Are digital agencies the new dinosaurs?

campaignlive.co.uk, Friday, 28 January 2011 12:00AM

As media channels become ever-more integrated, it is increasingly difficult to define what a 'digital' agency is and whether they are still relevant. Campaign asks if we are entering a new stage of agency evolution.

According to the new IPA Census, unveiled last week, there are 23 "digital" agencies registered as members of the IPA.

If this strikes you as a surprisingly low number, then you clearly haven't been following the trajectory of the digital definer.

In the lexicon of agency marketing, digital has gone from being a label that distinguished "proper, grown-up agencies" from the flash but agenda-setting upstarts in Hoxton, to a term desperately claimed by anyone with a lone staffer in a corner toying with pop-ups, to a basic part of most agencies' DNA.

As such, it has lost much of its meaning along the way. In a communications world where even the most traditionally analogue media (posters, for example) are fundamentally digital, the word has become superflous.

So you might imagine that those 23 IPA member agencies still tagging themselves "digital" represent rather a steep decline from the dotcom boom years, when pure-play digital shops were launching at a cracking pace. Not so. A decade ago, the IPA had no "digital" members. But then you don't need reminding that ten years is a very, very long time in this space.

With digital so much a part of the industry establishment, then, has it become actually demode to describe an agency as "digital"?

Does it either protest rather too much a skill-set that should arguably be a given for any communications agency now, or suggest a rather one- dimensional offering?

It's certainly true that many agencies from the digital generation have massaged their positioning to suggest that they are now rounded communications agencies, albeit with digital at their core. And one of the best - Dare - kicked off 2011 with the ultimate in digital repositioning, merging with its sister creative agency MCBD to create a new hybrid: a symbiosis of the old(ish) and the new(ish).

Of course, there are plenty of specialists whose business is still firmly focused on digital technical expertise: web builds, app creation, digital production. Digital tech is what they do, often all they do. Thank goodness.

Because for all their keenness to sell digital services, most creative agencies have little interest in taking on digital production.

But if you're in the business of offering communications advice, of solving business problems through consumer insight and creative execution, then isn't it time to ditch the digital tag?

Are pure-play digital agencies facing extinction in a digital world?

Perhaps. But that's not to say it's "game over" for those agencies with a digital birthright. Many still have a convincing digital edge over their old analogue counterparts as the newmedia latecomers still have plenty to prove before they can convince clients that digital disciplines are as embedded as any other.

On the other hand, many of the old pure-play digital agencies still have plenty to prove before they can convince clients they can do all the traditional advertising stuff - from thinking to creative execution - as well as the old-timers.

WHAT ADLAND'S PALAEONTOLOGISTS THINK

AJAZ AHMED, Founder and chairman, AKQA

The Computer Electronics Show used to be the annual pilgrimage for geeks. Today, you're just as likely to find ad group heads walking its halls in search of the next media revolution. We say: "Welcome." It's only an enthusiasm and passion for digital that can create the best work and move the industry forward.

I believe Campaign could recognise the vibrancy and sophistication of digital agencies by focusing on single awards, not signalling the end of their existence. It speaks of digital agencies' greater standing with clients and brands. "AKQA is the University of Digital" is how the chief marketing officer of one of our clients described the agency to me a few years ago. And recently, Apple hired three people from AKQA because of a sense of shared values. I'm not sure there could be a better compliment from our client or from Apple.

There was a meeting at Goldman Sachs last year and one of the analysts asked me how I felt about traditional agencies poaching our team. I replied that the day they stop approaching our talent is the day that I need to worry. Ad agencies with a traditional heritage talk a good game, and so they should. When it comes down to it, though, they know in their hearts and minds that they struggle to deliver and change the mindset. Most new-business enquiries we get are from disgruntled clients of traditional agencies. This is the main reason why agencies with a digital heritage remain acquisition targets of holding companies. It's also why they are growing in double digits while traditional agencies make do with minuscule growth.

It no longer matters what heritage an agency has as long as they remain relevant and continue to add value to the client's brand. AKQA is proud to be what could be Campaign's last Digital Agency of the Year. Purpose-built for digital, we hope to be among the first to be named Campaign's Agency of the Year.

STEPHEN WOODFORD, Chief executive, DDB

The pure digital agency risks being a dinosaur. So does the pure ad agency, pure direct agency, and so on. Just look at the way the market is moving. Ad agencies have been buying or merging in digital skills rapidly, if they haven't had them for years. Digital agencies are broadening skills or merging with other disciplines.

Look at creative awards for digital. Top prizes at Campaign's Big Awards were shared by ad agencies with strong digital skills (Bartle Bogle Hegarty, Abbott Mead Vickers BBDO, Mother, DDB), as well as the specialists. The top Cyber Lions at Cannes last year went to ad agencies (Wieden & Kennedy and DDB).

Or innovation. The best is rooted in deep consumer insight, again where advertising/digital hybrids are in a great place. For me the future for digital is inextricably intertwined with all the other disciplines - just like how the ideas are consumed in the media.

Ideas that people want to play with, participate in and pass on is the ideal outcome. "Social creativity" is what we call this at DDB. These ideas are best derived through the fusion of all the skills in one organisation. TV advertising can be so much better when the digital is created in the same team, with the same agenda. Likewise, digital programmes are infinitely more successful when conventional media are used as a catalyst.

Teams like this will be the winners, rather than businesses in a single discipline, working in isolation. At DDB, we've put "creative technology" at the heart of our creative department, itself a mix of advertising, integrated and digital specialists. We think this mix of outstanding specialists, working together in a collaborative and open culture with the right business model (one P&L and management team), is the best model for future success.

MARK CRIDGE, Global managing director, Isobar

Any agency of any shape, size or sensibility that fails to adapt to the requirements of the modern marketing age will by definition become a dinosaur. This applies as equally to digital agencies as it does to the Tyranosaurs and Brontosaurs of a more traditional bent. The fact is that as all media has become digital, and increasingly social, the main requirement of any agency has been to expand their knowledge and insight across the full extent of what is possible.

It's less about knowing the specifics of one platform over another, rather better to understand which platform, channel or technique is relevant at that point in time and crucially knowing how best to utilise it to extend a relevant and engaging experience between brands and their consumers across all media.

This is something in my limited experience I've found digital agencies are particularly open-minded to. That said, this is more a defining characteristic of what it means to be a modern agency, rather than digital having any particular exclusivity to this skill. This is certainly borne out by the rapidity with which the dinosaurs of the traditional world continue to hoover up digital talent!

The effect this has on digital agencies is two-fold. First, agencies such as ours become increasingly broad-minded and create work across the full gamut of media. Second, other digital agencies become increasingly specialised around a particular aspect of one technology or channel. Neither approach is particularly old-fashioned, and in both cases you'll find agencies very much at the cutting edge of what is possible - hardly criteria that qualify them as potential dinosaurs.

So, in summary, digital agencies are not the new dinosaurs. Instead, agencies of all sorts are modernising at the same time as some digital specialists become more adept in a series of niche endeavours.

IAN PEARMAN, Chief executive, Abbott Mead Vickers BBDO

There's a scene in Monty Python And The Holy Grail where a king is showing his son the rolling hills of the surrounding countryside that will one day be his, and is taken aback by the stammering answer: "But ... father, I ... don't want it."

This must ring a bell with digital agencies. Rolling along, generating some very healthy revenues making lots of great stuff, the accusation that somehow they've failed by not grinding every other agency model into the dust says more about the inflated self-regard of the above-the-line business than it does about them. God forbid that someone should not want to play our game.

But this burden of unreasonable expectation has always weighed heavy. Ten years ago, they were heralded as the Napster of our industry; the revolutionary force that would turn the old order on its head. It didn't get much dafter. There was nothing very disruptive about applying the traditional time-costed business model to a new channel.

Others predicted that as the world became ever more digital, they would - inevitably - take the helm. But, again, that wasn't going to happen without significant adjustment to their plans.

Why on earth should they have been expected to make disproportionate investments in top-class brand strategy skills when all of their profit came from granular management of coders? Founders had little incentive to cross-subsidise such adventures when clients were unlikely to trust (and pay for) such advice from an agency model premised on single channel execution ("the solution is a website, you say?"). Much easier to let the tide of production revenue sweep them to an exit plan.

The digital business has a fine tradition of pragmatism - illustrated by the growing numbers working directly with ad agencies to provide quality production capability. This makes good business sense and will keep extinction at bay for a long time yet.

JOHN OWEN, Deputy chairman, Dare

The reason it is becoming increasingly anachronistic to talk about "digital" agencies as a category is that it pre-supposes the existence of analogue ones. And, in 2011, any agency that has not embraced digital is either dead or dying.

Does that mean all agencies have a similar expertise in digital? Absolutely not. It has proven unusually difficult for "traditional" agencies to acquire this expertise. Why is this? Partly because "digital" isn't easily defined - it's not just a channel, not just a technology, not even a discipline - and partly because it's evolving so quickly that even some specialists struggle to keep up.

The truth is that, for everyone in our industry, change is now a constant. Anyone who thinks it's OK to still do things the way they did them a couple of years ago is sorely mistaken.

Digital agencies are no exception to this. Ultimately, they must decide whether to evolve into brand-builders, to pursue a direct marketing focus, or to embrace one or more of the digital disciplines - web design, eCRM, mobile production, and so on - in order to clarify where they can add value for clients.

Different clients will need different services and have different priorities. The trick for bigger agencies will be flexibility in the face of these various requirements.

At post-merger Dare, our agency is now built around a number of centres of excellence, all of whom are willingly collaborative with each other and with those of other agencies. This diversity is the key to our being able to build brands in totality, but it also enables us to continue to operate as a specialist for some clients - deploying the appropriate centres of excellence for our remit. We think this approach is the future - at least, the foreseeable one.

STEVE HENRY, Creative consultant; non-executive director, Albion

I found myself asking this question in a blog last year - and it's a fascinating question. The defining thing about a dinosaur is in its inability to adapt - unless you believe the theory that they were wiped out by a meteor hitting the Earth, which is a pretty hard thing to adapt to.

The swathe of top digital agencies that cut through London from 2000 on - agencies such as Glue, AKQA, Dare, Albion and Lean Mean Fighting Machine - changed the industry forever. They said to the big, bad agencies, if you don't want to do this stuff, well, we'll just help ourselves to your lunch, thank you very much. But now that a lot of chips have been nicked off a lot of plates, the big agencies are finally catching up in the only way they know how - by buying in the talent grown elsewhere. However, this makes them unwieldy and expensive, because the project teams in those agencies are now tenor 12-strong.

The Canadian agency Taxi was founded on the principle that a project team should be able to fit into a taxi, but the big agencies need stretch limos. So I reckon they're the ones most at risk. Of course, all agencies need to get their heads round a new landscape of social media rather than websites (spaces, not places), but the younger ones seem to be adapting quicker.

The dangers facing the digital agencies are complacency and greed (as Jay Chiat famously said about Chiat Day: "How big can we get, before we stop being good?" And selling out is the Judas kiss of death to creativity), plus a sort of stodginess that can set in after seven or eight years. But if they can fight those threats, they could still see off the lumbering giants of adland.

This article was first published on campaignlive.co.uk

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