This week AdAge released their annual Agency Report.  In it they once again ranked the top “digital agencies” in the US.  This is a valuable report to many marketers (and to Forrester, as we often use it to report agency revenue in our Wave report).  I tip my cap to the AdAge team as I know first hand how hard it is to compile this type of information. However, the list itself also reflects how the agency world is changing. For instance, while stalwarts like Razorfish and Digitas top the list, there are many unconventional names throughout the list such as Meredith, IBM, Acxiom, GSI and Acquity Group. It includes traditional agencies such as Ogilvy, Goodby & Silverstein and DraftFCB and beyond that it even includes contest company ePrize and GroupM’s search division. And while this list has always had a mix of players, the emergence of these firms as “digital agencies” continues to show how the old agency walls are fading and how agencies and marketing services firms are entering a “Great Race” for relevance as they see opportunities to enter the interactive/digital market.

Yet this ultimately creates a challenge for interactive marketers as it is becoming increasingly difficult to determine who does what and when you should decide to work with them. Not all digital agencies are created equal, in fact they are very much apples and oranges (or at least all citrus fruit). Applying the word “digital” or “interactive” to all of them is a deadly mistake too many marketers and their search consultants make. At Forrester we recommend starting this process with one simple step – identifying the services you need to outsource and build your criteria from there. Then go out and determine which agencies/firms fit the bill best rather than the other way around. This may be a simple step, but it’s a crucial one that is too often overlooked. And you can expect Forrester to continue to expand our agency coverage to include more agency landscape research to help determine the ideal situation to hire specific agencies.