NEW MEDIA: SPOTLIGHT ON ONLINE AGENCIES - Online agencies weather the storm by employing flexibility. Online media has grown in a year that other media has declined

Things, as they used to say in election campaigns, can only get better. Actually, that's a little unfair where online media is concerned - because things were never quite as bad (in revenue terms anyway) as some people assumed.

Reliable figures are, as always, hard to come by, but Internet Advertising Bureau figures suggest adspend in the UK grew by 7.1 per cent in 2001.

That's nothing compared with the triple-figure growth rates recorded around the cusp of the millennium, but it's still a hell of a lot better than the 10 per cent decline (averaged out across all media) that the offline market recorded last year.

On the other hand, that relatively good performance didn't stop the online agency sector taking a real pasting. Which, you could argue, was incredibly unfair for a sector that was actually still pulling its weight. A sector deemed to be vital to the whole future of the advertising industry and deserving of a bit of protection.

So what have we learned as we now contemplate happier times? How did the strongest of the survivors survive - and are they now best placed to inherit the next growth wave? There's surely more than a little luck involved in staying the course, isn't there?

Robert Horler, the managing partner of Carat Interactive, doesn't think so. "No-one has survived on sheer luck, he says. "One of the most important factors from our point of view is all about having an understanding of the real world in which advertisers operate. Not enough new-media businesses have fully addressed that in the past. For me, the past year has been about an industry growing up. It's about understanding what the client really needs and then being in a position to deliver."

Ajaz Ahmed, the chairman of AKQA, has a similar outlook.

"We're lucky that AKQA has an unfair share of brilliant people and clients that want brilliant work, he says. "It's the people that make the agency and make the work. So that's the biggest priority, to hire the best people we can. First and foremost, AKQA is dedicated to ideas and the passion to create great work for our clients, he says.

A common assumption over the past 12 months or more is that the big agency groups will eventually inherit this market if they can manage to hold their nerve - whatever they do. They have the deep pockets needed to survive when the going gets tough and to invest when the time is right. And ultimately, after all, they "own the client - or at least the big multinational clients.

Nigel Sheldon, the managing partner of mdigital, MindShare's digital arm, says: "Last year remained a strong year for us, first because we were working closely with our integrated clients - such as Ford, Volvo and Nestle - as well as showing MindShare how digital fits in, and the return on investment it can contribute. We've also benefited in that we invested early on in people and systems and support, so we have been able to continue to offer a robust service. The evidence of that is there to see in the awards we have picked up."

Of course, the independent specialist agencies tend to be sceptical about the integrated bit. They point to the fact that online has often been "integrated into the direct marketing wings of the big agency groups. That, they imply, could be a huge mistake.

Andrew Walmsley, the chief operating officer of i-level, points out that the internet is no longer a niche medium. For instance, Yahoo! now has almost the same reach as a major mainstream property like the Daily Mirror.

"Here's a dangerous idea - the internet is an advertising medium. It's an advertising medium just like TV is an advertising medium. Just because you can measure response doesn't mean it's just a direct response medium.

Look at the research undertaken by Unilever in the US, showing that levels of awareness, brand recall and purchase intent can all be boosted by adding internet advertising to a campaign, Walmsley says.

He predicts that this will be the dominant theme of the next phase - more advertisers will want to use the internet as an awareness- driving medium. Some agencies, he believes, will struggle to understand this.

"There is now more understanding in the client community of the potential for digital media than there is among agencies. In fact, they are deeply unhappy with the provisions their agencies make now in this area, Walmsley insists.

But Rob Norman, the chief executive of Outrider, points out that excellence really has nothing to do with size, structure or ownership.

"A good big 'un is always going to beat a good little 'un. And actually, being big and acting small is the best place to be, because this area does undoubtedly take a lot of touch and feel. It's true that there is a great deal of connectivity between digital and direct - you only have to look at how they do things at Wunderman or Ogilvy in New York to realise that. But they also have digital specialists doing their own thing too.

The important thing is that digital people are invited to the table early and in reality success comes down to getting the balance right," Norman says.

Ken Frakes, the managing director of Zinc, tends to echo much of that. Attitude is the key here.

"Flexibility, he says. "That's the main thing we have to take from what happened last year. The attitude previously was to grow as fast as possible and I think what we've discovered is that there were some agencies that tried to do things they were not really focused on. The industry is really maturing and it's now much more professional.

Now we're all a bit more focused we have to deliver what's appropriate for the client - and flexibility will be important in doing that."

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1 Job description: Digital marketing executive

Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).