Are agencies no longer the flavour of the month?

Following on from the Twitterer is a mainly a narcissist article, the currently trendy term of "Consumer intelligence" seems to be giving clients the jitters (so agencies see it). Companies that understand the need for a consumer "pull" strategy where the emphasis is on the consumer, fits with the need to quickly respond and listen to the consumer, analyse new behaviour and habits. In a very interesting Ad-Age article the journalist explains that companies feel they don’t need agencies as much!

There is a great quote from the CEO of Unilever Paul Polman:

"Maybe the most extreme example of this is to be found in consumer-generated content, where we have invited consumers to develop communications for Omo and Vaseline as a complement to those generated by the company, and in the case of Peperami, we have even dispensed with the agency in favor of exclusively 'crowdsourced' content.
"However well traditional advertising agencies read the signals and recognize the need for radical change in their capabilities," he said, "few agencies can address all the communications needs of a brand. ... This is making the management of agencies increasingly complex, and raises challenging questions on how best to measure the value added by the respective partners and consequently how to manage remuneration."

The current economic situation pushes clients to search for financially viable solutions, or at least good ROI you can present to your boss. From an agency perspective, we know this is without being prepared to accept a reduction in scope or speed to market. Although the speed to market aspect can often be better managed by agencies, the "same scope, with reduced budget" is just not always possible. Sure you can provide cheaper solutions but that generally implies a reduction in quality, even though clients may agree to it. Clients rarely anticipate the reactions from their project sponsors and hierarchy and it can fall back on the agency.
Clients who have previously externalized their marketing and branding requirements are now looking to internalize what they had given away to agencies over the years according to the above article. The likes of Forrester are pushing to get marketing and brand managers (sorry Forrester prefers Brand Advocates) to be use 'invaluable' Forrester insight and work in house rather than go through agencies as much.
Would this have anything to do with some of the larger digital agencies producing detailed market reports (ex: Digital Outlook) and complex dashboard systems that provide the same type of 'insight' Forrester is selling to clients?

I’m not sure Forrester is my idea of a company capable of seeking and identifying trends in the digital arena to serve as a catalyst for the client’s brand coverage but hey I work in an agency so I would be biased. Without denying the importance of the number crunching and analysis, it is just a small ingredient of the digital marketing mix.

Although the above article does not touch on the details or definition of an agency I think there is a tendency to consider them all to be the same. In the same way that Jon discusses how both Forrester and Gartner don't go into enough details in their Content Management comparison reports, I feel they do the same when discussing and comparing agencies. Good digital agencies do provide support for the above areas mentioned by Forrester and far more. The intricacies and issues of implementing complicated technical solutions are part of a digital agency's normal day. They also have a good understanding of all the other ingredients of the digital marketing mix, how it all works together down to the small details that Forrester don't even touch on!