So you’ve decided to look for a partner to help you create a digital product. This likely means that you’ve already considered the path of hiring a team yourself to accomplish this task. Before we dive into the meat of the topic of partner types, let’s first cover down on the pros and cons of hiring your own team of employees or freelance contractors when pursuing digital product development:
Pros:
- Full control over every aspect of digital product creation, including what they do and how they do it.
- Equity can be used to incentivize a team in lieu of cash.
- Establishment of team culture and norms.
Cons:
- The cash cost of contractor or employee compensation and benefits (don’t forget to add 30% to whatever you plan to pay them annually).
- Multiple people with specializations are required for great digital product development: product managers, branding experts, UX designers, UI designers, front-end developers, back-end developers, project managers & QA engineers. This is not to say that you can’t find a unicorn designer who is great at product strategy, branding, UX and UI; or a unicorn developer who is “full-stack” and who writes such perfect code he/she doesn’t need any independent QA. It’s just very, very hard to do.
- You give up valuable equity early.
- Hiring great people for digital product creation takes time and you have to know exactly what you’re looking for.
- Need to manage this full team of people day-to-day
- Teams take time to mesh/gel before they can become high-functioning–plan for a minimum of 3 months, but more likely 6+ months of lower-than-ideal output and collaboration before a new team composition hits its stride.
Assuming you're not swayed by the pros and are worried about the cons, please read on.
There are three main types of digital product development partners you can enlist to help you create (or improve) your product:
Digital Product Agencies
- When it comes to a digital product partner, these are the specialists. Creating or improving digital products is all they do. They focus squarely on the digital product work to allow you to focus on everything else the business needs to succeed–e.g., sales, marketing, partnerships, HR, operations & customer support. These teams have had a singular focus from the start on nothing but digital product creation.
Examples:
Full-Service Marketing Agencies
- These are the teams whose core focus is marketing, but have built digital product development services over time. They are great at understanding your target audience and delivering compelling content, but the extent to which that translates into your digital product depends on the company’s strategic focus–i.e., what % of their clients are marketing clients vs. digital product clients. No company can be good at everything and these agencies run the risk of spreading themselves too thin.
Examples:
Management Consultancies
- These digital product partners are the highly paid teams composed of top graduates from top schools. It is indisputable that these teams are smart and capable when it comes to the highest levels of corporate strategy. Much like full-service marketing agencies, they have (over the last 5+ years) begun to add digital product capabilities to their service offerings. With minimum engagement sizes north of $3M, the cost of entry is high.
Examples:
It’s important to look at a variety of important factors when considering which type of digital product partner is right for you:
Let’s get into the weeds on the above chart:
Digital Product Agencies
Cost: Medium
- Rates range from $30 (India-based) to $300 (US-based) per hour depending on where the team members are located with average project total costs ranging from $100K-$600K.
Speed: High
- Speed during digital product creation very much depends on where resources are located: US and Western European teams work faster than South American or Eastern European teams who work faster than Indian teams. Speed is also determined by how long a team has been working together–the longer the collaboration, the more well-oiled the processes.
Quality: High
- Quality of digital product development also depends on location. It’s not to say that there are not great developers in India or South America, they’re just much harder to find. It comes down to the quality of education, problem-solving mentality vs. task-taker-mentality, understanding of (US) cultural norms, and immersion in good design aesthetics in their daily lives.
Focus & Specialization: High
- Because it is all that they do, these agencies are not distracted by any other service offering and thus can perfect their delivery over time.
Marketing Cohesion: Medium
- All Digital Product Agencies have Product Strategists who understand how to uncover and create for user needs. While they’re not marketing specialists, they have enough of the skillset to collaborate well with 3rd party marketing teams.
Business Strategy Cohesion: Medium
- Similar to the above, Product Strategists are the folks able to translate business goals and business strategy into a cohesive digital product. While ideally other members of the team can and should have a strong foundation in business operations, Product Strategists lead the charge.
Full-Service Marketing Agencies
Cost: Low
- Because the complexity of the digital products that Marketing Agencies can create is generally low, the cost is also generally lower.
Speed: Low
- Expect slower delivery than what is to be expected from Digital Product Agencies or Management Consultancies. Their organizations are geared around delivering marketing ROI, so their digital product development processes are less honed on this specific front.
Quality: Low
- Marketing Agencies are usually only capable of delivering rather simple digital products that are likely just brand extensions without complicated functionality.
Focus & Specialization: Low
- Marketing agencies are mainly focused on delivering marketing support to their clients (typically 80% of the business) vs. creating a digital product (typically 20% of the business). Because of this, speed and quality inevitably suffer as their processes are less honed.
Marketing Cohesion: High
- This is where a Marketing Agency will excel as a digital product partner. Marketing messages and content will be in lock-step with the digital product. One collaborative team will work to ensure that marketing considerations for the digital product are considered from Day 1.
Business Strategy Cohesion: Low
- Marketing Agencies are not Consultants. They do not typically have the caliber of talent or skillsets to deliver a good, sound business strategy that looks beyond the digital product and marketing thereof.
Management Consultancies
Cost: High
- It’s likely that you’ll pay a minimum of 3x (but sometimes upwards of 5-6x) what a Digital Product Agency and 6x what a Marketing Agency would charge for the same/similar output. The large management structures, highly compensated employees and general overhead (i.e., beautiful offices with cafeterias) necessitate very high rates for consultancy digital product development services.
Speed: Medium
- Again due to their large management structures, these teams are not as nimble as smaller Digital Product Agencies. While their talent might be top-notch, they suffer from the same woes of any large organization–layers upon layers of management and slow decision-making.
Quality: Medium
- While the talent is usually very good, they are stymied by analysis paralysis and the need to follow the direction of slower-moving business strategy teams. Instead of focusing on quickly validating a direction and getting a product to market quickly, seemingly endless rounds of user testing and approvals are required to create a digital product with Management Consultancies.
Focus & Specialization: Medium
- Because the bread-and-butter of Management Consultancies is business consulting, and only recently have they created digital product teams, their processes are less honed and deliver less than ideal output.
Marketing Cohesion: Low
- Consultants are not marketers. They may be able to help set direction for marketing efforts at the highest level, but they do not have the skillsets to get in the weeds and devise channel-by-channel marketing test-driven strategies.
Business Strategy Cohesion: High
- This is where having a Management Consultancy as your digital product partner can really come in handy. If you’re looking for consulting services outside of the realm of the digital product itself (and willing to pay top dollar for it), this partner path could make sense. If you need deep support on any or all other aspects of creating or running a business, this team will ensure those things are front and center in the digital product creation process.
In summary, depending on what you’re looking for in a partner to help create (or improve) your digital product, you have choices. While Digital Product Agencies will usually come out on top, per the chart above and commentary, if you have a simpler product and a strong desire for tight marketing cohesion, a Full-Service Marketing Agency might be the right choice. Or if you have a strong need for a full suite of business strategy services and a digital product is just a small piece of the puzzle, a Management Consultancy might be the right choice as your digital product partner.
Of note, in most cases, all of the above potential partners can and will play nice together, if you ask them to. Get the specialization and the best that each partner type has to offer to your digital product development project by getting a Management Consultancy to set and lead overarching company strategy, getting a Digital Product Agency to create a digital product, and getting a Full-Service Marketing Agency to market a product.
Best of luck in your journey to find the right partner for your business!