Agencies Warned: In Digital Media, Change Or Die

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by Tobi Elkin, Thursday, Mar 22, 2007 6:00 AM ET

DEVELOPMENTS IN DIGITAL MARKETING AND media are happening at such breakneck speed that marketers must prepare to navigate them--or be left behind. The same goes for the agencies that advise them. But the consensus among a panel of experts appearing at OMMA Hollywood earlier this week is that they're not ready, not by a long shot.

"Agencies aren't prepared for where things are going," said Tim Hanlon, senior vice president-Ventures Group, at Publicis Groupe's Denuo. Hanlon was, by far, the most strident of the group. Agency silos, he said, remain the order of the day, referring specifically to the relationship between brand and direct response media.

"Consumers, especially younger ones, if they see something in any form of media, they're going to want to go further with it," Hanlon said. "Agencies should be de-siloing to make that TV expression both a branded and DR vehicle," whether it's a TiVo vehicle or a telescope unit, "a little TV with a DR component," adding: "Is that the direct marketing agency's responsibility or the brand agency's? I think it's both, so why do have two separate groups?"

Good question. The role of the agency will need to change, given the rise of online-based ad auctions, hyper-local media planning and buying services, like SpotRunner and Spotzer, and other emerging media planning platforms.

"Google showed us that search and targeted ad messaging is not only a viable business, but a gargantuan business," Hanlon said. "The holding company model missed it. Now they're scrambling to be experts or to acquire this skill." Hanlon noted Publicis' acquisition of Digitas late last year.

With mobile and search engine optimization, "the reality is that you still have to have integrated agencies and teams. It's a big challenge. People have to be aligned differently. The way we hire and [provide incentive] needs to change, and it can't happen quickly enough," Hanlon noted.

Holding companies are licking their chops at digital investments. However, "making the investments is definitely the easiest thing we do--the hardest thing is to take an investment of any size and integrate it into the agencies and to deliver a powerful offering," suggested Bant Breen, president, Interpublic Futures Marketing Group. "That requires more holding company involvement--or a new [kind of] holding company involvement."

Nick Grouf, co-founder, chairman and CEO of SpotRunner, maintained that agencies, media companies and providers are morphing all the time: "Agencies change but they don't go away."

Breen suggested that the idea that creative and technological solutions stand at polar opposites no longer applies. "It's a messy landscape today ... Digital media staff is working two and a half times longer and harder than the traditional media staff," he noted, citing thousands of media channels and different data feeds. "We need systems to coordinate that process. Truly personalized creative could be very, very exciting."

"The media agency needs to reinvent its business model so that it's much more of a polyglot," Hanlon said. "Agency holding companies risk marginalizing themselves to just focusing on the big stuff. And then it becomes nothing more than a share-shift game. That's not a growth business; the growth is at places like Google."

"The big part of what agencies do is to empower consumers to make a purchase decision, foster relationships, enable transactions and deliver information," added Sean Gold, senior vice president marketing, MySpace. "Traditionally, they've been great at delivering information, but the fostering relationships/enabling transactions needs to improve."