Is there a future for Interactive Agencies?

The Creative Services industry is now entering a pivotal period of change. This change is largely being driven by the rise of the Internet as a medium for mass marketing.

What's behind the change? No surprise: the internet. U.S. interactive-agency revenue rocketed 23.1%, driving the increase in marketing services. But digital is more than interactive shops; it's an integral part of marketing services from direct to promotion. "Interactive is huge," says Chris Weil, chairman-CEO of Momentum Worldwide, a promotions agency owned by Interpublic Group of Cos. "If anybody in marketing is not a big part of interactive, they won't be around much longer." -- Advertising Age http://adage.com/article?article_id=116341

There have been a series of pivotal moments of late. The loss of the Nike Running account by W+K (attributed in part to a poor digital track record) is just one of these moments. It is clear that both media dollars and creative dollars are moving to the web.

Agencies and networks of agencies are taking a series of different approaches to this challenge.

Some are looking to replicate their current structure/model by adding services offered through acquisition.

The $1.3 billion purchase of Digitas by Publicis was the largest acquisition over the past year by a marketing organization, but it was far from the only digital deal. Since January 2006, the Big Four have bought, or made investments in, more than 20 interactive ventures. -- Advertising Age http://adage.com/article?article_id=116341

Others are simply trying to handle the perception challenge (W+K's redesigned website as an example) and hoping that this all blows over or that they can figure something out along the way.

The final option is to identify the needs of clients in this area - and the opportunities presented by this shift - and create a new structure and model that is optimized for these needs and opportunities. This is the approach that will produce the most opportunity. It is, however, an approach only suited to companies that are aggressive, flexible and (most of all) talent-focused.

In looking at the opportunities, it seems clear that the primary current "gap" lies in the area of digital (or interactive) strategy. No-one has much doubt on HOW (tactical execution) to do this sort of work. The challenge is that there is little or no ability to handle either the WHY (strategy) or the WHAT (tactical planning).

Clients have seen this issue - and are very nervous about it. All clients realize that everything is changing (for them). The rules are changing, the challenges are changing -- the audience is changing and the distribution is changing.

This frightens them. A lot. For good reason.

The control relationship and control structures are changing.

So they are going to their agency partners for help -- and their agency partners are letting them down.

An agency that can not only handle this perception issue - but that can actually deliver strategic direction and a sense of comfort to their clients is going to have a huge advantage over the competition.

It is highly likely that we will see a continued drive toward convergence - where eventually the (long time and arbitrary) separation of "digital" from "traditional" will vanish. Given this, it is equally likely that we will see a reshuffling that ends up with a "tiered" model across all mediums -- with the traditional production houses on the bottom (doing production on a specific-media basis), agencies in the middle (with a mix of "full service" large agencies and boutique houses) and strategy on top.

The (first) question is - how is this strategy delivered?

It seems likely that (long term) we will see one of two models. Either you will see the middle tier expand up into the top tier (as has been done in the past with media planning), or you will see the emergence of cross-offering and cross-media strategic consulting firms as the top tier. It is actually most probable that you will see a mix of the two.

The (second) question is - who will do this work?

One of the challenges here - and one of the causes of this situation - is that the dot-com crash resulted in a huge percentage of the experienced talent from the services firms in the digital space leaving the business. As a result, there is a signficant shortage of experienced talent available. This creates a situation where not only is talent scarce and at a premium - but many of the mistakes made are being repeated and the lessons learned are having to be relearned.

Digital talent dearth is alive and well: Whether it was agency creatives agonizing over post-conference dinners about the lack of interactive talent coming out of traditional ad schools or panelists lamenting how that dearth is driving up the cost of hiring, it's obvious more people with digital skills are needed. Bob Moore, chief creative officer at Publicis USA, said the agency doesn't hire people without digital in their portfolio, the hoped-for net effect being not two classes of creative but one. The challenge is getting people to think about it as a blank slate, he said, and "the irony that creative people are the slowest to recognize this is grating on me. Terribly." -- Advertising Age http://adage.com/digital/article?article_id=116393

The (third) question is - what does this mean for folks who work in Interactive?

Well.... if you have Talent (with a capital T) and you have experience (real, battle tested knowledge and a track record) and you can deliver strategy (with intellectual rigor and actual insight and basis) then you might be about to see a huge bump in your career.

If, on the other hand, you have Skill but no talent - or don't have experience or are highly tactical... well... then it's likely that you're going to find your employer becoming a Production House (focusing on interactive work) or you're going to be working for an agency as a specialist or you're going to have to learn a lot more about traditional marketing and creative Real Fast.


Exciting (to me at least).

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