As the great and good from the digital advertising world tuck into their pudding, Campaign's editor Claire Beale wastes no time getting down to the nitty-gritty. She wants to know what the key challenges are that agencies face today.
"Recruitment," one agency chief says, and the room falls to silence. The bottom of the glass bowls suddenly become fascinating.
Finding the right people
Chris Clarke, the executive creative director at Digitas London, ventures to explain this sudden change of mood. "Recruitment is fairly terrible across all areas of digital," he sighs. "But it's particularly bad in some areas of creative production because that's where the specialist skills come in, whereas the conceptual thinking can be taught relatively easily. Planning, too, is in a real crisis because planners really do need to understand digital in detail."
Agreement is nodded around the table: the general consensus is that there is not a great deal of quality in the digital planning sphere and that many above-the-line planners simply don't get it. Gray Sycamore, the director of digital, Europe, at The Marketing Store Worldwide, concurs with Clarke. "One thing that agencies are notoriously poor at is investing back into skills development. The lack of technical skills within creative agencies is a big issue," he says.
Clarke's theory for the dearth of talent is that "it's not aspirational enough to be in digital. Colleges aren't really talking about it. Everyone just wants to make TV ads, even though all those people running above-the-line agencies know that's a problem. More work needs to be done to get the message through that digital is the place to go."
Lee Wright, the managing director of Dare, is candid about who exactly she believes is responsible for promoting digital careers: everyone sitting in the room. She lays down the gauntlet when she says: "I would challenge people around this table to say what they are doing about this. Because - although we are all talking about it and we're saying it's the biggest issue in digital - people aren't actually doing a great amount to tackle the problem and attract really brilliant talent."
George Nimeh, the managing director, digital, of Iris, agrees and equally does not pull any punches when pointing the finger of blame at all present. "The shortage of talent that we are experiencing now is directly caused by a lot of people who are sitting here. We let lots of people go who were very passionate about digital (when the dotcom bubble burst). That's the reason we're paying a premium to find people - because there aren't many people with four or five years' experience. They've either got ten or two," he says.
The mention of "paying a premium" strikes a chord with the group. It prompts many skyward looks and groans about the inflated salaries that agencies are being forced to pay to secure talent, as well as complaints about the raft of calls they receive daily from aggressive recruitment consultants.
Dan Collins, the head of digital at Arc Worldwide, says he receives around 14 calls from recruitment agencies every day, which is a huge drain on his time. The other big frustration for him is that "if you find good candidates, you have to wait three months for them to show up". "You have to plan well in advance to see if you can fit that person in your budget and if he's a good fit. You have to make a commitment long before you're really sure," he says.
Nimeh also supports Wright in her assertion that the industry needs to do more and focus on educating the market about the digital sector: "I used to network all the time in the 90s. I used to go to all kinds of events in New York. There's not as much happening these days and there should be. And that's an industry responsibility. It means taking time out from our busy schedules to actually do something to promote education about digital." Again, there are nods of approval all round, accompanied by comments about how the staggering number of candidates who come for interviews at agencies do not understand what is actually involved in a digital role. Asked the standard question, "why do you want to work in this area?", many are stumped.
Perhaps Nimeh and Wright are bold in taking their contemporaries to task on this issue because both their agencies are investing time and money in cultivating digital talent in the Iris Academy and the Dare School.
Nevertheless, some of those present don't believe digital schools are the answer because, as Kristin Berg, the planning director at Euro RSCG 4D Digital, says: "People who are passionate about digital think in a different way and you can't train that."
But as well as encouraging young graduates into the industry, there's a general acceptance around the table that digital agencies need to embrace talent from traditional agencies too. This is true even if these candidates are purely out to get quick digital experience before returning to above the line, James Clifton, the European planning director at Agency.com, argues. "In the past year, the number of high-calibre CVs has opened up compared with two years ago. We're receiving them from very seasoned above-the-line planners, which is great. These people bring with them really good planning skills, even though you know in your heart of hearts that they're just coming to get their digital stripes."
Taking the lead
The second-biggest challenge digital agencies are grappling with is where they fit into the fast-changing media landscape. There's an overall feeling that now is a pivotal time for agencies with digital expertise; most believe that they have an opportunity to take the lead ahead of all other client suppliers in terms of setting a brand's strategy in a way they never have before. The problem is, they don't know how to go about staking out this territory.
Jo Hagger, the joint managing director at glue London, spells out the problem when she says: "We're struggling to define what this leadership needs to look like through a period of enormous and rapid change. There are lots of different opinions about the model we should be using, whether production should be in-house or out-of-house, what the dominant media consumption is going to be in a month's time (let alone a year's time) ... That's what makes digital so exciting, but also what makes it so difficult to show clear leadership to our clients. That's what we're collectively struggling with."
The perennial "should we be specialists?" versus "should we be generalists?" debate is inevitably revisited at this point in the conversation. As usual, opinions are divided. Some believe there are many agencies that are desperately trying to be Jacks-of-all-trades.
Russell Marsh, the managing director at Agency.com, believes these outfits will end up being master of none and get their comeuppance: "The difficulty for these agencies, especially those above the line, is that they're trying to get hold of so much. Their entire focus is on integrating all parts. That's a lot for them to learn. I don't believe they will be able to wrap their arms around all of it."
Ultimately, Rob Forshaw, a partner at Grand Union, says, it will come down to ideas. He predicts that agencies with an ideas-led culture are going to be the ones that dominate in the digital age. But that's not to say that the agencies that dominate will necessarily be digital ones.
In fact, when Beale asks whether agencies see themselves as being "digital" or merely "good" agencies in five years' time, most put their money on the latter. The thing that gives digital agencies the edge at the moment, and that they are conscious they must keep hold of, is their ability to understand technology and turn this understanding into pitch-winning concepts.
As Forshaw says: "We have benefited from the shortage of advertising industry knowledge about digital, particularly around technology. As that phase passes and traditional agencies skill up, the challenge for us is working out what it is that we do so well and how we're going to maintain some kind of leadership. At the moment, we're leading, but how long that will last is an interesting question."
While some commentators believe digital agencies are at an advantage because they can help clients navigate the technology, others, such as Matt Dyke, the head of planning at Tribal DDB, believe they are not making the most of their technical head start. "In the past two years, I can count on my hands the number of creative uses of technology in the marketplace. Technology needs to be right up there with art directing and copywriting."
And time is running out. The pressure is on digital agencies to prove their worth to clients. As Norm Johnston, the president at Digitas London, says, digital agencies are currently "getting the benefit of the doubt because most clients feel they're not getting the solutions and advice they need from traditional agencies.
"Clients are looking to us at the moment. That's a huge responsibility. We've really got to step up and deliver the goods because, if we fail this time, it will be a disaster."
Shifting agency structures
Digital agencies can potentially steal a march on traditional agencies in terms of their business models and team structures. As Clarke explains, when he speaks to friends working in above-the-line agencies, the problem is not that they don't "get" digital. "The problem is that the models in which they operate don't allow them to do it. That's where we've got a chance to lead on digital creative," he says.
So what do the creme de la creme of digital believe is the best structure going forward?
Dyke has already touched on the fact that the way creative teams operate needs to change. He suggests that technology experts need to sit shoulder to shoulder with creative and art directors, but adds that planners are essential in the mix too. This opinion garners much support around the table. As does the theory that agencies need to develop a much more flexible, fluid way of working in which all team members work easily with other specialists working on a client's campaign, both internally and at other agencies.
Mark Iremonger, the head of digital at Proximity London, even calls for media and creative to be reunited, as in the good old days of advertising. "As part of this unfolding of integration, media and creative are going to have to get back together," he says. This is greeted with yet more approving looks.
Nick Blunden, the UK managing director of Profero, says his agency's best creative work is conceived by creatives working alongside media experts. "Having media and creative sitting side by side during the planning phase enables you to come up with a wider variety of ideas," he says. "In the digital world, where there are so many more permutations of what media is, media experts are coming up with very strong creative ideas. You have to have that interaction between the two early on to come up with those ground-breaking ideas."
Indeed, the word that crops up most often is "collaboration". Everyone agrees that clients want agencies to work more collaboratively than they've ever done before. "While we're really far away from understanding whether it will be a one-stop shop that delivers everything, or specialist agencies delivering different elements, one thing is clear: we will progress by not wanting to take over the world, but by at least being able to understand and play well with others," Nimeh says.
According to the GT managing partner and creative director, Marc Giusti, digital agencies are better at playing nicely than their above-the-line counterparts. He argues that this is because collaboration is in their blood: digital agencies have always had to work with other platforms and media, while traditional agencies have not.
"We've always had to be a part of everyone else's day, whereas many of the old farts at ad agencies have no understanding of why on earth they would want to be collaborative. It's a cultural issue for them and they're defensive, which is a real problem, as well as being unreasonable and very boring," he says.
In the long term, he speculates, this attitude will put traditional outfits at a disadvantage but, in the short term, their fight to land-grab looks set to continue. And, while it does, true collaboration will prove elusive on many client accounts.
Indeed, throughout the lunch there are many sideswipes at the "old farts" working in traditional ad agencies. Bartle Bogle Hegarty is singled out as an "old school" type agency that thinks it can simply poach a few digital marketers, press a few buttons and suddenly become "digital". However, when Saatchi & Saatchi Interactive's managing director, Neil Hughston, hears about this (he wasn't able to attend the lunch), he is enraged. He accepts there are quite a few "dinosaurs" in advertising "whose egos are bigger than the planet and think that creative still revolves around broadcast". But he argues that equally unhelpful attitudes are rife in the digital world: "The dinosaur's digital counterpart is the chippy creative director who thinks creative heritage and brilliant creative concepts have no place in the interactive world. That's bullshit. They're just as much arseholes as the dinosaurs."
The discussion turns to clients and their role in this new working style. It emerges that, in many campaigns, it is the client who takes the lead on collaboration, rather than the digital agency.
"It's not the industry that is driving collaboration; the clients are forcing us to work in that way," Iremonger says. Marsh relates to this, adding that on some accounts it's clients who are saying to their agencies: "Come on, guys, you all have to work together. It's our brand. Stop mucking about and work together and come up with an idea and you'll all take something out of it."
However, clients prove to be a divisive topic. Some agencies believe client knowledge of digital is shamefully poor and holds the discipline back. One agency head - who will be spared identification should any of his clients be reading this - says: "There are some smart clients out there, but there are also a lot who aren't very smart, but think that they are."
Similarly, Utarget Networks' strategy director, David Michael, is stunned that some clients haven't even grasped the basic principles of digital marketing. He relates an anecdote about meeting a senior FMCG client responsible for signing off online media schedules. "When I said I work for an online advertising network, she said 'what's a network?'. She's buying online media and she's not even aware of networks. It's that kind of lack of knowledge client-side that makes it very hard for us," he says.
Other agency heads, such as Wright, believe that comments such as this are "doing clients a disservice". Alistair Millen, the senior planner at Agency Republic, agrees. He finds all the client-bashing going on around the table "quite odd, considering they pay our bills. There seem to be a lot of agencies complaining, but no-one is coming up with huge amounts of innovative solutions to train clients." Agency Republic offers clients tailored digital training sessions. Rather than bamboozle them with PowerPoint presentations, the agency believes clients respond much better when advice is personalised to them. For example, an Agency Republic executive will sit down and ask them about their interests. If they say sailing, for instance, the executive will then show them how the internet can help enjoy their passion more. It could be by writing a blog, reading specialist blogs by sailors, or uploading their photos to Flickr to share with their crew.
"Some of our clients are in their mid-thirties or forties with families. They haven't got the time to keep up to date with technology," Millen says. "This kind of training helps them get enthusiastic about digital. Then they can start to understand the teenagers who are constantly online, living their lives on social networks such as Bebo. It's then easier for us to sell in new ideas."
Consumers taking control
The final big shift brought about by the digital revolution and as identified by the lunchers, is that the balance of power has changed. Whereas once clients and their agencies were brand guardians, that mantle has been passed to consumers in the digital age.
The internet has allowed consumers to group together and become a strong force in influencing their peer groups about which brands to buy and which to berate. Social networks such as MySpace, community knowledge sites such as Wikipedia and the litany of blogs all provide rich breeding grounds for today's increasingly vociferous consumers to air their points of view. The growing mistrust of advertising is fuelling the growing importance of advocacy in the marketing mix.
According to Clifton, it's this "wisdom of the crowds" that underpins the fundamental shift in power. He believes an agency's role now is not to trot out interruptive ads that scream for attention on a web page, or that simply replicate a TV ad on a computer monitor. Rather, it's to come up with ways to "create a role for brands in people's minds by involving consumers in our communications".
It follows, then, that the other key role of the agency of the future is to create campaigns that consumers talk about. With digital agencies' understanding of technology, they should be able to identify where and why those conversations are happening. But, as Hagger points out, they've been slow to grab this opportunity. "Digital is still dominated by search, affiliate deals and banner ads, when there's this enormous area of online PR and buzz marketing that is really interesting. It doesn't feel like anyone is leading in this area at the moment," she says.
So, as Campaign's lunch draws to a close, resolutions have been made, gauntlets have been thrown down, soul-searching has been done and some group therapy has been enjoyed by all. "It will be interesting, if we're all sat here in a year's time, to see if the situation has moved on," Beale says in conclusion. Dyke adds his final tuppence-worth and gets the last laugh: "Are we allowed to leave in between, or is Campaign going to keep us all here?"
TOPICS AT A GLANCE
What the digital sector thinks about ...
- Finding talent is tough, especially in creative production and planning
- The industry must do more to make a digital career more aspirational
- Agencies need to invest more in training their workforce
- Digital agencies are at a pivotal moment in their evolution: they have an opportunity to carve out their territory as clients' key advisors in the digital age, but they must get to grips with how they can do this
- Digital specialists need to leverage their technological advantage better before they lose it
- There will be no "digital" agencies in five years' time; only "good" ones
- Agencies that succeed will be those that are collaborative, flexible and "play nicely" with other disciplines
- In many cases, it's actually clients and not agencies that are driving collaboration
- Agencies need to educate both clients and potential recruits about digital if the discipline is to move forward
- The balance of power has shifted: consumers - not clients or agencies - control brands in the digital era
- Agencies that understand this and come up with campaigns that involve, rather than interrupt, will thrive.