The digital transformation rabbit hole
News broke this week that Walgreens is announcing an agency review, specifically citing their digital transformation needs that have been accelerated by the COVID-19 pandemic. As advertising history teaches us, once one large advertiser makes a move, others are likely to follow suit.
It seems both curious and obvious that digital transformation would play a role in agency selection. Creative and media agencies have long found themselves at the forefront of digital transformation conversations, as they’re often the closest to changes in consumer behavior. While many have built transformation practices, most have to contend with executing/fitting into a transformation plan that someone else was asked to develop. In most large enterprises, digital transformation is still considered as primarily a technology challenge and it’s very rarely in the purview of the CMO to execute it cohesively across the organization. So what can an agency do if their review specifically lists digital transformation needs?
Why should you care:
The answer, like with most things related to digital transformation, requires some (read: a lot of) nuance. A good starting point is to understand what the client means when they use the dreaded DT term. In pandemic times, for some of our clients it was about quickly testing and launching a direct-to-consumer offering - a feat that would, under normal circumstances, solicit months of planning, expensive contracts, new RFPs, and a plethora of coordination work among different internal departments that would have turned it from ‘let’s just try this’ into a Big Project. For others, it was about tracking down a printer so they can physically print out and sign a contract because their operations aren’t equipped to deal with digital signatures. There are many scenarios that fall somewhere in between these two extremes.
The biggest challenge agencies face in this arena is that their main stakeholders are all within a company’s marketing function (and occasionally the CFO gets involved most often in a dreaded cost-cutting scenario). Digital transformation inherently needs to cut across different organizational functions to be successful: this is why management consultancies win these projects all day every day. Agencies can fix up their own backyard (e.g. by helping a company in-house some operations) but they don’t have much credibility in re-architecting a business process that, for instance, involves the company’s product development or supply chain. This is a true test of whether or not marketing and advertising are perceived as strategic within an organization: if yes, then the agencies handling these functions should at the very least be stakeholders in transformation conversations.
I want to flip this back to the buyer. If you’re a brand, what are your top 3 expectations from your agency relationship with respect to digital transformation and how would the day-to-day be different? Is digital transformation simply the Deus ex Machina to invoke and try to fix other underlying inefficiencies in the ‘brands and agency holding companies’ relationship? If that’s the case, we’ll be back here in a few years blaming some other high-level concept and kicking off the next agency review, right on cue.