough brand people, but they do have ample technology. Similarly, digital agencies have enough brand people, but not enough technology. As this shakes out, a unique ecosystem will form — one unlike any we have seen before.

I predict that digital agencies will transform the way the channel operates in 2017 by disrupting the status quo of selling products. Suppliers are intrigued by the possibility of enhancing their visions and guiding customer journeys.

My advice: You can’t beat them in the long term, so join them — or at least learn from them. Digital agencies bring new insight to channel partners by enhancing the customer’s digital experience, which ultimately spurs organizational growth. Either capitalize on this partnership or face falling behind.

Kimberly King is the vice president for global channels and partners at Progress and is responsible for the strategic direction, management and success of the Progress partner community. King and her team focus on enabling Progress partners to grow their overall revenue, while recruiting new software vendors into the Progress community. With over 20 years of sales and channel experience working with large and small organizations to build innovative programs focused on partner’s growth, Kimberly is passionate about successful partnerships.