SERIESSociety of Digital Agencies The Society of Digital Agencies is a global community of digital agency leaders, creative visionaries and technology disruptors. With 100 agencies across 20 countries, SoDA’s members help the world’s most progressive brands imagine and create the future of digital experiences. Learn more.→ XD Ideas / Perspectives / Society of Digital Agencies / Tom Beck on the SoDA Report and Digital Outlook 2020Tom Beck on the SoDA Report and Digital Outlook 2020 Illustration by Simona Toader Tom Beck Jun 5th, 2020SoDA has released a Global Digital Outlook Study for the past seven years and 2020 was “supposed” to be no different. In late Q4 of 2019 we collected data from nearly 500 digital agency leaders and client-side executives and in Q1 had planned to present a clear continuation of our annual trends report– global spending forecasts, adoption of emerging technology, perspectives on the digital landscape and evolving strategic priorities for both creative agency leaders and brand marketers. Alas, it’s turning out to be a much different year than the one we thought we might have.As we sit here in May, the situation remains very fluid. While the reach of the global pandemic has been nearly universal, the direct economic impact, and the longer-term structural impact to our businesses and social lives is unknown. We like to talk about a “return to normal” or “the new normal” or things like “the shape of the recovery.” But the reality is that we have no idea whether we’re in the middle of temporary disruption or in the early days of what may turn out to be a significant societal, technological and economic shift.There’s no doubt this year will test the resilience, decisiveness, empathy and invention of creative leaders and practitioners around the world. As it relates to the findings from our digital outlook study, we certainly anticipate a disruption to annual spending plans and a reshuffling of strategic priorities. We also believe that many of the structural and systemic challenges faced by agencies (and brands) will be accelerated and intensified by greater economic pressure and, perhaps, new social norms that may emerge. With that as the backdrop, here are five developments that we’re closely tracking in the SoDA community.Marketing spend continues to move in the direction of digital, even if 2020 budgets are pinchedComing into the year, 77% of client-side leaders said they were increasing their digital budgets in 2020… 35% “significantly” so. Looking at it through another lens, 23% of brand leaders had planned to increase their spending for digital AND marketing overall while 54% were planning to increase their digital spend while decreasing or holding flat their overall marketing budget. That means that the allocation of existing and net new financial resources continues to move in the direction of digital initiatives. While the budget increases that were originally planned for 2020 are unlikely to materialize for most marketers, we suspect that the proportional movement of investments towards digital will stay true this year and, in some cases, even accelerate as marketers weigh newfound financial constraints and strategic priorities. That bodes well for businesses and creative practitioners focused on digital design and, longer term, this continues to be an area of growth. But that’s a caveat too.The arena for digital design is growing but more and more players want in the gameSoDA’s annual forecast has shown a steady increase in the allocation of corporate budgets towards digital marketing initiatives. In fact, by the end of 2019 half of the client-leaders in our study said they were already spending 50% (or more) of their total marketing budget on digital. And that’s just the marketing realm. We know that digital design initiatives are also growing within product teams, technology teams, sales and customer services teams and many other areas across the enterprise. As demand for digital capabilities grows, so does the competitive pressure.It’s a natural economic response for growth areas to attract more competition… everyone wants to jump on an opportunity area with an upwards trajectory. When it comes to competition in the digital landscape, it’s clear that many digital agencies, traditional integrated agencies, design studios, production companies and consultancies are racing to be leaders at the center of the digital marketing, customer experience and digital transformation ecosystem. In our study this year, 69% of agency leaders said competition for the services they offer has intensified and they cited “competition” (along with “pricing pressure”) as the biggest challenges facing their business. 64% said that the entrance of global management and IT consultancies (Accenture, Deloitte, EY, Cognizant, Wipro etc.) into the creative agency space poses a threat to their business. The pressure is growing in all directions and even in-house digital teams on the client side are seen as a competitive threat for digital work. A global recession in 2020 will only serve to intensify this competitive pressure and many agency leaders will be forced to reckon with the relative level of specialization and differentiation in their services mix.Collaboration, Insourcing and the Mixed Martial Arts of Digital DesignThere’s no doubt that digital experience design is a team sport and the movement towards organizational structures that better support collaboration is growing. On the client side, marketing leaders said that, “evolving our internal culture and organizational structure” and “adopting new methods for working collaboratively” are the top two areas they are investing in to fuel their organization’s success. And when it comes to their agency partners, client-side leaders said that “more flexible/nimble working models” was the top area where they’d like to see their partners improve. Some of this is driven by the inherent nature of digital experience design and the sheer number of business units, capability areas and partner teams that may be involved in any single digital initiative. A continued trend towards the in-sourcing of digital capabilities by client-side teams is also an important factor. According to Forrester, 72% of client-side organizations have some form of in-house creative agency i but the depth and breadth of capabilities varies. On the digital side, we’ve found that for any specific digital capability (e.g. UX/design, media planning, data analytics, etc.) between 25-50% of marketers have already brought that capability in-house. Furthermore, the recent mandates to “work-from-home” will have significant and longer-term impact on team collaboration as many agencies and brands seriously evaluate the possibility of sticking with a remote, distributed team model even after current restrictions are lifted. All this means that the digital experience design process will continue to become more distributed – both physically and across various teams and capability areas. Current models and methods of collaboration, already a delicate balance, will be further tested and forced to evolve to meet market demands and the new reality of work.Emerging technologies may start to emerge more quicklyWhen it comes to digital experience design, emerging technologies such as AI / machine learning, voice-based applications, spatial computing and AR/VR/Mixed Reality have become a staple in our industry discussions. And yet, for all of the chatter, most of these technologies have only seen the light of day in relatively specialized use-cases. But that’s changing.Coming into the year 76% of client-side marketers agreed that AI technology was already impacting the way they plan for and design customer interactions. Only 57% were directly leveraging the technology in their digital initiatives but another 31% said they planned to do so in 2020. On the agency side, the impact and adoption of AI technology for their own operations lags that of client-side marketers – while 53% of agency leaders agree that AI technology impacts the way they plan for and design customer interactions just 35% are leveraging any form of the technology in their agencies today; another 30% planned to do so in 2020. And this is just one example.We expect the unique circumstances of 2020 to accelerate the rates of adoption and the potential breadth of application for technologies that better enable automation, virtualization, personalization and “touchless” modes of interaction. Some of it will be driven by new market realities for public spaces and retail experiences. And some of it will be driven by economic pressure to better deliver and scale capabilities that can’t be done effectively (or cost-efficiently) by humans alone. In fact, our colleagues at Forrester had already started imagining what they’d dubbed as the “Human + Machine Creative Team.” This initial research was coming out of their “Future of Work” practice, but given the immediacy, depth and acuity of impact from this global pandemic (both socially and economically), we believe this “future” will now arrive much more quickly than we previously imagined.Design Ethics, Equality and InclusionThe socially conscious side of our industry has become more vocal in recent years and topics related to design ethics, diversity and inclusion and pay equity have been prevalent discussions. And, for good reason. Nefarious design practices continue to compromise the trustworthiness and integrity of many digital experiences and the industry, at large, has a clear issue on its hands when it comes to the diversity of their teams, the inclusiveness of their thinking (and, consequently, the solutions they deliver) and the fairness of their compensation practices.When it comes to design ethics, client-side marketers tend to see it as a more pressing issue – 75% say that design ethics is a major priority for how they approach projects and the work they create versus just 52% for agency leaders. Regardless of the relative importance of design ethics, the bigger challenge lies in the lack of clear and consistent definitions and guidelines in which to assess the challenges.When it comes to tackling industry issues related to pay equity and diversity/inclusion, there is much work to do – just 56% of agency leaders say they have a formal policy for diversity, equality and inclusion and only 41% say that they actively track and report on the gender pay gap in their company. As the well-hewn adage states, “you can’t change what you don’t measure.”Intentions are good and the industry dialogue on these matters is headed in a positive direction. But it’s always easier to embrace a concept (such as “design ethics” or “pay equity”) than it is to implement an actual policy and actively manage to it. 2020 will be a challenging year for many in this industry and the focus on stability, evolution and, in some cases, survival will prevail. Amid these external pressures, I’d urge digital design and digital business leaders to insist on continued, clear and tangible progress on these issues. Lip service will never be enough.These are just a few of the areas that we’re tracking closely in the SoDA community.While we fully understand that forecasts for digital budget and revenue growth in 2020 will be upended, we believe that many findings from our annual digital outlook study remain relevant and will provide a useful reference point against past and future forecasts. That said, we’ve dropped, for the time being, using language such as, “Trends to Watch.” There’s no doubt that new trends are in the making this year and I am hardly in a position to predict them. Plus, a little less declaration and a little more humility will do us all some good. We’re entering uncharted territory once again and the strength of our capabilities, the courage of our convictions and the generosity of our spirits will serve as the best moral compass and roadmap for the path ahead.Words by Tom BeckTom Beck is Executive Director of SoDA, a global community of digital agency leaders, creative visionaries and technology disruptors. With 100 agencies across 20 countries, SoDA’s members help the world’s most progressive brands imagine and create the future of digital experiences. Find out more about the SoDA community on our website, LinkedIn, Twitter and via our trend publication, The SoDA Report.About the Global Digital Outlook StudyThe Global Digital Outlook Study is an annual collaboration between SoDA and Forrester. Our study assesses global digital spending trends, adoption of emerging technology and shifting views on the digital landscape. It’s also one of the few studies to gather, analyze and compare this particular outlook data from the vantage point of both client-side executives as well as agency leaders at digital agencies, integrated agencies, consultancies, product design studios, production companies and every niche in between. This year’s study had 401 respondents from across the globe – 166 from client-side executives and 238 from agency leaders. For a closer look at the data, you can download a copy of our summary findings at, The SoDA Report. i Source: See the Forrester report “Focus Your In-House Agency Strategy To Expand Marketing’s Influence.” SoDA Series Leadership Insights Words by Tom Beck Tom Beck is Executive Director of SoDA, a global community of digital agency leaders, creative visionaries and technology disruptors. 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