• by Larissa Faw , August 31, 2016

Agencies are struggling to meet the demands of digital-centric opportunities, according to more than 2,000 agency employees queried in The State of Advertising Talent report from management consultant smith & beta. The majority of respondents (62%) claim their clients are asking for more advanced digital work, yet 43% of agencies feel they aren't prepared. Only 7% say they are exceeding client expectations when it comes to digital work. For those in client roles, this percentage drops to 5.6%.

The longer employees have been in the advertising industry, the lower their perception of their agency‘s ability to exceed client expectations. Those with the most experience lack confidence in their agency’s digital capabilities, and the majority of employees rate their digital capabilities in between failing and exceeding. 

Many claim that clients simply aren’t buying digital ideas from their agencies. Employees often lose confidence to sell ideas after repeated rejections, so many become apathetic. In addition, agencies that continue to pitch digital ideas sometimes succeed at “selling it in” but then fail to execute on the ideas presented. This lack of confidence in execution has eroded employee risk-taking for fear of underperforming, says the report. Nearly two in three (62%) say their shops "talk more than they make." 

"Advertisers need to pay attention to capabilities of agencies, understand who they are hiring and how their own team collaborates with agencies," says Allison Kent-Smith, founder, smith & beta. "Brands are just as in need of skill evolution and they have a history of investing in employee capabilities. If I were a CMO, I'd read the report carefully and put programs in place that ensure that their marketing teams keep pace and evolve skills accordingly."  

Employees struggle to keep up with the ever-evolving skills needed in the digital space. More than half rank themselves as "novice or below" in mobile advertising strategy, prototyping, and measurement. One in three say they are lacking in cross-platform story-telling abilities and 47% are unsure about their capabilities when it comes to the user experience.  

"The most surprising finding is that agencies are so behind in mobile," says Kent-Smith. "With a phone in almost every pocket, why have our skill sets not evolved to meet the opportunities that mobile presents? I'm also surprised that agencies continue to be so far behind in prototyping, as showing ideas where they will eventually live is often necessary to selling." 

Many employees say that they don’t have permission to learn. Lack of prioritization and leadership support drives employees to look for roles outside of their companies in order to continue to learn, grow and explore. Talent flight is undeniable, says the report.  

This is because agency leaders have not evolved their ways of working to allow for integrated learning, experimentation and risk-taking, says Kent-Smith. "We're still operating in 'ways of working' that resemble the 1960s. We all know that we need to evolve, yet we continue to acquire and hire talent to solve the problem and that simply has not worked."  

The report outlines key takeaways for advertisers. Agencies must shift their investment from emphasis on acquisition of talent to development of talent. And conference and single workshop educational investments should move to annual integrated learning programs to allow employees to continually evolve their skills.

Also, leaders should establish distributed innovation programs beyond the 'classroom' that provide time and space for learning. And agencies need to re-evaluate payment opportunities as the billable hour model is restricting growth, collaboration, and evolution in the industry.

Last but not least, agencies should offer education as a service to their clients in order to learn digital capabilities together.   

The report is based on three years of data. A survey was distributed to leading advertising companies across North America, APAC, LATAM, and EMEA since 2013. Survey participants included employees from small and large agencies who answered skill and organizational readiness questions via a quantitative survey and one-on-one, group employee and leadership interviews.

The full report can be found here.