Agencies - All these people want your work. But which will be the best fit?

Ad agency? Web specialist? Technical expert? Direct marketer? Choosing the right new-media steward for your brands and business doesn't have to be a headache, as long as you know what you want, says Robert Dwek.

What a mess: hundreds of agencies offering their services to marketers who want to get on the internet, but all with wildly different backgrounds and credentials. It's no wonder that many clients are profoundly confused by it all.

The trouble with the early days of the internet has been the ridiculously low cost of entry. Anyone with a Mac and a modem can set themselves up as a 'web specialist' - and they have. The tiniest and youngest of companies have heard internet investors talking about a 'paradigm shift' and valuing the likes of Yahoo! and Netscape at mindboggling multiples, so they too become empire builders from day one. They refuse to accept that boring old business logic should limit their aspirations. After all, this is the internet, where companies can be all things to all customers.

Well, this euphoric phase of the internet's life is already coming to an end, as boring old business logic makes a comeback. And for the agencies, this means thinking much more about their positioning. It might not be necessary immediately, because the market is still growing at a very brisk pace. But they'll have to reconsider their raison d'etre sooner rather than later.

As things stand, agency types range from those with a strong marketing background - such as ad agencies, direct marketers or design consultants - to those rooted in computer and internet expertise. The problem for clients is trying to harness both talents and then creating something more than the sum of its parts.

Many clients need a lot of handholding from their existing main ad agency, so they choose to delegate all their internet work. The ad agency will often subcontract out that work to the newer internet specialist companies, but a number of ad agencies have developed their own in-house new-media operations.

There are, however, a growing number of internet specialists which see themselves as strategic partners and demand direct access to the client.

One such is AKQA, which claims to be the largest independent agency in the UK. Managing director Ajaz Ahmed claims that his company could not have come up with its much-praised and highly original internet work for clients such as BMW, Durex and Virgin if it hadn't been given access to top-level strategic thinking from within those companies.

Ahmed also makes an interesting claim about the limitations of many marketing agencies when dealing with the internet. "Many advertising agencies think it's like TV, radio or press - in the sense that once you've defined the medium, it then remains basically unchanged for ever and a day. This gives them the illusion that the internet can be added to their existing list of media and therefore understood." Which misses the point, he says, because the internet is still such a new medium that it's impossible to define properly and is "very much what you make of it". The traditional agencies, in Ahmed's view, are too eager to get on with the message when they should be thinking more about the medium.

David Fletcher, senior consultant at AMX Digital, another leading new-media agency, says that although he's happy to work with ad agencies and the like, "it's better for clients to use us directly if they feel we fit their needs". As his kind of agency has a deeper understanding of internet 'culture', he claims, its thinking is authentic, rather than 'superimposed' from outside. And like Ahmed, Fletcher regards the internet as a moving target. "The development of digital brands raises a whole range of new issues," he contends, "and companies like AMX have focused considerable effort in addressing these issues."

For other agencies, the key is to offer a balance of marketing and technical proficiency. Jon West, marketing director of IS Solutions, whose clients include BP, Thomas Cook and Guinness, says that for clients spending up to œ100,000 he is able to "offer a service that caters in equal measure to marketing and technological needs". He warns, however, that a more specialist expertise might be required for larger budgets.

Direct marketing agencies have been "shockingly slow" to get into internet services, says Rob Noble at DRA Interactive, a wholly owned internet offshoot of a direct response specialist: "I'm astonished that more direct marketing agencies haven't taken this area seriously and that most have done nothing at all."

"I think the web is heaven-sent for direct marketers, it's what we've dreamed about for years: one person sitting at a computer, looking at your information and responding immediately," adds Noble. The web is so suitable for direct marketing agencies, he argues, because it is not a broadcast medium. Moreover, the skills needed to get someone to visit your web site and then to establish a relationship with them "have much more in common with direct marketing skills than with ad agency skills".

One major UK client that uses its direct marketing agency for internet work is Ford. The company also uses its main ad agency, Ogilvy & Mather/Mindshare, which has an in-house new-media division. While DM agency Wunderman Cato Johnson helps Ford run its web site, O&M does media buying and internet strategy and also advises on future trends in digital TV.

Ford's manager of direct marketing, Nichola Dady, explains why it has no direct contact with any of the new-generation net agencies: "We're very keen to make sure that all our new-media strategy is completely through-the-line with everything else we're doing. It has to be co-ordinated with our offline work. Both of our existing agencies have very strong new-media departments, which give us access to cutting-edge innovation. It's the best of both worlds."

Mudimo Okondo, executive director and founder of Zone, whose clients include Rank Entertainment, Orange and Sony Playstation, runs an agency which has been happy to bill itself as an internet production house, as several do. This sends out the signal to ad agencies that the new kids are not in competition with them, but are happy to work on a subcontractual basis.

However, Zone now wants to turn itself into more of a full-service agency, offering greater strategic input to the client. "We've seen loads of situations where the client's existing ad agency farms out internet work and then pushes the overall price up because of incremental costs," he says. "At the same time, the client loses out from the lack of communication about strategy between the more powerful ad agency and the much smaller internet company. It's not in the client's best interest."

Although he wants Zone to be more of a stand-alone agency, Okondo says that he is happy, for the moment, to work closely with other agencies.

"People are generally much more relaxed about working in networks and alliances than in the 80s, when everything was so aggressive and competitive," he says.

There are, of course, a number of independent new-media operations whose founders have marketing backgrounds. Mark Curtis at CHBi, for example, was previously in sales promotion. "This company was built very much around the need for strategic marketing, production, design and technology all working together and comfortably," he says. "It means that everybody is driving towards the same goal and learning from each other."

Some clients seem reassured by this. As Ian Nairn, project director at ICL Interactive, notes: "I'd probably always favour a marketing company that had started to gain some experience with using technology, rather than the other way round."

Like many new-media agency people, Curtis criticises those ad agencies that view the net as another form of television: "They're working off a model which is driven by what they know, and that's mainly TV production.

They want to own the creativity and strategy and farm out the production.

But the web has far more strategic implications than TV and therefore needs a different model."

As things shake out, he predicts, ad agencies will concentrate more exclusively on banner ads and sponsorship, and leave web site development to others.

And interactive specialists on the whole will play a greater role in design and internet strategy, but are likely to withdraw from the media-buying side.

But it's not just clients who are confused by the plethora of agency types out there, admits Curtis. "You never know where the competition is coming from and one of our biggest problems is identifying who we're up against," he says.

From the clients' perspective, one of the essential things to get clear is their motivation for using agency A rather than agency B. For example, if they decide to stick with tried and tested traditional marketing agencies, as Ford has done, then they must know that this is a positive choice, rather than one driven by a fear of the unknown.

A recent pitch, recalled by one new-media agency, highlights this dilemma: a large Swiss pharmaceuticals company wanted to develop its internet presence.

It shortlisted two large and familiar PR consultancies experienced in that sector, but with little experience of interactive work. The new-media agency, which was vastly superior in this respect, wasn't even shortlisted.

There's no simple answer or shortcut to finding the perfect internet agency, but the problem is being compounded by laziness and ignorance on the clients' part. New-media agencies all state that clients should not expect their existing ad agencies to act impartially when there is so much at stake.

Other agency alternatives leaping into this melting pot include management consultants. But their notoriously high fees are already redirecting quite a lot of internet budget. "The main problem with management consultants is that they are totally unable to implement any advice they might give," complains one new-media executive. "Their technical knowledge is extremely limited, which increases their costs even further."

Compared to the management consultants, the new-media operations affiliated to ad agencies start to look cheap. Traffic Interactive is part of the AMV advertising group. It is part-owned by sales promotion agency Clarke Hopper and PR agency Freud Communications. But Traffic creative director Simon Richards claims that the company is fully independent in spirit and a match for any of the stand-alone new-media agencies. "I know many of these places have been formed by people with backgrounds in sales, design or technology. In TV, you'd never get a cameraman to direct a shoot and the principle applies here. I wouldn't entrust key marketing decisions to people who are clearly driven by more limited skills. The last thing you'd ever get at Traffic is some nerd droning on about how the internet works," he adds. "All we're concerned about is fulfilling the client's broader objectives. We never talk about technology. There seem to be so many agencies out there jabbering on about Java, but nobody's interested."

What clients are increasingly interested in doing is comparing notes with each other on agency performance, but this isn't easy in such a young industry where supply struggles to meet demand. Carol Russell, media communications manager at Allied Domecq, believes that industry guidelines would help, particularly on fees. "It would be great to get together with other heavy internet users and compare case studies - to get the real story, rather than the official presentations at industry conferences," she says.

Revolution would also like to get more of the 'real' stories, so drop us a line. The fight against client confusion begins here.



QUESTIONS TO ASK YOURSELF WHEN DECIDING WHO TO USE

How much do I want my agency to educate me as well as to assist me?

How important is it that my online brand fits seamlessly with my offline brand?

Will the quality of work be jeopardised in any way if my appointed agency subcontracts to another agency?

And how much added value will my appointed agency bring to the outsourced work?

Does the agency have the right balance between marketing skills and technological skills?

Can I see why I might be paying more for agency A than agency B?

If I'm going to go direct to several different internet specialists, will they be able to co-ordinate their activity with each other and with my existing marketing agencies?

If I'm sticking with my advertising agency, design consultancy or direct marketing agency, do they have good contacts and relationships with internet production companies?

If I'm using a digital or a new-media agency, what are their marketing credentials and are they happy to work with marketing agencies if required to do so?

If I'm using a new-media agency that's part of an advertising group, how independent is it?



CASE STUDY RISKCARE'S BRUISING EXPERIENCE

Paul Wilson, head of marketing at RiskCare, a derivatives software company with large merchant banks among its clients, has had a bruising encounter with the internet agency world. Choosing the right partner was, in his words, "a very long-winded process".

With RiskCare only a few years old, Wilson was keen to build a web presence.

But as its products are complex, his main concern was that the web site didn't give a misleading impression of what the company was all about.

So he went looking for an agency that could not only handle the production side of things, but might also play an important part in shaping the brand.

"I wanted to work with people who were creative and reliable and I quickly ruled out people who seemed too preoccupied with money." Quotes for the work averaged œ20,000, but ranged massively from œ4,000 to œ80,000 (an ad agency). "As we are a financial institution in the City, it assumed we had money to burn," recalls Wilson. Another ad agency "seemed more suited to working with people who sold trainers and had a high street presence. It was also into timing meetings down to the nearest second".

But even without the money madness, he came up against a much more pervasive problem. "Many of these web agencies didn't want to be judged on the quality of their design, but on the quality of their long-term strategies. They wouldn't settle for a short-term project. I could see this was a cushy way for them to secure future revenue streams, but it was not what we wanted, and it would have left us far too much at their mercy. We wanted to grow things at our own pace and as our technology developed." Wilson quickly whittled his list of agencies down to a shortlist of three, all three of which proved disappointing. "One refused to show us any designs because it wanted to be judged purely on strategy; another had simply done an online version of our existing brochure; and the third came up with something incredibly conservative, when our brief had been urging radicalism." So Wilson returned to the list and picked New Media Factory. It had failed to impress before because it wasn't as pushy and didn't seem as hungry as the others. But its laid-back and thoughtful approach now seemed a refreshing contrast.

"It helped that it was familiar with banking technology," says Wilson, and offered a nice balance between being "not too marketing and not too boffiny".



THE PROS AND CONS OF EACH TYPE OF AGENCY

Stand-alone specialist:

- Can provide a fresh view on marketing problems.

- More comfortable with technological issues than a traditional marketing agency.

- Better able to keep up with the rapid pace of change and innovation on the internet.

- Less able to integrate internet work into existing marketing.

- More risky as very little or no track record as brand guardian.

- Might be trying to do too much in-house in what is an increasingly specialised area.



Ad agency that subcontracts:

- Takes responsibility for making sure that internet specialists toe the brand line.

- Can source the best internet expertise, allowing the client to concentrate on other things.

- Can cherry-pick the most appropriate internet agencies.

- May be financially inefficient: not vetting third-party fees, duplicating subcontracted work, or adding a mark-up to subcontracted costs.

- Might be creatively inefficient, duplicating work done by subcontractors or failing to communicate the strategy clearly enough.

- Might be resistant to radical new ideas from subcontractors.



Ad agency with an in-house specialist:

- Will be extremely well-placed to act as online brand guardian.

- Should be able to ensure a seamless continuity between offline and online work.

- Should be financially and creatively efficient.

- Might have a very blinkered attitude towards new media, shunning experimentation among its clients.

- Could lack the net expertise to cover every eventuality.

- May not be price competitive with either ad agencies who subcontract or stand-alone new-media agencies.

Stand-alone specialist from a specific marketing discipline: ICould offer the best of both worlds - firm marketing foundations combined with technological know-how and a fresh perspective.



- The agency's independence should mean that its founders have great confidence, self-belief and originality - all qualities which could greatly benefit the client's brand as it sails into uncharted waters.

- Should be fairly priced, because it will be familiar with the fee structure of traditional marketing-services agencies.

- Could turn out to be neither one thing nor the other, rather than excelling in marketing disciplines or net expertise.

- Might be culturally constrained by trying to do too much in-house.

- Could be limited by its marketing skills - for example, good at design but poor on advertising or direct marketing.



CASE STUDY BMP KEEPS STRATEGY SEPARATE FROM PRODUCTION

BMP interAction is wholly owned by ad agency BMP, which accounts for 40% of its client base. Shared clients include Budweiser and Vodafone, while clients solely using BMP interAction include Associated Newspapers, ICL Interactive, and BMG Interactive.

Vodafone asked the agency last year to work on a web campaign for its youth pager, called Zap!, including online sales. It handled the media planning and buying and the promotion, but subcontracted some of the web design work to an agency called NetsitePro.

"We never do the design or programming in-house," says interAction business director Jason Goodman, "and we always subcontract production because the industry is moving so quickly and you need very particular skills for each job. At the same time, the production houses have really started to specialise, and we tend to work with six or seven at a time." Goodman is happy with this because "ultimately, clients want insightful strategic advice and someone to implement it - who does the implementing is not their concern". Ad agencies should get into the internet more heavily, he says, but "we would like to think we're pushing our industry forward".

Sally Fenwick, senior marketing manager at Vodafone Paging, says she "feels close" to the agency because the advertising side has handled Vodafone's offline brand for so long. That said, interAction is a very separate entity from BMP. As for the outsourcing: "My main concern was that whatever they came up with met my brief. How they did it was up to them." InterAction's links with BMP give it a good background knowledge of the Vodafone brand, says Fenwick, "and of what we're trying to achieve".

Did the outsourcing create financial inefficiencies? "No", says Fenwick, "we had a given budget for the project and an exact idea of what the web site had to do for us, and interAction met both targets comfortably." Although it's still early days - "we're looking at the internet as an experiment" - she wants to use BMP interAction again "for another project in June".

The production company, NetsitePro, seems happy enough to work both with advertising agencies and without them. "We have no problem with them bringing work to us," says a NetsitePro director. "It works better in some ways if we deal directly with the client, but we don't feel disadvantaged going through BMP because they keep us fully involved in the process."



CASE STUDY FULL SERVICE OPTION NETTED BAILEY'S FOR LOWE

Lowe Digital is an in-house new-media operation within ad agency Lowe Howard-Spink. Its creative director, Deborah Loth, stresses there isn't any official policy against outsourcing work to other internet specialists, but that in many cases most or all of the work is usually tackled under one roof.

One recent project which required minimal outsourcing was for Bailey's, a brand which LH-S had handled for some time. Its owner, UDV, wanted a web site, so Lowe Digital helped to create one to take the brand forward, rather than just trying to replicate its offline values. "I'm a great believer in the power of the internet for creating communities," says Loth.

Launched a year ago, the site now has a number of highly interactive features. As a result of user feedback, new features have been added, most recently an e-commerce facility which sells a range of previously unavailable branded items such as glasses and mugs.

Loth likens internet work to film making, where contracting out is not a problem, but has no patience for net production companies with a no-can-do attitude or which focus on technicalities at the expense of strategy.

Her client, Ron Ng, Bailey's international marketing manager, says UDV considered using other internet agencies, "but we felt it was a natural tie to use people who were part of our existing global ad agency. LH-S understands our strategy".

His primary purpose for the internet work was for it "to bring our offline advertising to life and build a direct relationship with the consumer".

Has he missed out by not going to a stand-alone net specialist? "I don't think I'm losing anything," he states. "Lowe Digital is strong technologically, but I'm more concerned that the strategy is right. Technology is great, it's why you're there in the first place, but you must make sure it's not wagging the strategy." Accessibility is key for Ng. He believes consumers are turned off by "too much high-end stuff" and that making the brand accessible to them is "much more important".

The idea that in-house net specialists must be weighted more on the advertising side than on the technical side "sounds like stereotyping", says Ng. And the explosion of net agencies brings more opportunities for everybody in the industry, including clients. "It is a more confusing picture, but that's not necessarily a bad thing. The agency world was so neat and compartmentalised, now it's much less so. That's an improvement in many ways."



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