In 2017 Janne Kalliola and Michel van Velde conducted the Drupal Business Survey for the second time. By collecting responses from more than 200 Drupal agencies, they were able to come to the following conclusions:
- Drupal 8 has become the most popular version for new projects.
- Agencies started working on more complex projects.
- Drupal has lost against Wordpress (and others) in the low-end market.
- Smaller agencies have a challenge staying competitive in seizing bigger projects.
- Finding talent is continued to be a challenge.
To try and foreseen into 2018 I am doing a SWOT analysis based on general digital agency reports from 2017 and outlooks for 2018.
Drupal agencies have an advantage that they are already very specialised. The last couple of years there has been a trend that everyone in every kind of business has to specialise in a niche market in order to be successful. You can even see simple businesses like coffee shops going in a niche and attract certain types of customers. So how are Drupal agencies specializing? They do Drupal, and they tell this to the world. Drupal is still something clients look for. Many clients get educated about the CMS market and place Drupal as their CMS of choice.
The other strength I see is the mature community. Last year I was at a couple of Drupal events, and many had dinners for agency executives. It was great to see how competitors can sit together and share their experiences with each other. This means we are working together to take a bigger share of the CMS market.
By talking with more than 100 Drupal agency executives, I found two types of agencies:
- Type A: They are active in the open-source community and is almost religious on using Drupal.
- Type B: They see Drupal as one of the tools available to help their clients succeed.
The weakness that I found in type A is that those agencies also only focus on selling Drupal and it's software features. They are transmitting the same messaging that convince them to use Drupal. This is all too engineer oriented. Client's do not care about the underlying technology as much as some agencies think they do. So, we have to be careful that our strength does not become a weakness.
Based on the report from Society of Digital Agencies (SODA), 43% of clients expect to increase their digital marketing spend in 2018 where 33% will maintain the same budgets. The areas where businesses will allocate more budget are digital experience, customer insights, content development, and digital projects. In 2017, WPP, the largest holding company in the agency space, reported the largest share price fall in decades. On average the revenue of the six largest agency companies fell for 0.3% in the second half of last year.
So what is happening?
Based on the report, the number of clients with three or more digital agency partners grew by 42% in 2016. In addition to that, we could spot a shift in 2017 where clients were more likely to partner with a consultancy firm than an agency.
I see this as an opportunity for Drupal agencies to position themselves as consultancies rather than a full-service agency. There is also a prediction that the term "digital" will disappear in the next five years as there is no more difference between digital and physical with the introduction of omnichannel. This will mean that a lot more engineering work will need to be done. Drupal agencies have an opportunity to build websites and leave design and marketing to other agencies (without having to fear to lose a client).
Only 25% of clients are planning to increase spending with external agency partners. So where will 48% of companies who are increasing their budgets spend that money? More and more marketers are partnering directly with companies who offer self-service (like Shopify, Wix, Squarespace, etc.).
Marketers need to move fast, and they are not able to afford to wait weeks for a new landing page on a website. Drupal agencies need to start thinking about integrating those services into their offerings and provide added value, even if that means doing less development work. Clients will be happy to pay the premium for something that will save money in the long run. So, do less work and charge premium.
Drupal agencies face the same challenges as many other types of agencies. What I learned is that specialization is the right course, but they have to think about the value they provide. Agencies that are not thinking about the client's goals will have a hard time winning more work. Drupal is a great tool for building websites, but it is not a sales strategy for agencies.
Overall, the future is bright. I am looking forward to seeing Drupal agencies grow and AGILEDROP can sure help them do that with fewer risks and overhead.