Despite the dire situation that resulted from Covid-19 on an international scale, a few industries have, surprisingly, seen growth during these trying times. Demand for agency services improved for various industries.
As a result, e-commerce and direct-to-consumer business models have seen unprecedented growth during the pandemic.
Incidental services to these e-commerce businesses such as delivery and logistics services have also benefited from these economic movements.
Perhaps one of the more surprising outcomes of the pandemic is the proliferation of work-from-home arrangements. Although remote work has been around for the longest time, traditional businesses have seen the very little benefit in adapting the model until now.
Forced to send their employees home and make adjustments to ensure they can continue working from home, a lot of business owners right now have realized they don’t need to spend thousands or even millions of dollars renting or leasing office operation space in order for their respective businesses to continue operations and be profitable.
And not only that. Digitalization services have also seen growth as more and more business owners realize that their survival rests on the digital transformation of their respective businesses.
This has created plenty of opportunities for digital agencies and marketing outfits.
In fact, the steep uptick in the demand for agency services and digitalization services has also increased the need for outsourcing services.
In-house and local talent are no longer able to keep up with demand the of agency services, and so outsourcing services for these talents and skills have also seen plenty of upward movement.
Online is the New Frontier
As previously mentioned, more and more businesses are realizing that in order to survive, they would have to digitally transform their businesses. Online is now the new frontier, especially for more traditional businesses.
Restaurants have started taking online orders and home deliveries. Groceries and supermarkets have followed suit. This also increased the demand for delivery and courier services.
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Fitness gyms have begun online fitness classes and some have even started renting out or leasing out equipment. Sales of home gym equipment and other home exercise apparatus have spiked since.
Even doctors and hospitals have begun transitioning to online clinics and online consultations. They’ve also started heavily using delivery and courier services for prescription drugs and other medical products and supplies to be delivered to patients.
It is estimated that by the end of 2020, 47% of businesses previously affected by the pandemic will have gone online. And the good news is that to date, about 75% of these businesses who have transitioned to digital platforms have experienced some level of success. And this has breathed new life in most industries that have opted to take the digital path.
In fact, analysts are in agreement that by Q2 of 2021, about 70% of businesses will have transitioned to some form of digital or online operation.
The Rising Demand for Digital Agency Services
As a result of the rising number of businesses transitioning to digital operations, digital agency services have also started to get plenty of action.
Services such as web design and development, graphic design, software development, social media management, digital marketing, local SEO, and others are gaining plenty of traction both from local and national businesses.
So while the digital marketing industry has been hit hard by the cancellation of international marketing stages such as the Olympics, the NBA, and other sporting events, world tours and concerts, international festivals, and a host of other multi-million and multi-billion-dollar international gatherings and celebrations, the sudden upsurge of the demand for digital agency services for small to medium-sized businesses has quickly filled the void.
As previously mentioned, since 47% of businesses affected by Covid-19 have gone online, and it is estimated that by Q2 of 2021, about 70% of businesses will have transitioned to some form of digital or online operation, all those businesses need online infrastructure.
And by online infrastructure, this means new websites, online shopping carts, third-party application integration services, and other digital transformation services.
A lot of those businesses will also need integrations with delivery and logistics services. And those delivery services will also need a strong online presence.
Indeed, it’s a happy chain of opportunities for the industry. However, the pressure is on for digital agencies to keep up with demand.
This pressure stems from several factors that are innate to most digital marketing agencies.
First, the increase of prospective clients is within the demographic of local businesses with limited marketing budgets. Most agencies are not meant to handle this increased number of prospective clients with very little spending capacity.
Second, most agencies are “designed” to handle a limited number of major high-paying clients.
Handling more workload in order to achieve profitability goals will definitely put enormous stress on these agencies’ workforces.
Third, these agencies usually rely on “template services” which is perfect for scaling up but disastrous for scaling down.
And most importantly, most of these agencies rely on in-house talents which are decidedly more expensive. And with more work and fewer profits, it’s just a matter of time before something gives.
The Solution of Demand for Agency Services: Outsourcing
Whether you like it or not, outsourcing is the only way for digital marketing agencies to adapt to the new normal and survive.
Insisting on using only in-house talent not only puts you at a huge disadvantage.
It also is counter-productive. Not only are you paying more in payroll costs, you’re also paying a premium for maintaining a physical office enough to house your staff. Not to mention, these prohibitive costs won’t allow you to match the competitive pricing offered by offshore agencies.
The truth is, right now high-speed internet and all the information therein has been effectively democratized.
Marketing campaigns being launched by what used to be the industry untouchables in the US and elsewhere can be viewed, reviewed, and dissected by no-name agencies from countries you don’t even know exist.
Currently, these unknown agencies can launch campaigns that can go toe to toe with those launched by A-List agencies in New York or Los Angeles. And they don’t care about landing “resume clients” and 7-figure brand deals.
They’re willing to handle the marketing campaigns of local businesses and remain profitable simply because they can price their services more competitively.
These are the average monthly salaries of various digital agency professionals across the top professional markets in the world.
The ‘Traditional’ column represents the average salaries of digital agency professionals in the US as compared to similarly skilled professionals found in different parts of the world.
Exact figures depend on local labor market conditions, exchange rates of foreign currencies, benefits and taxes etc. There’s no question about it.
Digital agencies need to outsource in order to expand their operational capabilities and deepen their specialization. There’s no other way to do it.