The Anatomy of a Digital Agency

Robert

The anatomy of a digital agency will reveal what the agency does, who does it, and how it is done. Understanding the different agency anatomies helps to determine where digital agencies overlap (services) and their pros and cons, especially regarding their underlying process and suitability to your project and product.

Key points:

There are different digital agency types, and you might work with more than one.
Understanding what they do and how they do it can help instruct the right digital agency for your business.
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Years ago, we searched for ‘web design Sydney’ for a suitable web designer or agency.

We’ve moved on from those days.

Today, we build digital products.

That is not to say that at the core, a business is not expecting a new website or app, though we use the term ‘product’ because fundamentally, two things have changed:

Digital agencies are increasingly adopting ‘product management’, the methodology more advanced businesses and digital businesses use to develop their digital products.
The concept of ‘product’ is broader than that of a website and considers far more, including why the product is being developed, how it will meet its goals, and how to meet them through growth and optimisation.
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Conclusion: Digital agencies have different structures, approaches, and business models. Understanding these variations will help you choose the agency or agencies that are most suitable for your digital project and needs.
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Digital product agencies, traditional digital agencies and digital marketing agencies: generalisation versus specialisation

For this article, I only focus on digital agencies that produce websites, apps, and digital marketing collateral to drive users to these websites and apps.

I can’t call these digital agencies full-service because they are not, though they are more generalised in their work and less specialised.

There are too many digital agencies with particular specialisations to list them all. By all accounts, you also might not need them, or their area of specialisation would be clear to you if you did.

For instance:

Digital agencies that specialise in research.
Digital agencies that specialise in site profiling and database optimisation.
Digital agencies that provide testing services.
Digital agencies that specialise in data and analytics.
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So, in breaking down the anatomy of the types of digital agencies I am focused on, we are going to look at the most common three types:

The digital product agency.
The traditional digital agency.
And the digital marketing agency.
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The digital product agency

Today, most digital agencies will refer to the fact that they develop ‘digital products’, though that is often only skin deep.

To genuinely take the product approach to digital product development means two fundamental things:

Undertaking the development through the complete prism and thinking of product management: how you do it.
Taking a view of the whole lifecycle of the digital product and not merely the execution and delivery of the product: what you do.
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Digital product agencies are often younger because achieving these two fundamental requirements is a ground-up effort.

It cannot be retrofitted, or at least not easily.

Essentially, digital product agencies are still executional like more traditional digital agencies, though they are steeped in product management, meaning they see things differently and do things differently:

This does not necessarily mean that digital product agencies are a better approach in all scenarios. They have an evolved model that borrows from product management rather than utilising the traditional project management/waterfall approach.
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The anatomy of a digital product agency

Interestingly, the anatomy of a digital product agency follows both what digital agencies do and how they do it.

The process underlies all, whatever is being built. The process is critical and fundamental to it all.

A digital product agency has two focuses in terms of process:

In the long term, how do we realise the product, get it to market, optimise it, and grow it?
The short term: what are we doing right now to achieve the long-term?
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The long-term view: macro

In simple terms, there are three stages a digital product agency will focus on and follow in terms of digital product development:

Research and planning: Who are we building this for, what problems are we looking to solve, and how will this work?
Execution: Building or executing on the product; for instance, developing your MVP: architecture, design, development, testing.
Growth and realisation: Realising the product (or a new set of features), growing and learning from it.
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Ready for more research and planning.

I refer to it as the macro view of product, which is long-term thinking and strategic.

Often, a ‘product manager’ will oversee the longer-term view of your digital product. They are experienced, strategic and will work with your business and stakeholders to understand how your digital product fits your business’s vision and objectives.
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The short-term view: micro

The short-term view of product and digital product agencies is probably the more relevant when dissecting the anatomy of a digital product agency because it is here where we meet both the typical players and the day-to-day process.

A clear distinction in the product-led approach to digital product development is that things are not done under the auspice of a project.

Sure, you might be involved in a project, though a digital project agency will borrow from traditional product management methodologies rather than traditional project management.

Product management is about iteration and flexibility. It is about always having a destination (which can change) and charting the best path to that destination as things and priorities change.

To achieve this, the process is critically important.

In a digital product agency, the team developing a digital product is called a ‘product team’, and each member will be steeped in the process.

The team will likely be led by a ‘product owner,’ who delivers the product through each development iteration.

(We call these iterations ‘sprints’, or short two-week work units.)

The product owner and the team agree on short-term goals. The team works through a rhythm and a series of ceremonies. After each sprint, you should have made progress on whatever you were looking to achieve.

Where I say ‘whatever you were looking to achieve’, that is why the process is so fundamental.

A product owner and their team don’t care what is being asked of them.

Whether they are undertaking research and experimentation, implementing a series of fixes or kicking off an email campaign, the process is the same.

It is here that the anatomy becomes interesting.

The product owner is a constant. The team is not.

Depending on the priorities of the team and your product priorities will determine the priorities of the product team.

If your priority is to fine-tune your analytics, you’ll be using different team members than if you were undertaking a fortnight of customer research and solving bugs.

A digital product agency will swap team members as their skills are needed.

Which is why the entire product team needs to be steeped in product management and the process. Team members are self-organising and are left to their own devices.

In terms of actors, a product owner would likely ask how long your arm was.

If we compare digital product agency to a traditional digital agency, the answer is the same: UX designers, designers, developers, copywriters, testers, and the rest.

Executing and delivering the product uses the same skills and people.

It’s just how they are organised.
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Pros and cons of the digital product agency

Pros

Focused on product/business success, not merely execution and delivery.
It is a more efficient and effective process, especially for larger builds.
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Cons

Process introduces overhead for smaller projects and discrete engagements.
Process can be confusing and overwhelming for businesses without product management experience.
Essentially, it is billed as time and materials, which is not to say that estimates of time and cost are not provided, though the remuneration agreement is fundamentally you pay for what you get.
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The digital agency

Digital agencies are executional and primarily about delivering digital products (websites, apps etc.).

Most agencies help prepare their execution through services such as UX. Some digital agencies—especially larger ones—provide additional research and planning services, though smaller ones often do not.

This can be a strength of the digital agency model and focus: it is there to output a digital product, and that output is the measure of success.

If as a business, you have a strong handle on what you want built and have the systems in place to work with and manage the digital agency, you can take full advantage of the digital agency model.

Digital agencies borrow either a hybrid process (attempting to introduce some internal product management methodologies) or a traditional project/waterfall process.

A few points to make here:

This process can work well for discrete builds and pieces of work.
It is often in response to a business needing a scope and budget. To this extent, the digital agency providing scope and budget responds well. However, whether this is the best approach depends on several variables, principally the size of the ‘project’ and the imperative to get to market.
The bigger the project and the less the need to get to market, the more risky it is to tie things to a project/waterfall structure.
In my opinion, the hybrid approach does not ultimately benefit the digital agency or the client because work is typically undertaken in a project/waterfall manner.
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Whereas a digital product agency will ultimately seek remuneration via time and materials, a digital agency will take on a degree of risk by scoping and costing their work up front, with the caveat that variance will be sought if the scope changes or grows.

I referenced that the underlying digital agency model is under increased strain the more significant the project and the less the imperative to get to market.

And this is for a few reasons:

Scoping a project before commencing it is all good and well if there is absolute certainty about what will be delivered. Indeed, a digital agency receiving user stories (thinking of them as instructions for what will be built and delivered) and being asked to quote them would be in total heaven.
In reality, this is rarely the case. Even with thorough research and planning, things invariably change.
The research and planning specifications, requirements, and scope are tested in the light of day. Changes in the market require changes to the strategy, as do changes to budgets and resourcing on the business side.
The issue is when the research and planning are done within the project and invariably show up variations between what was scoped and what is now known. The difficulty is whether and how these are captured and agreed to, invariably changing the nature of the project, including the cost of the project. This, in turn, strains the project and the relationship.
This is not to say that projects and the waterfall approach cannot work, though the risks are real, and this is why traditional websites built through a digital agency are prone to the risk of failure or at least compromise.
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The anatomy of a digital agency boils down to project management, both at a macro-level (i.e. managing the various projects the digital agency is undertaking and playing the projects off against each other) and the micro-level (managing individual projects themselves).

Under the digital agency model, the product owner is replaced by ‘web producers’.

Web producers play a very hybrid role, interfacing between the client and the team, pushing the project forward and managing variation, often dealing with ancillary issues such as content and migration, and much, much more.

In terms of actually developing digital products within a digital agency, it is the same actors are employed in the digital product agency: designers and developers. Nothing changes there.
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Pros and cons of the digital agency

Pros

The output of the digital project is the measure of success.
Executional by nature, which can make sense in the right circumstances.
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Cons

The underlying model is often unideal and can lead to risks and poor outcomes.
Rarely data-driven.
Disconnected from the broader product lifecycle and cannot play a role in driving product success, even if asked to do so.
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The digital marketing agency

Digital marketing agencies are about driving traffic (and hopefully results from that traffic) to a digital product.

This can mean activities such as:

Analytics setup and configuration (in partnership with your digital product agency or digital agency)
Search Engine Optimisation (SEO)
Search Engine Marketing (SEM) and paid media (e.g. LinkedIn, YouTube)
Social Media
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It could also mean services such as affiliate marketing, influencer marketing and even growth marketing. However, these services are pretty specialised, and I’d suggest you’re probably looking at a specialised agency for these sorts of services.

Indeed, there are specialised SEO, SEM, and Social agencies, so you must balance working with a one-stop shop or specialists.

Digital marketing agencies work in a couple of types of engagement:

Discrete engagements: once-off engagements.
Projects: larger projects such as establishing your product up in social.
Retainers: ongoing, rinse-and-repeat engagements where the digital marketing agency delivers monthly work.

The main go-to at a digital marketing agency is an account manager, especially if working on a retainer model.

Account managers might also undertake some of the executional work, though they are mainly an interface between your business and the digital marketing teams. Key services of an account manager in a digital marketing agency include estimation and reporting.

Some digital marketing agencies are performance-based, meaning that they are partially or fully remunerated based on the outcomes of their work (leads, conversions, sales, etc.).

In this instance, a digital marketing agency might insist on driving customers to assets other than your product so that it can fully control the customer experience, such as lead forms within social media, landing pages, etc.

Depending on your internal capabilities, you might rely on your digital marketing agency to keep you abreast of your analytics, and that is an important consideration if you are expecting that.

From a process perspective, digital marketing agencies will likely have a process for onboarding your business and determining their program of work. After this, there is typically less onus on the process.
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Pros and cons of a digital marketing agency

Pros

Provide services to drive traffic (sales, conversions, leads etc).
Can work somewhat autonomously.
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Cons

It can cause demarcation issues with the other agency types: finger-pointing.
It can require work by the business to get consistent and good results.

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Common issues with resourcing at digital agencies that impede your product growth

Robert

Resourcing your digital project through a digital agency is by no means a walk in the park. We think we can do better.

How to improve your relationship with your digital agency

As someone who subscribes to the concept of ‘garbage in, garbage out’ when briefing digital agencies, I’ve spent what feels like a lifetime refining how I engage with agencies to better maximise the outputs I need while fostering a sense of partnership and accountability with the agency and their staff.

Using the digital product approach to gain business efficiencies

Kieran

It can be challenging to do the best for your business at the best of times. It is even more challenging whilst we are all occupied thinking about and dealing with the effects of a Pandemic. When you have the responsibility of managing a team your focus needs to be on them and avoid falling into the common trap of taking it all on yourself. Digital product management can help. And a good digital product agency can get you started and keep you on track for success.

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