Following the release of “The Forrester Wave™: Customer Database and Engagement Agencies, Q2 2018,” Katie Pickard, Director of Marketing for RRD, had a chance to sit down with Fatemeh Khatibloo, Principal Analyst at Forrester, to better understand how Forrester defines the agency landscape to help marketers optimize the vendor selection process.
The interview took place on June 19, 2018. Here are some of its highlights:
Demand for customer database and engagement agencies
Katie Pickard: As a Principal Analyst at Forrester Research, you’ve done a lot of work to support B2C marketing professionals, especially around consumer data and agency partnerships. Can you talk to me about why more B2C and CRM teams are turning to customer engagement agencies more than ever before?
Fatemeh Khatibloo: Yeah that’s a great question. I think one of the really interesting things that we should start with is how much CRM teams are changing and they’re getting so much more visibility in their organizations. They are, you know, the data savvy, tech savvy part of the marketing organization and what that means is that the CMO is relying on them a lot more than they used to.
They have a lot more visibility in the organization. As a result, they need more resources and they need more support. And we’re seeing that support come in the form of customer database and engagement agencies. We’re seeing that these resources really support the organization and the marketer from a data perspective, from a strategy and analytics perspective, and even in some cases from a creative perspective.
Evolution of the customer engagement agency space
KP: How about the evolution of the customer engagement agency space? Forrester started evaluating these companies back in 2012, but what’s changed since then?
FK: Boy what hasn’t changed since then. As you alluded, we started to look at this back in 2012, and at that time it was really just sort of an evolution of the database marketing services providers space. A lot of usual suspects who were adding bits and pieces to do a more sort of well rounded creative offering or a strategy and analytics offering.
When we looked at it couple of years later, we saw that direct agencies and digital agencies were starting to do more with data and analytics as well. So while the database vendors were doing more with creative, the other guys were sort of squeaking in and there was sort of a race to the center to what we started to call a customer engagement agency.
And we did our first Wave in 2014 and looked at, gosh, I think we had 12 or 13 vendors at that time and there was a really wide range of offerings and capabilities. It was a great model which, unfortunately, many marketers were not ready to take advantage of. They weren’t really ready to do the kinds of partnerships that a customer engagement agency requires. And they really didn’t have that culture to bring the data and the creative and the analytics together inside of their organizations.
So we saw a lot of RFPs that were challengingly written and included lots of different kinds of agencies that we really had a hard time resolving. So we sort of let that lie for a little while. I’m very happy to say that in 2018 we’re starting to see the promise of that come back to fruition. We’re seeing marketers who really understand how to work with a customer engagement and database agency. We’re seeing agencies whose offerings are much more holistic and well-rounded and really a lot better integrated than what we were seeing five years ago.
The right mix of first, second and third party data
KP: So a solid data strategy is critical to creating a strong marketing foundation. Is there a magic formula that agencies use to create the right mix of first, second and third party data?
FK: Marketers who have a big first party data asset ― and just to level set, that’s the transactional data that you get from interactions with customers ― they are less dependent on second and third party data to understand their customers and design campaigns. Marketers and brands who don’t are much more dependent on second and third party data.
The agency’s job here is to help the marketer understand what the best mix is of that first, second and third party data to solve business challenges. So we looked at agencies who were thinking about third party data from a strategic perspective and how did they approach data enrichment to again solve business and marketing challenges for their clients. And we also looked at agencies and how they help their clients navigate and negotiate second party data relationships with business partners.
When creative meets data-driven strategy
KP: Now regarding data and creative capabilities, the report ― The Forrester Wave™: Customer Database and Engagement Agencies, Q2 2018 ― says that you really found two camps: creative lead agencies with data capabilities and database operators with creative chops. You also mentioned that the leaders in your study were able to bridge both of these areas effectively. So how important is it to creatively deliver on data driven strategy?
FK: The combination of art and science is something that we can actually achieve now within the marketing world. I think it’s very important that an agency be able to have both of those capabilities and be really strong in those capabilities. I think the creative lead agencies are moving closer and closer to data and analytics capabilities that historically the marketing services providers had. And I think the legacy marketing services providers are getting closer and closer to engagement, journey mapping and digital strategies that weren’t really in their primary wheelhouse before.
I think it’s incredibly important and I think we’re getting much more aligned and in a couple of years, when we do this study again, there may be very similar capabilities. I didn’t feel that it was really crucial for the agencies to be doing creative for all of their clients. I intentionally scored that a little bit lower. But, I thought it was incredibly important that they all have creative capabilities.
I know that if you don’t know how to write a creative brief or if you can’t translate data and insights into something that a creative can turn into a marketing program or creative execution, you’re missing an opportunity. And if you can’t do it internally, you’re certainly not going to be able to do it for your clients. That’s why I thought it was so important that all of the agencies we evaluated have some creative capabilities and creative resources in-house.
Distinguishing analytic services leaders
KP: So once an organization has identified the right data, they’ve got to do something meaningful with it. When it comes to analytic services, what really differentiates the leaders from the rest of the pack?
FK: There is a huge shortage of analytics talent and resources, and that’s incredibly painful for brands and marketers, of course. So they’re really looking to their agency partners to help future-proof their analytics programs. They’re thinking about how does AI and machine learning support what I’m doing today and how should I be prepared for it in the future.
They might also be thinking about things like spatial analytics and location analytics, entity analytics. How do I use those to improve my business? So we were looking at agencies who could fill both of those roles, who had a very deep bench that was scalable, and who really did understand and who were investing in their analytics teams to be more future-proofed and to think about emerging technologies and emerging analytics and be able to bring those findings and learnings to their clients as needed.
Understand the culture fit
KP: And lastly, the execution of marketing programs is really where the rubber meets the road. Can you share any tips for marketers in selecting an agency who can effectively bring it all together?
FK: The marketing organization, the client, and the agency really need to have a great culture that fits. And I think that’s something that gets lost in the procurement process sometimes. So I talk to my clients a lot about how to make those decisions and how to find a partner that’s a culture fit.
Katie Pickard is Director of Marketing for RRD. On April 24, 2018, Forrester named RRD Marketing Solutions a leader in Customer Database and Engagement Agencies in its report, The Forrester Wave™: Customer Database and Engagement Agencies, Q2 2018. Access a copy of that report here.