AGENDA: Why don’t Web shops work? - The latest closure of a new-media agency shows that the Web is still a tough medium for marketers to work with. Lisa Campbell reports

The shake-out of the new-media industry shows no signs of slowing, with the news last week that yet another agency has folded.

The shake-out of the new-media industry shows no signs of slowing,

with the news last week that yet another agency has folded.

This time it was Lowe Howard-Spink’s new-media unit, Lowe Digital, whose

clients included Vauxhall. Many argue its demise is a further example of

ad agencies entering unknown territory without the necessary technical

or intellectual expertise.

’It’s not a natural link for agencies to set up a new-media arm,’ says

Martin Child, managing director of new-media consultancy Traffic. ’It’s

a different discipline from advertising, not just because of the

technicalities but because the Internet is a one-to-one medium rather

than a mass medium.’

Yet it isn’t just ad agency ’bolt-ons’ that are suffering. Recent months

have seen a spate of closures which have included independent new-media


New Media Factory went into voluntary liquidation this month after two

failed mergers. The news came a week after AMX Digital was bailed out by

Real Time Interactive after cash flow problems. The list of other

new-media companies that have recently gone to the wall includes Web

Media, Obsolete and Web Ltd, and nearly everyone in the industry expects

there to be further consolidation this year.

So what is happening? Is the industry slowing down after its explosive

growth, or are the companies themselves to blame?

Figures released this week have shown that most online publishers are

still having a hard time selling ad space on the Web, with only around

pounds 1.4m worth of ads booked each month (see New Media, page 15).

Andrew Pickup, Microsoft’s Internet marketing manager, says: ’A lot of

firms and agencies saw the Net exploding and jumped on the bandwagon. Ad

agencies were particularly keen to set up new-media arms to attract

clients. The question is whether they were thinking long-term or whether

it was a knee-jerk reaction,’ he says.

Give it time

Ajaz Ahmed, managing director of AKQA, also questions whether ad

agencies are committed in the long term. He believes the dynamic and

immature industry needs continued investment and the time to fully


Others say the needs of clients are changing rapidly and that agencies

are folding because they are not responding fast enough.

’The closure of a large segment of a market is not indicative of client

demand slowing down, but of companies using the Internet


Instead of using Web sites as company brochures, more clients are

tagging on to existing sites, sponsoring particular sections of content

sites for example,’ says Tim Brown, managing director of Realmedia. This

explains the fall in demand for production companies.

Ahmed believes the fault lies with the industry as a whole. ’I think

what’s missing in our industry is focus on the client. New media is

still a distress purchase for clients. They don’t enjoy it because they

are still confused by it. Many specialist agencies aren’t explaining how

the medium can be used as part of the client’s overall marketing

strategy,’ he says.

Specialists provide technical expertise, but can lack marketing

expertise; for ad agency units it’s vice versa. For agencies to survive,

they must provide the mix of skills clients are demanding.


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