The role of digital agencies is changing. For over a decade, the so-called "full service" digital agency has been the norm, offering everything from strategy, design to development and hosting. Businesses like this have popped up all over the world, each fighting to carve out their identities and take a big bite of market share.
The motivation for the one-stop-shop model is organic and easily understood. By offering more, we appear to have more value. With each offering, we eliminate another potential competitor from siphoning off our revenue stream. It makes sense. Cast a wide net, catch more fish.
The problem with this type of thinking is that it doesn't scale well. If doing everything ourselves was really economically optimal, we wouldn't have cleaning services, electricians, or caterers. There has to be some boundary that divides what we're willing to do ourselves, and what is better left in the hands of others.
Today, agencies are more frequently opting to place their efforts into specialties. They're spending the most time possible doing the things that deliver the most value to their clients. A natural side effect of that shift is that service areas have to be in-filled by third parties who specialise in them.
We all suffer from loss aversion.
Bill Gates reportedly makes $12,000 per hour. No wonder he never gets his hair cut. It costs him a fortune!
Of course, this is satire, but if it really were true that Mr. Gates avoided cutting his hair in the interest of protecting his earnings, it would illustrate classic loss aversion. We're all hardwired to avoid giving away things that we have already defined as our own. Have you ever noticed how easy it is to save money when it comes right out of your paycheck, but when we attempt manually make deposits to the bank, it almost never happens? We don't like to give anything away once it has entered our possession, even if we know we're not actually losing it.
The challenge for a modern digital agency is getting past that psychological spectre of loss and placing their efforts in places that will ultimately engender long-term gains.
First on the chopping block: Hosting.
For a long time it has been commonplace for digital agencies to offer hosting to their clients. In fact, it's almost expected. The premise is that it gives the agency more control, and if things go smoothly, it results in a tidy passive revenue stream for the agency.
If things don't go well, however, hosting becomes a massive liability, and it's anything but passive.
More and more, agencies are opting out of hosting their clients. The benefit are two-fold: one, they avoid the risk of things going wrong, and two, they get to offer their client more value via a third-party service.
SilverStripe recently collaborated with Catch Design on a rebuild of the website for New Zealand telco 2degrees. A large enterprise client like 2degrees had requirements for 24/7 support, which Catch could not offer. They opted to host with SilverStripe Platform, which would fulfil their needs for a robust, flexible and supported hosting arrangement. In turn, Catch got to offer an enterprise-grade solution, while building a cutting-edge digital experience.
When post-launch digital advertising sent large volumes of traffic to the site, SilverStripe Platform scaled to keep the site performant during periods of high traffic.
We don't have a 24/7 support team. The SS Platform provides our clients with additional reassurance around platform support. It also means we can offer an enterprise-grade solution to clients without having the weight of the support infrastructure. Hamish Stevenson, Managing Director, Catch
It's not a loss if you get it back.
When all was said and done, Catch had sacrificed very little in hosting with SilverStripe Platform. They still got to use their modern workflow. They didn't have to learn anything new, and they have a happy enterprise client, backed by 24/7 support to show for it. The gains were extremely positive for the agency, who have since adopted a very forward-thinking doctrine that puts their skills front and centre, and keeps their distractions at a safe distance.
Header photo by Wonderlane.