What do digital marketing companies do?

The existing answers are the bare minimum.

Average agencies do the following:

• Post content on the clients site.
• Post content on the social media accounts.
• Explain the results they achieve on each platform with a tendency to spin negative results.

Great agencies do the following:

• Deeply understand the mechanics behind a clients business.
• Sets clear objectives with measurable and time bound deadlines.
• Work to understand the management structure and where the client wants the business to achieve.
• Sets up structures so communication is effortless between agency and client and client and their customers.
• Leverages existing platform wins as a way to gain traction in other channels.
• Quantifies all activities and builds a quantitative model which shows the key points of leverage that drive results.
• Craft funnels - Setup and create experiences for customers throughout their journey that naturally attract them further into the funnel. (This is magical and can literally double revenue in a matter of weeks.)
• Run advertising campaigns against the funnel that encapsulate the brand and its message. (Great digital ad creative is dying and the best agencies put a huge emphasis on this)
• Be the ally to the clients business and its goals. It often means telling the client things that they may not want to hear. This is what separates average agencies with the best agencies.