What’s Driving the So-Called Digital Marketing Apocalypse?
Forbes recently published a piece discussing what some experts are calling an ‘apocalypse’ in the digital marketing round. What is this apocalypse? It is a downturn that is seeing even long-standing digital marketing agencies suffering significant revenue losses. Some are even going out of business.
To be clear, digital marketing itself is not suffering. It is the agencies. The Forbes piece cited a number of different factors along with data to clarify them. But at the end of the day, it all boils down to supply and demand. The market is completely saturated with agencies. And it is not just here in the U.S. It’s a global thing.
The digital marketing agency not able to figure out how to overcome the competition finds itself on the losing end of revenue. And if reduced revenues become a long-term problem, the agency’s very existence is threatened.
Evidence of an Industry Glut
One of the statistics cited by Forbes clearly indicates market oversaturation. Here it is – the number of digital marketing agencies in the U.S. and Canada grew by 54% between 2018 and 2023. That is an astounding number. But keep in mind that the statistic only applies to North America. You can find a digital marketing agency just about anywhere in most developed countries. Digital marketing is alive and well in Europe, Asia, South America, and so on.
If you understand the economics of supply and demand, you know what this means. Competition forces prices to stay as low as possible while still maintaining a decent margin. But excess competition also reduces the revenue streams of everyone involved. Less revenue means less opportunity for growth. And a lack of growth in an industry that requires constantly bringing new customers into the fold can have business-killing consequences.
Sophistication and Awareness Are the Fuel
So, what is fueling all the competition? Two things: sophistication and awareness. In regard to sophistication, you have both customer and technological sophistication. Both are creating problems for long-established digital marketing agencies.
Customer sophistication is gradually making companies aware of the fact that they can hire incredibly talented digital markers capable of double duty as SEO specialists. They do not have to spend money on a local digital marketing agency and a separate SEO counterpart. It still might be cheaper to outsource, but companies seem to be trying to handle things in-house if possible.
Technical sophistication is allowing them to do just that. New software tools, especially those driven by machine learning and artificial intelligence (AI), can manage most of the heavy lifting. And do not forget complete out-of-the box digital marketing and SEO solutions. Cloud computing makes them readily available.
As for awareness, customers are also becoming more aware of how digital marketing and SEO actually work. According to Salt Lake City’s Webtek Digital Marketing, this is creating problems for higher priced agencies that have relied mostly on customers not understanding what it is all about.
Almost Anyone Can Do It
The net effect of all of this is that we are at a point where almost anyone can manage at least basic digital marketing and SEO tasks. Companies are willing to take their chances at a time when tight marketing budgets force them to be frugal about how much they spend on outsourcing.
Between market saturation and growing sophistication within digital marketing and SEO, it is getting harder to run a profitable agency. Not every digital marketing agency is struggling right now. Yet many are. In the end, nature will run its course and the fittest will survive. That is the way business tends to work.