Close-Up: Live issue - Should digital keep its independence?
By Kunal Dutta, campaignlive.co.uk, Friday, 22 June 2007 12:00AM
Selling out need not result in the loss of a digital agency's entrepreneurial spirit.
Barely ten years ago, the term "digital agency" would conjure up images of technologically gifted geeks coding websites from their bedrooms. But last week's news that Dare, founded in 2000 by Mark Collier, was to sell a majority stake of its business to Cossette, the Canadian-based marketing services giant, was another blunt reminder of how those times have changed.
As traditional agencies scramble to show they have the talent to tackle digital media convincingly, it is many of those small digital shops from the last decade that are now enjoying their time in the sun. In passing up bids from advertising suitors such as Publicis Groupe, the Dare deal is similar in nature to the fortune of glue London, which sold to Aegis for £14.7 million in 2005.
So why are Cossette and Aegis beating the likes of WPP and Omnicom to such acquisitions?
Mark Cridge, the chief executive of glue London, says that having broken through the early years, most digital shops have an ingrained entrepreneurial spirit that makes them reluctant to sell only to bolster another agency's reputation. "As an independent digital agency, you're looking for an owner that will help you grow and evolve on your own terms. Why would you sell to a traditional agency and spend three years turning around its digital department for the sake of that agency's legacy?" he says.
Others such as Rob Forshaw, a partner of Grand Union, assert that for creative agencies, memories of the dotcom crash linger, and the appetite for acquiring a digital company isn't there.
He asserts that the alternative - building talent organically, importing talent and outsourcing certain production elements - gives an agency more control on its operations and is more cost-effective. Little wonder then that Rainey Kelly Campbell Roalfe/Y&R, Beattie McGuinness Bungay and Bartle Bogle Hegarty have started their own digital departments to service clients such as Danone and Lynx with both digital and traditional elements.
But can agencies that cover off digital be successful challengers to the independent digital specialist? Richard Exon, the managing director of RKCR/Y&R, believes so: "The main thing is understanding how the customer is behaving in the digital space and the brand opportunities. After that, it's down to the agency to manage the production to get us there."
But Wayne Arnold, the chief executive of Profero, disagrees: "You cannot detach thinking and execution in the digital space. For an idea to work in the real world, it has to be understood by all parties, from conception to implementation. Otherwise, the final product you'll end up with will be second rate."
For the likes of glue London and now Dare, the question is how much a link to a parent is likely to help its fortunes. With offices in Spain, Australia, Italy, Singapore and Japan, Profero exemplifies the growth that is possible without resorting to the clout of a parent company. Arnold attributes much of this to the agency's independence.
But Cridge argues: "Independent agencies won't have the same security or backing when they're going for big pieces of business. Plus, you can still retain your independent spirit if you have the right relationship with your parent company."
The outcome of global digital pitches such as Federal Express and Guinness will go someway to showing who the client's money is on.
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AGENCY MD - Richard Exon, managing director, Rainey Kelly Campbell Roalfe/Y&R
"Digital touches everything we do and the creation of Saint marks the fact that our proposition is changing. We're building the agency by bringing in people from outside and combining a mix of in-house specialists and outsourcing expertise as necessary.
"The agencies that will dominate digital in the future will be those that can do it well, regardless of whether they're independent or not. There is no one style that will dominate. Some will have an advertising heritage. Others will have a media, direct marketing or digital heritage.
"The key thing is to make sure the agency has the right talent and structure to be future-facing."
DIGITAL CHIEF - Wayne Arnold, chief executive, Profero
"The biggest benefit of being independent is that you're in control of your destiny and clients know that they get 100 per cent passion. As a chief executive, it is easier to change, influence and adapt with market forces.
"When we started the business, we never built for short-term gain nor approached venture capitalists or aligned ourselves with another agency. That said, every business needs its fair share of fortune, and the fact that we rode out the dotcom crash and expanded in global markets with the odds stacked against us is testament to that."
DIGITAL CHIEF - Mark Cridge, chief executive, glue London
"Many traditional agencies with a great legacy are looking for talent, staff and expertise to turn around their digital offering. But most digital agencies don't just want to be the digital department of a traditional agency.
"Glue is as independent in spirit as day one, but part of that is because in Aegis we've found a partner that cherry picks its creative subsidiaries and isn't encumbered by traditional agency structures. Making the relationship work is about having clear vision. By the time we sold to Aegis, we were already a fairly sizable business and knew where we were heading. The deal with Aegis has allowed us to harness the firepower of Isobar."
MATCHMAKER - Debbie Morrison, director, ISBA
"The Dare deal will give the agency the financial backing to grow and buy more talent as well as global leverage, which will put it in very good standing for the growing number of global digital pitches. It also puts it into a very smart portfolio of companies that will take it to the next level.
"There is an assumption that digital shops create communication strategies that will be weighted towards digital. But it's, in fact, the opposite. Many of my clients find that they're getting a completely unbiased view of communications planning and are used to working across the whole communications spectrum."
This article was first published on campaignlive.co.uk
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