I just read two interesting articles that help paint a picture for a changing future of digital agencies.

The first was a report from Forrester projecting interactive marketing spend in 2016, which they estimate will reach $77 billion. While the headline focused on the fact that interactive media will catch-up to television media spend by that date, an equally interesting set of figures provide a glimpse into a very different digital media world in 4 years. The report predicts that search’s share of digital media spend will shrink, as marketers disproportionately increase their investments in more sophisticated display media and really rev up their mobile media spend.

The second was an AdAge Digital piece on how veteran digital shops (most of which started in the late 90′s) were changing (and expanding) their business models. The article focused on the big search agencies – iCrossing, 360i, and iProspect – and how they’re diversifying into other areas of digital advertising. Obviously they’re looking at the same data as Forrester, and as they look to grow, they are seeing greener pastures in areas such as digital content, display advertising, and online video.

The article also talks about how shops like AKQA are expanding their focus from digital design and development into digital media (search, display, etc).

Two trends I see for the future:

• Less room for and a resulting fewer number of specialist digital shops (i.e. the search marketing agencies, or the digital content shops)
• The growing prominence of a new breed of large, integrated digital agencies, accentuated by an increased difficulty for big traditional agencies to keep up with the pace of change in digital

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• Alfredo says:

  August 25, 2011 at 9:56 am

  Do you see this new breed as pure play integrated (search + display + social + content) or integrated with “traditional”?
• Jose Villa says:

  August 25, 2011 at 10:22 am

  I see it as being both really. I think there is another trend coming that will affect this – more digitally savvy clients who understand the complexity of digital. Many of these “new clients” will see value in having digital specialist agencies, albeit integrated digital agencies. That being said, the mega-digital agencies will and are already starting to expand into traditional.

  I guess at the end of the day, the big winners will be the big digital shops.