Digital Agency Brands Closing? Downturn or politics?

Beyond Interactionhttp://www.olayan.com/pub/wpp_logo_image01.jpg

Another digital agency is “integrated.”

Not uncommon in a downturn. By integrating agency units holding companies save on management costs (one MD, one CD), are able to maintain team size (two smaller teams become one bigger one) and consolidate overheads across more revenue.

But do we think Beyond is closing because none of Mediacom’s clients are asking for digital services?  Not likely.

This is integration because of the political need and justified by the feeling clients want a single integrated partner, as is commonly reported in the industry press.   The strategy makes sense.  Taking digital-trained teams and distributing them amongst the traditionally-trained ones should end up with both being stronger.  Clients can call on a single account director and get all of their questions answered and needs met.  Unfortunately that isn’t what generally happens.

The question to watch will be what happens to Sloan Broderick and the digital leadership team.  More often then not when the smaller team (the digital one) is assimilated into the bigger shop, the digital team doesn’t end up in the leadership posts.  Or only one or two become part of a management team of 7 to 10 — which doesn’t allow them to make policy changes and quickly leaves the digital leaders disillusioned at the thought of trying to fight to change the course of the supertanker.  Consider Colleen DeCourcy‘s moves through JWT (now focused primarily on RIOT, a digital-led agency), Don Scales leaving Agency.com when it was “aligned” with TBWA (now running iCrossing) and Eric Wheeler at Ogilvy (now running 33across, a digital business).

For the team trying to deliver the work the situation is even worse.  Being integrated often means being surrounded by people that don’t have the same passion you do for digital marketing — and think the term geek has negative not positive connotations.  And this in an industry that changes so quickly you can’t keep up alone.  You need your digital colleagues.

It also frequently means you are reporting to someone that doesn’t understand the issues of trafficking a complex rich media campaign and can’t field an issue that is escalated.

The classic case is the manager saying, “I don’t see what you are so concerned the client wants 3 extra variants on the creative.” When the digital account person knows that with 5 markets and 5 typical online ad layouts plus 5 or so resizes for each, the boss has just agreed to 375 new ad units — all that need to be optimised, tagged, uploaded and trafficked…for tomorrow.

Or perhaps a more fundemental issue like proposing the need for a media plan template change to accommodte behavioural targeting, in-campaign optimisation or templated creative.  On the creative agency side consider our isolated account manager being caught by the big agency creative director (with all the ego this position requires) trying to break up the creative black box asking the solutions be developed collaboratively rather then in isolation by the art director-copy writer  teams.

In the Revolution article linked to above, Kevin Murphy, joint-MD of Zed Media, comments that

It’s clear that many traditional agencies still have some catching up to
do, but they’re doing it fast. Digital specialists will no doubt be
looking at selling up while they still have some real value, or
concentrate on forming close strategic partnerships with larger agency
networks.

I’ve got a slightly different opinion.  Being part of an integrated group has huge benefits, but being an “integrated” team is a disaster.  And I think the next year will prove it when I update the headcount figures.

WPP Moves Beyond, Beyond: Digital Brand Will Cease To Interact

by Joe Mandese1 hour ago

As part of a reorganization that will more seamlessly integrate its traditional and digital media services brands, WPP’s MediaCom Worldwide unit next month will drop its Beyond Interaction brand, and will consolidate all its digital operations under the MediaCom Interaction name, Online Media Daily has learned. The move marks an end to one of Madison Avenue’s seminal digital media brands, and one which WPP acquired in 2005 as part of its acquisition of then Beyond parent Grey Advertising.

http://www.mediapost.com/publications/?fa=Articles.san&s=98769&Nid=51393&p=929055

 

Who's Been Winning?

There has been lot’s of discussion in the creative agency world about the impact of digital marketing and how agencies should respond.  It appears every agency from advertising networks like BBH to traditional DM shops like OgilvyOne to creative hotshops have put “Digital at the Heart of the Agency.”

Only this past May Alastair Reid reported in Campaign a reasonably balanced article about the increase in digital awards being won by traditional agencies, and brought out the classic Goodby turnaround in the US a few years ago.

But whose really been winning?

Looking at the 2008 NMA Top 100 that was just released last week, we see that Digital agencies have seen another year of solid growth — averaging 20% across the list.  In his introduction Michael Nutley also makes a balanced argument for the state of the industry.

But maybe we are being too analytical — if one uses the simple measure of headcount over the last 5 years, we can see where the growth has been and inferr that this represents shifts in revenue.

The top digital agencies have had an amazing run since 2003.  I take 2003 because it is 5 years ago and it was solidly after the collapse in 2001-2.  From ad hoc conversations I think that agencies like AKQA have gone from say 120 in 2003 to over 350 today — that is 191% growth in London alone.  Dare was probably about 60 people in 2003, and now reports having 174.

I’ll need to do more digging to get good numbers but here is a basic table I’ve pulled together from industry articles and league tables and rough memory.  It will be interesting to check in another year’s time.

Agency 2003 2008

Digital Specialists

AKQA London
Dare London
Agency.com
LBI
iris Digital
120
40
30
350 (NMA)
174 (NMA)
115 (NMA)
352 (NMA)
33 (NMA)

Integrated DM/Digital

Proximity London
OgilvyOne
DraftFCB
220
210
282 (ipa)
270
185 (ipa)

Advertising
Grey
JWT
McCann
BBH
AMV BBDO
200 (ipa)
246 (ipa)
245 (ipa)
450 (ipa)
400 (ipa)

Independents

iris
Mother
Crispin
450 (ipa)
125 (ipa)

The End is Near (again)

Shops Stand to Lose in Digital Revolution

November 14, 2007 By Brian Morrissey

Agencies have the most to lose in the new digital order, even more than broadcasters, per industry leaders surveyed by Accenture.

NEW YORK Changing consumer habits, driven by the shift from analog to digital media, are revolutionizing the ad industry. But that could spell bad news for agencies, according to a new study by Accenture.According to 70 industry leaders surveyed by Accenture, agencies have the most to lose in the new order, even more than broadcasters. When asked who would fare worst in the transition to digital advertising, 43 percent said agencies, compared to 33 percent who answered broadcasters. Cable operators were third with 10 percent. No respondents chose search companies or digital ad specialists. IBM

The end of advertising as we know it

IBM Institute for Business Value study

Imagine an advertising world where… spending on interactive, one-to-one advertising formats surpasses traditional, one-to-many advertising vehicles, and a significant share of ad space is sold through auctions and exchanges. Advertisers know who viewed and acted on an ad, and pay based on real impact rather than estimated “impressions.” Consumers self-select which ads they watch and share preferred ads with peers. User-generated advertising is as prevalent (and appealing) as agency-created spots.Based on IBM global surveys of more than 2,400 consumers and 80 advertising experts, we see four change drivers shifting control within the industry.

Advertising v Interactive Advertising

It is a common theme in the traditional advertising world, and direct marketing world, and sales promotion world that creatives come in sets of two. Art Director and copywriter. They work as a team, are hired as a team and even move agencies as a team.

This makes sense when the agency’s work is primarily a concept — it would be a tough job if the creative blackbox had only one lone hipster sitting in a dark corner, eyes rolling back in his head, trying to reason out whether it should be “Did somebody say McDonald’s?” or “Hey, sombody say McDonald’s!”

In this traditional world where what is given to a client is often a print ad or a script or mail pack, doubling up the creative team makes perfect sense. The account team scales based on the complexity of the client. The planner is a senior consultant and can work on his or her own. Design is a afterthought handled by “mac operators” that are part of the studio once the big idea has been cracked. Production just happens. The real magic is at the concept and with the account folk tapping their fingers, it is no wonder the creatives insisted on working in pairs.

So is this still relevant when our work is so much more complex?

A great campaign now has multiple channels, contact strategies that have to be delivered and synchronised over time, technical executions with data dependencies that require NASA-level project management and fifteen thousand different client teams that need to give their input.

In this world is it fair to put the weight of the delivery on even a superstar copywriter and art director? Can we expect them to know if a flash movie can branch based on if-then logic? If the layout breaks all of the information architecture rules Jacob Nielsen has so painstakingly taught the industry? Whether when a customer starts a card application, a promotion should be offered based on home address, income or key benefit? Whether an e-mail can come from a the sales team, and which of 15 key messages should be delivered in the opening paragraph? How to organise and edit 30 pages of text to make a good argument?

Mark Kingdon on Organic’s site says:

Great advertising was often created in “pairs” — a copywriter and an art director. In the digital world, the creation process is more complex. Strategists, designers, information architects, media specialists, and technologists must come together to create great experiences.

Organic Threeminds Blog

The next step is to look at how the digital agencies are structuring themselves — does RG/A have creative teams? AKQA? LBi? We know Sapient doesn’t, just as Accenture has never heard of them, so where will advertising move to?