How do you get the most out of your online advertising? It is one thing to come up with a magic formula for where digital should sit in the overall marketing mix, but quite another to suggest how much you should spend on a banner campaign, say, as opposed to your search-marketing budget.
Most businesses will have their own answers to this, but, clearly, brands need to decide who to charge with making these decisions and managing digital advertising? Assuming it is the brand or e-marketing manager or, increasingly, the marketing director, who has responsibility for a company's internal digital brand, how should they put it into practice?
There is an argument for putting all of your digital functions in-house. Most recently, British Gas cut the number of its 'support' creative agencies to work alongside lead agencies CHI, WWAVRC and EHS Brann. The energy giant believes this approach will create greater efficiencies and cost benefits in its use of creative partners. But, although it has reduced its 30 offline agencies down to just three, it has made even more dramatic decisions with its online work.
Functions previously carried out by Tribal DDB, which worked on online marketing, are also to be integrated into the work performed in-house and by the core agencies.
Charlie Herbert, head of marketing communications at British Gas, comments: "This has been a thorough process and we are pleased that we have identified excellent partner agencies to work with us as we continue to develop our business."
In 2003, on the other hand, the COI - one of the biggest advertisers in the UK - drew up a roster of agencies to handle its online marketing requirements on behalf of the government.
Many brands and businesses will find it efficient to simply appoint a lead digital agency with overall responsibility for its digital marketing - Levi Strauss has taken this route.
Helene Venge, head of digital marketing at Levi's Europe, explains that, apart from creativity and a strong strategic approach, it is important that it has a lead digital agency that can work with other partners. "They really have to be able to collaborate with other agencies and understand where digital fits in with other media and advertising. We do require our agencies to truly understand the brand inside out."
Levis Strauss has had a long-standing relationship with digital agency Lateral in Europe. For most of the time since 1995, the company has been its lead digital agency. Venge believes that having a lead digital agency, which can take control of certain aspects of the company's work, helps her to manage her own time and needs. In no particular order, she cites these advantages: the ability to build a relationship, visionary thinking, innovation, speed of turnaround, and the ability to come up with simple, effective, solutions.
"People skills and leadership are as important to have as creative skills. It is about being pragmatic about what is and what isn't possible," she adds. Ultimately, however, Venge says it is important to have trust and transparency.
Monster, an online recruitment service, has advertised heavily on television in the past and therefore has more above-the-line considerations than some digital brands. Traditional advertising giant Saatchi & Saatchi is one agency that has had a leading and important creative role in its campaigns.
Kim Walma, head of marketing at Monster Worldwide for the UK, points out: "In the ideal digital world you would have one point of contact, but it does depend on your business and the remit." However, she says this is a two-way process - it is not just about a brand dictating its digital needs. "We need efficiency, and we need to have someone who can extend our brand and needs to the digital arena, but the more value they can proactively add and the more ideas they can suggest, the better."
"There is a clear trend for a lot of the larger clients, which we deal with directly, to reduce the number of partners they have," notes Vanessa Kent, corporate development director for Value-Click Europe. "That can leave one agency or one provider."
Areas such as search and affiliate marketing may lead to someone else being brought in. "The growth of search marketing in the last couple of years has seen the rise of some search teams in-house," Kent remarks.
Walma agrees that it is important to get search right and this can mean that agencies have to develop partnerships for the client. "As there is more to find online, it is important for your business to be able to find you online. If they can't find you, you can't get them to take the next step."
Heinz is another branding giant looking to one main supplier to fulfil all its digital requirements. Digital agency Swamp has just created a new web site to support the rebranding of Heinz Baked Beanz (see news, p15).
Paul Mallett, managing director of Swamp, explains the relationship between the brand and its agencies: "Heinz has a policy of having specific agencies sit around the decision-making table. The lead agency is also the lead creative agency. This is the strategy of the current Beanz campaign, of which digital is a part." Key to this, he continues, is that each of the agencies involved has a respect for each other's skills. "You have to get everyone talking to each other," he advises. "Do not keep them apart or brief them separately, and make it clear that each of you is not fighting for a different part of the budget."
He adds: "This is a real strength when you look at the way we operate with Heinz. And it is a lot of fun as well."
Zentropy Partners, which is part of the Interpublic Group, works with the Royal Bank of Scotland. Alastair Duncan, managing director of Zentropy, explains the company's role: "They need us to optimise their online presence. They have an in-house team, which is in e-commerce and communication. In terms of a supplier, they need us to provide creative thinking and look at the user experience and, for example, their online advertising."
However, what skills and services should this agency be expected to provide? Mallett, who used to work at a full-service agency, Brand New Media, says that trying to provide everything digital in one place is near impossible. "It made sense to have a full-service agency when, say, with search engine-listing nine years ago, all you needed was to organise the odd listing. Then we found we were even offering a video-editing facility - we would look at where the value lay and often it wasn't with the full-value commitment."
Zentropy has a range of clients, from Unilever to hp and, as Duncan says: "Not all of our clients require all of our services." He also notes that some aspects of an online brand, such as basic content management, can be handled in-house by the company itself.
But what those aspects are depends on the business model of the brand, its needs, its budget and its head count.
Duncan says the situation with digital marketing is similar to the rise and fall of in-house advertising departments, which disappeared with the advent of commercial TV in the 1960s. "There is pressure on marketers and brands to build good communications with consumers that have resonance. The management and maintenance of those can rest with the client team." As he explains, this is carried out in a variety of ways. Microsoft in the UK tends to outsource whereas British Airways has a larger in-house team. "It is hard to anticipate, but it is important. You cannot always shove a process down the client's throat. Clients don't want to sign off a 'complete function specification'."
William Corke, managing partner of online marketing agency Harvest Digital, which works with brands including Tesco Personal Finance and United Biscuits, says: "It's our experience that clients are not buying digital services in a consistent manner. Many of them manage some key areas like paid-search in-house. Most like to pick and choose from a number of specialists on a relatively informal non-rostered list. This pattern doesn't seem likely to alter in the near future - at least as long as the market continues to change, develop and grow at its current pace."
It may be client needs that drive business, but the ability of agencies to provide a service is also important. In the last five years alone, the type of agencies has changed as the market has moved on. Duncan recalls: "The interactive business began with the main proposition that they would claim to show how to operate your digital marketing and even how to reorganise your supply chain."
Marcos Richardson, European director of measurement company WebtraffIQ, says agencies can have their own worries when it comes to specialisation: "Due to the nature of the internet and related technology, you cannot afford to be a specialist agency in SEM, for example, for some clients.
"Not having any, or limited, understanding of the other channels leaves agencies exposed. Agencies need to understand and appreciate what the other channels and mediums are, and what they can and cannot do (their limitations), in order to deliver cost-effective, efficient, integrated campaigns. This is increasingly important and crucial when connecting and integrating off- and online campaigns and media," he adds.
Like Mallett, Duncan thinks a more focused approach makes sense in 2004. "We do understand the internet and communication, and how people should use the net. It's like the changes in the media industry: they have moved from implementing a planning, cost and buying strategy to advising clients on what they can do. If we can't do it well, we won't do it."
The consolidation that continues to be an over-riding factor in the digital agency market has an impact on this, of course. "There should be no reason for a client to go to a number of agencies for different elements of a digital marketing campaign," says Stephen Priestnall, managing director of Syzygy, whose clients include Air Miles and Mazda.
"The focus on online advertising consolidation follows a similar model to traditional advertising. As the media planning and buying techniques enter mainstream media-agency portfolios, much of this work will be integrated with other above-the-line media-planning activity."
Priestnall adds: "Overall, the ability to deliver effective online creative becomes a function of marketing creativity and efficient production techniques, and this is where digital agency specialisms will be needed."
Priestnall continues: "We will see businesses looking for a single place to manage customer insight and, as a result of this, we will see research companies, DM and database agencies all migrating into the digital marketing space. The outcome will be a real power base for driving effective media metrics and email marketing activity."
Duncan points out that, as an agency that has already established itself in the digital marketing space, it is cautious about offering any completely new services. "We run a profitable business and we have to, so we are relatively cautious about moving into a new area."
Clearly, there is neither a right nor wrong way for brands to set up an agency network in general, but each brand must decide which way is the best for it to operate. However, even this is not an easy decision for some.
As Mallett points out: "There are still a lot of big companies at a very formative stage of their online strategy."
Kent notes that it can be tempting for a brand, particularly one in the FMCG sector, to simply run its online advertising strategy along the lines of its offline work.
"Online is so complex that it is not like setting up your press, media and radio planning together. You might need to look at affiliate work and search marketing. It can be complex and comprehensive and I wouldn't recommend that. In some ways, that approach is a little dangerous."
UNILEVER GETS SOPHISTICATED WITH MAGNUM ON THE WEB
FMCG giant Unilever started working with Zentropy Partners in 2000. It was one of the digital agency's first client wins.
Alastair Duncan, managing director at Zentropy, had previously been involved with Unilever's interactive brand communication centres in New York and Amsterdam. His team created the award-winning Captain Birds Eye web activity and original 'veg porn' Peperami site, which was commended in the 1998 Revolution awards.
"We've seen how Unilever's needs have changed," says Duncan. "It has gone from 'we think we need a web site' five to six years ago to a more sophisticated communications approach, which uses digital."
In 2002, Zentropy did a key campaign for Persil and last year it worked with Unilever when the Magnum ice-cream brand launched its Seven Deadly Sins range. Its site took users into interactive applications celebrating sloth, lust, greed and so on via 'sin rooms', and a competition with Capital Radio and Heat.
Zentropy says the site exceeded expectations in terms of visits and ROI by 6,500 per cent. Duncan says: "It's a question of having a good planning model and applying that with other parts of the campaign."
Oliver Rudgard, senior brand manager, at Magnum, says: "Zentropy's thorough knowledge of online media has greatly assisted in driving the interactive component of our brand communication."