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Marketing agencies in Hamburg Part 1

Couple of days ago I was in Hamburg with my family and in the meantime I had an occasion to meet with owners of some Marketing Agencies from Hamburg. We had really interesting talks and I want to share some conclusions and observations from them with you.
 

In Hamburg there is half thousand of Marketing Agencies and the competition is obviously high. On the other hand in such a big city with almost 10 000 of companies there is a lot of potential clients to work with. Estimating that every company needs to use some marketing services for 1 agency there are 20 clients. Not too much, is it?

Price competition

Most of persons I talked with, said that there is not only quality but also ( even more ) price competition rising for the last years. One of the important reason is that some agencies found alternative sources of delivering services for example outsourcing to countries where labour is extremely cheaper than in West Europe. Another way of serving cheaper services is usage of less costly substitutes like Hybrid Mobile Apps or making a website from ready template. If the client has to choose between comparable quality ( which is hard to know before service is delivered ) and much more competitive price in most cases he chooses cheaper service. That point leads to the next one below.

Cheap solutions

Some of marketing agencies found out that to win price competition and to gain new clients they will cooperate with far east companies for instance from India. And there is nothing bad in it in general. The only disadvantage I have heard is that in most cases the quality and communication is poor and final product is far away from what was expected. That situation leads to double loose scenario: unhappy client + marketing agency which has lost a client. Some of the agencies that I talked with, had bad experience with that approach in the past and they do not want to go that way. However there is still  a lot of such Agencies on the market which leads to big differentiation of prices and quality. 

Still traditional approach

A lot of clients have still traditional approach to marketing. It is hard to convince them to spend money on digital solutions like well developed websites combined with SEO and SEM. I think this is a bit specific for whole German market as for instance in Scandinavia proportion of budgets for digital and traditional marketing are opposite.

Fix price and project based cooperation

Clients would like to have a fixed budget for everything they order. Even if there is almost no project description. Marketing agency has to handle that somehow. That is good regarding costs saving. The challenge is when during the project changes appear. It is hard for the client to extend the budget as it was fixed. Another challenge is with support and maintenance of digital solutions. Clients do NOT want to pay money after the project called “Website” or “Mobile app” is finished. They want to save money on support and maintenance of the project. They would like NOT to pay monthly fee for that. 

Development challenges

Marketing Agencies have 2 main options to make digital development:

  • Have a team inhouse
  • Have an external partner 

 

I heard about few challenges with the first option.
First one is recruitment. Right now in Germany there is a lack of from 20 000 to 60 000 IT specialists. That means it is hard to find people and on the other hand resources are expensive.
Second one is that it is hard to have continuity in projects for agency. Sometimes there is too much work, sometimes people are waiting for a job. 
Having a partner gives  couple of advantages, but also risks. It gives flexibility and partner’s expertise. Marketing agency does NOT have to take care of resource planning or technological issues. Some agencies see risk in:

  • having smaller control over the project ( which is in some cases true )
  • giving know how to third party
  • communication gap

 

If Marketing Agency has trusted partner with experience in cooperation with agencies none of that risks should take place. Here you have some tips how to find good IT partner http://valueadd.pl/blog/9-practical-advices-when-choosing-software-development-supplier
 

To give it a short summary, there is big competition on the Marketing Agencies in Hamburg. There is a need to have cost effective and high quality digital solutions with fast and flexible time delivery.

Where should we send price of that project?