TOP 300 AGENCIES: Finding a niche

2002 saw many standalone shops folded into their parent agencies, as digital tried to define its role within advertising.

The new-media industry spent 2002 trying to find its feet after the thrashing it suffered in 2001.

An important focus for above-the-line ad agencies was defining the role of digital within advertising itself. A few years ago, when it seemed like new media was going to take over the world, many ad agencies launched standalone digital operations to capture the eagerly anticipated revenues.

But following the dotcom bust two years ago, many questioned the raison d'etre of standalone digital agency brands. Especially as the average spend on new-media executions continued to fall. As a result, 2002 was the year of cost-cutting and integration.

Saatchi & Saatchi Vision folded its standalone division into the main agency, and Havas Advertising followed suit: Arnold Worldwide Partners' digital arm, AMX Communications, merged with the new-media agency Zinc and rebranded as Arnold Interactive UK. BMP DDB also merged its two interactive agencies - Tribal DDB and Billco Digital Design - under Alison Parker and Jane Cunningham as joint managing directors.

A common strategy in 2002 was to fold digital into direct marketing. IMP rebranded its below-the-line and digital operations as Arc. Similarly, Publicis united its digital and direct divisions, while M&C Saatchi folded its digital offshoot into its direct marketing arm, LIDA.

But while a combined offering is sensible, it can seem as if it's doing little more than paying lip service to the idea of a truly integrated offering. The merged operations need to prove that they are motivated by more than cost-cutting.

When media agencies merged, they too had to work out the best options for their digital offshoots. The merger of Zenith and Optimedia meant uniting ZED, Zenith's direct operation, with both interactive@optimedia and Zenith Interactive Solutions (ZIS), making Jeff Hyams the managing director of the merged operation.

Mergers also mean redundancies. Often it was the most senior management positions with the highest price tags that came into the firing line.

In 2002, many high-profile figures left agencies, and were either slow to be replaced or not replaced at all. First up was Interpublic Group's full-service new-media shop, Modem Media, which lost its managing director, Tim Sexton. He left in June and had still not been replaced by the end of the year.

Ogilvy Interactive also took a blow when its head, Tim Carrigan, departed.

Carrigan had been an significant force at Ogilvy Interactive: it was his former company, NoHo Digital, that WPP acquired in 1999 as the foundation for a digital offering for Ogilvy & Mather.

However, new media began to show maturity and resilience with solid work in 2002. The adverse market conditions seem to have driven creativity, leading to innovative rich-media executions taking the place of the bog-standard banner-and-button campaigns. A clutch of digital planning and buying agencies, such as i-level and Mdigital, helped to raise the bar with clever and effective campaign schedules. I-level picked up a Campaign Media Award for its work for COI Communications on behalf of HM Customs & Excise. The ad appeared at the online point of purchase to target people trying to purchase cheap cigarettes via the net. The smart agencies also made the most of partnerships with media owners such as Emap that really understand digital and its potential.

It was also refreshing to see a groundswell against intrusive advertising formats. This was particularly the case for the unpopular pop-up. The feeling seems to be that advertising must be balanced with consumer interests to drive long-term success over short-term gain. This was mainly a US-led initiative, with the likes of Ask Jeeves, the women's portal iVillage and AOL uniting against pop-ups. At the moment, however, most UK media properties aren't in a strong enough position to bear the loss in revenue that would result from a complete ban.

Media owners do appear to be acting more responsibly. For a long time, the big sites that attract the lion's share of traffic tended to lord it over advertisers and the wider agency market alike, particularly when the going was good.

So when a media owner such as Yahoo! UK consults and then listens to what advertisers says, it should benefit the industry as a whole.

Another good sign for 2003 was a growth in activity by consumer goods advertisers, who were always seen as slow on the uptake when it came to digital media. The digital debut of McDonald's, which launched its first mobile and digital push in a tie-up with Disney to promote the film Monsters Inc, was a major event. Online work for Xbox was also a creative highlight of 2002.

Another promising sign was the performance of Emap - one of the most forward-thinking media owners in terms of embracing new media. It achieved what some had thought impossible: its new-media operations broke even, although this did follow several years of almost continual restructuring.

It can't be denied that there was plenty of bad news for the sector in 2002. But this was inevitable after the bloated days of hype. And yet, there are some encouraging signs of life. Take Wheel's acquisition of Abel & Baker, giving the agency stability and some creative clout. Everything is in place for this agency - and the new-media industry at large - to move forward. Not least because there is an enhanced awareness of the measurable benefits and cost-effectiveness of the medium compared with more traditional advertising.