In a stunning early finding of interviews with nearly a dozen social media agencies and software providers, I’m seeing a new trend: Social media agency of record (SMaoR) are now moving into advertising buying. I’ve just spent a week interviewing a number of social agencies here in Manhattan as well as taken briefings from around the globe (see below for source info)
Why this dramatic change from social media purists who once declared war on advertising?
The new advertising features from both Facebook and Twitter (Such as sponsored tweets and trends) encourage earned content to become advertising units and give an opportunity for social marketers to get into the advertising game. This also means the opportunity for ads to perform at a higher level because they’ve been ‘approved’ by the crowd is a unique opportunity afforded to the social media agencies vs the ‘carpet bomb’ approach of yesteryear. This results in three distinct impacts to the industry:
- Advertising is Limited to Social Networks: The advertising units that these agencies are purchasing are often limited to Facebook or Twitter –not broader banner and skyscraper ads across media and Google serp. In fact, in most cases they’re analyzing which earned content performs the best, then using the features like Twitter’s sponsored tweets to amplify this earned content to reach new audiences and drive attention or call to action.
- Social Media Agencies Don’t Have Solid Case Studies, Yet. Most of these pure play social media firms lack an advertising background and are staffed for engagement. They also tend to have a longer term approach for community building –not six week ad block flights. As a result, it doesn’t guarantee that they’ll be able to outperform traditional digital advertisers although most say they’re working on case studies to show higher engagement, and conversion.
- Expect a Battle Between Digital Agencies and Social Media Agencies. Now, there’s going to be a fight over advertising budget as social media agencies battle for small shares of advertising dollars. We’re also seeing digital agencies develop social competencies and battling the social pure plays. In the end, I believe we’ll get rid of the term ‘social’ or ‘digital’ as a prefix for any agency as they’ll all have the same competencies, esp after a mass M&A that biz dev execs are already starting to sniff.
Sources: As an Industry Analyst, I’m fortunate to speak to many in the industry for research purposes, In the past few weeks I’ve spoken to Adobe, Attention, Banyan Branch, Big Fuel, Buddy Media, Converseon, Deep Focus, Edelman, Google+, IBM (Social Products), LiveWorld, SocialFlow, VaynerMedia, We Are Social, and many others. Our analyst focused on agencies is Rebecca Lieb (Blog, Twitter), although we’re both talking to many-in-the-industry for our upcoming joint report on Paid Owned and Earned integration.
Update: Fast Company’s Francine Hardaway has answered this post discussing how Agencies are Going the Way of the Dodo.
Very interesting discussion.   To Jeremiah’s question about how does
the CMO get an integrated and holistic plan?   This question applies to
the whole marketing mix not just within social. Generally there are
three approaches.Â
1) CMO’s team drives the integration across their
entire marketing mix and agencies. We believe this is the best approach
as the CM gets the best of breed in each area, owns the integration and
results. Also considerably more efficient and agile as there are no
layers between the CMO’s team and the integrated result. All of usÂ
specialty agencies prefer this. To work it requires a pro-active and
even aggressive CMO approach to managing their agencies. We’ve had some
clients such as AMEX that are very effective with this approach and
others who are not.Â
2) CMO hires and integration agency. We had one
client with 10+ agencies and an 11th whose job was the integration.Â
Still gets best of breed, but I felt the 11th agency didn’t have the
real power to force the integration and the agencies to play nice with
each other. Â
3) CMO uses one or giant integrated agencies that offer
an integrated portfolio. The big agencies and conglomerates like this.Â
Benefit is easier integration and less work for the CMO’s team – if
and it’s a big if the integrated agency or conglomerate or agency can
deliver seamless integration This is rarely the case.  Assuming they
can deliver it, the trade off is the client is no longer getting the
best of breed in each area. No one large integrated entity is going to
be best at everything. Also the actual strategy and deployment and
integration is one or more steps removed from the CMO’s team, which
means the CMO’s team is one or more additional steps removed from their
customers and market
There are cases where a company’s target audience may not necessarily desire long term engagement per se. And in those cases, paid amplification of earned media (especially earned media, not owned media) can be extremely effective in reaching those people.Â
This is especially the case when a company needs a high impact result with a very specific audience within a narrow time window. Say, reaching institutional investors around a major corporate event – M&A, earnings, crises, etc.
B2B companies should be looking at this trend closely since not all corporate stakeholders want the kind of engagement-heavy relationship we in the industry typically ascribe to consumers and brands.Â
Interesting post and comment thread, Jeremiah. Thanks for sparking the conversation.
Part of me is a purist that believes in the organic development of a community but I can see where a strategic approach to advertising can play a role in turbo-charging community growth. I emphasize the “strategic approach” because there have been enough examples of  ads backfiring.
Risk cannot be completely eliminated but advertising how a brand is giving back rather than what they have to sell will likely have a better, less risky payoff.Â
I also think you make an interesting point where purists could still be outperformed by traditional ad agencies. Some stakeholders just down have the patience for long term community building. Perhaps a hybrid approach of organic growth complemented by advertising will do the trick.
Some agencies are trying to figure out where they can add value on the new Facebook due to limitations around apps and landing pages. Part of me thinks that this is just Facebook gearing up for their IPO and driving/forcing brands down the advertising chute.Â
Agencies are also coming to terms with the limited contribution they can make with Twitter other than community management. They can’t sell custom apps or landing pages for Twitter which explains why some downplay the platform.
There are going to be interesting times ahead as the industry evolves.
Hi Jeremiah — We’re 8 years into the “term” social media and i believe it still means many things to many people.  I think what’s core going forward is the agency of the future (or today) has to be adept in socially-centric, data driven approaches. This means being part technology company, part management consultancy (since effective social requires integration/collaboration/agility across the enterprise in ways that haven’t been done before), and of course more traditional agency services. Paid, owned, earned is collapsing. Best agencies will be “real time,” story tellers who can find insights in the noise and act on them more quickly than others for competitive advantage.  Is that social media?  Time will tell. I’ve advocated for removing the “social” but then that leaves “media agency” — and it’s certainly not that..  But until agencies see the full picture and have capabilities in them — as opposed to seeing social through the prism of a particular discipline — social agencies will continue to grow. The internal change management capabilities will becoming increasingly important as well which falls out of traditional agency capabilities.