Marketing's first survey of new media agencies reveals rapid growth and shifting requirements from ever more sophisticated clients. If anecdotal evidence suggests that the new media sector is undergoing a period of extensive change, the statistics in Marketing's first ever New Media League Table provides strong supporting evidence. No fewer than 20 companies report triple-digit percentage growth figures for 1999 over 1998, with many more reporting strong growth during 2000. The past 12 months have seen major consolidation and shake-out too, with lots of merger and acquisition activity as agencies seek the alliances they need to compete on a global basis.
New media company pres.co, and on- and offline agency Foresight, merged in the summer, creating a company with 380 staff, the UK's second-largest new media agency based on 1999 turnover figures, with a total income of pounds 17.4m. Ninety-five per cent of its total turnover is accounted for by new media work, and it is ranked second, with a new media turnover of pounds 16.5m. In the table its 1998 turnover figure is an amalgamation of the figures for both companies.
Nucleus, independent since its formation in 1979, merged with the Swedish company Adera Group in September. The merged group has 650 staff. 'We are building on Europe's strengths in digital TV, WAP, strategy and branding, and with ten offices in seven countries, we are able to give the personal and culturally sensitive service our customers demand in a maturing environment,' says Nucleus chairman and managing director Peter Matthews. French advertising group Havas was also on the acquisition trail again, adding circle.com to its portfolio of new media agencies, alongside ehsrealtime and AMX.
Top of the league
Despite all the merger and acquisition activity, however, it's an independent agency, AKQA, which finds itself sitting pretty at the head of the league tables. The distinctively-titled AKQA, founded in 1995 by chairman Ajaz Ahmed, grew from pounds 14m turnover in 1998 to pounds 21m in 1999, and has picked up a string of new business wins throughout 2000, winning ten of the 12 pitches it has entered so far.
With 100% of its work accounted for by new media, it won a pan-European web project for Energizer, the battery company, in January; a life-style and e-commerce portal project for Saga in April; a Kit Kat site for Nestle Rowntree in May; and the pounds 1m Lloyds TSB internet bank, Evolvebank.com, in September. The company had planned to float in October of this year, but that idea has been scrapped for the moment. The company says it will come to the market by 2002 as originally planned.
'Independence enables focus and freedom,' says Ahmed. 'AKQA has remained independent so it can focus on what it does best: delivering outstanding solutions for clients. Our independence from a parent organisation has helped to ensure that the company is in control of its own destiny and it has the freedom to make investments that are right. Our objective has never been to be the biggest, only the best.'
The agency, Ahmed says, has avoided the temptation to grow too fast and deliver poor service to clients, which can result in high staff turnover and lay-offs. 'By doing so,' he says, 'the company has ensured that it manages to provide consistent levels of client service and remain loyal to its staff through both boom times and slow growth.'
In a sector that has sprung up from nowhere over the past couple of years, it's no surprise to see some huge growth figures, especially where the percentage rise is based on a modest starting point.
Topping the fastest growers table is Fi System Brand New Media. Fuelled by a number of pan-European account wins, including Durex and Procter & Gamble, plus acquisitions, the company's total turnover rose 756% from pounds 653,811 in 1998 to pounds 5.6m in 1999. It forecasts impressive growth figures for 2000 too, with turnover expected to come in at around pounds 11m.
Fi System says it is working on building the web agency concept in the UK, embracing IT, strategy and consultancy, across new and traditional media, and its focus for the next year will be to strengthen its IT back-end solutions and skills.
Geography and service
'We believe agencies that are capable of delivering a true full service to clients will be well placed to secure the large projects with bigger budgets,' says UK managing director Simon Wadsworth. 'As the industry continues to change and mature, customers will demand ever-increasing levels of geographic and service coverage. Our position as one of the largest web agencies in Europe puts us in a strong position to meet our clients' needs.'
Other notable growth statistics come from Razorfish, with total turnover up 550% year on year to pounds 7,158,000; and Absolute Internet, up 320% to pounds 1.2m, from the 1998 figure of pounds 400,000. Absolute says that its growth can be attributed to the explosion of activity in the business-to-business (B2B) e-commerce sector - 75% of its work is B2B - and the resultant demand for e-commerce expertise. The agency gives much of the credit for its high client retention to its customer service and project teams and its content management system.
This is software that Absolute says can be extended with a range of plug-ins and also enables its clients to control their own web sites. The agency says it is particularly suited to e-commerce and online retail and can power intranets and establish password-protected areas in both front and back end. An e-mail plug-in enables proactive client/customer contact, while an interactive plug-in allows users to post information on web pages.
Absolute also sets great store by site promotion. Its site promotion department was initially an extension of its web development work, but Web Site Promotion @ Absolute Internet is now a dedicated department operating independently - and it will soon become a company in its own right. 'Web sites have to be located quickly and easily on search engines or the creative and technical efforts that go into their design and build are wasted,' says Absolute director of site promotion Jason Russell. 'We deliver high rankings on the major search engines, provide detailed monthly statistics and continually advise clients on ways to maximise their web presence.'
Another big mover in turnover terms is MultiJac. The company has been around since 1994, but experienced major growth between 1998 and 1999, with total income up 400% from pounds 250,000 to pounds 1.26m.
MultiJac managing director John Simpson believes that as the new media industry grows up, the winners will be those companies that can most successfully marry old technology and new. Simpson says: 'As the market matures, the survivors will be the ones that can integrate the traditional creative and marketing skills with the new technologies to satisfy increasingly sophisticated demands for more effective communication and business information systems.'
Going for growth
Another agency pleased with its growth is Global Beach, whose total income rose by 88% between 1998 and 1999. The company opened a flagship London office in April and a New York office in September, and says that as it moves into 2001, it will continue to focus on integrating wireless communications, developing B2B software that 'knits together mobile communications and e-commerce with brand'. In the final quarter of this year, it will launch its Keycast GSM software, supplied on an Application Service Provider basis, which offers instant online audio.
Global Beach chief executive Clive Jackson says that in 2001, time, or at least the consumer's time, will be of the essence for new media agencies and online brands. 'The big consumer commodity is time - or the lack of it. The ability to cut to the chase will be a determining factor for new media delivery in 2001,' he says.
Jackson's views are echoed by James Dix, financial partner at The Team.
Dix says that The Team's work with the government on projects for the Department of Further Education and the NHS Management Training scheme required it to conform to government guidelines and has brought the issue of accessibility to the top of its agenda. 'We now use government accessibility standards as a base specification for all our work, unless the specific nature of the content demands a different approach,' says Dix. 'There's no point in designing a great-looking piece of communication that only the few can view. These guidelines mean fast, efficient sites with smart architecture, user-focused design and clever code.'
The past couple of years have seen several new media business start-ups.
Some of the newer agencies were unable to provide turnover figures for 1999 so could not be included in our tables this year, but they may figure strongly next time round. Xxist com, for example, started in August 1999 and at the time of compiling the survey had no audited figures on which to be ranked, but the company says it expects to hit a turnover of pounds 7m for the year to March 2001. Asylum.net, formed in January, is in a similar position, but expects first year income of around pounds 700,000. And while Panlogic's total turnover for 1999 may look modest at pounds 260,000, the company points out that its audited 2000 figures stand at pounds 2m.
Panlogic specialises in online marketing, but does not design or develop web sites. The company has developed a number of proprietary technologies, including web seeding systems that it claims enable its clients to get to the top of search engines. It has also developed 'Secure Socket Technology', which allows it to produce virtual scratchcards, trading cards and lottery games. Clients include United News & Media, Honda and Kelkoo, and the agency says it intends to roll its technologies and network into Europe in the next six months.
If 1999 was the year of the internet start-up then 2000 might be seen as the year that the old economy fought back. Established companies moved onto the web with a vengeance. As this multi-channel model becomes the norm, the integrated agencies that can advise companies on their strategy both off- and online are beginning to push the benefits of the integrated approach.
'Web site consultancy, design and build, carried out in isolation from the overall brand and communications strategy of a company, is a dangerous business approach,' says Bernard Guly, director of integrated agency View.
'We feel that agencies such as View, which have an in-house resource offering their clients the full end-to-end solution, from strategic brand development through to implementation via both online and offline media, coupled with back-end systems integration consultancy where appropriate, are the agencies of the future - all others will eventually become obsolete.'
IS Solutions, meanwhile, says it is more concerned about a different kind of integration - between the graphical front end of web sites, and the systems integration and technical consultancy for implementation and integration of back-office systems.
'As companies develop their e-business strategy, the need for an agency to offer a combination of these two skills has become more important,' says IS Solutions total internet solutions product manager Phil Presland. 'The age of flat, first generation, corporate PR web sites has long gone and traditional agencies that have embraced the internet as merely another advertising medium will find life difficult.'
Edwin Mitchell-Finch, director of digital media at PSD Associates, sees the integration of new media with old as inevitable and says the tendency for new media to be viewed as a separate communications entity will eventually disappear: 'With the proggression of interactive television, interfaces for mobile phones and hand-held technology devices, new media design agencies are spreading their skills further and this will continue to grow,' he says. 'Standalone digital media agencies will gradually come back into the fold of multi-discipline design groups as digital media has a greater impact on design and communication channels.'
Several companies noted significant changes in what clients are demanding.
'We are doing a lot more consultancy than we were 12 months ago,' says Roger Doddy, head of marketing at HarperKay. 'Then there was a real rush to create web sites. Now, companies are taking their time to get their next initiatives right and are consulting widely on strategy.'
Increasingly, it says, companies are asking for help with e-commerce projects, together with related integration and software development work.
It sees this trend towards wireless and broadband application development continuing during 2001.
John Owrid, head of the interactive consultancy at OgilvyOne, says the agency is witnessing a step-change in how clients approach both interactive and CRM programmes and in many respects these are becoming one and the same type of initiative.
Return on investment
According to Owrid, there are two key aspects to the change. The first is a far greater emphasis on return on investment, evaluation and measurement approaches, all of which he sees becoming far more dominant as entry-level issues for clients pursuing these strategies during 2001.
The second change is a greater emphasis in client work on the ability to deliver highly integrated solutions, where strategy processes are completely inter-linked with delivery processes. 'As the number of interactive delivery channels continues to multiply beyond web and wireless, the ability to connect the customer experience back into the 'front end' strategy and technology drivers will become a more important competitive advantage,' Owrid says.
Looking to the future, return on investment emerges as a key issue on new media businesses' agenda.
'The industry has to realise that many companies have now invested in well-developed web sites. The future will bring more demand to recoup return on investment from these sites,' says Will Simmonds, marketing manager for European Internet Technologies.
While new media budgets and new media agency incomes may still look small compared with their traditional above-the-line counterparts, the high levels of growth experienced by many show that the tide has already turned.
Fragmenting TV audiences will exacerbate the unstoppable migration toward the web, interactive TV and mobile internet platforms. And as broadband technology takes hold, streaming video and other data-rich content, which have thus far been a no-go on the narrowband internet, will become a reality for both consumers and companies.
It all adds up to 12 months of new challenges and opportunities for new media companies that can harness the leading-edge technologies at their disposal in the most meaningful and profitable way for their clients.
OASIS/GUINNESS WORLD RECORDS
Oasis Communications designed and built the front end for the new Guinness World Records web site, which went live in late October. Working alongside Bainlab, Oasis was briefed on the project in March and determined what content would be on the site and the way in which people could interact with it.
The site is aimed at a number of audiences, ranging from record attemptors, holders and researchers, who will use the information as a research tool, through to teenagers, who will log on for entertainment.
The site is designed to offer an immersive experience. It includes record pages offering comprehensive details about individual records and record holders, plus pages where visitors can see video footage of record attempts.
In the future, the aim will be to offer live feeds of world record attempts in progress.
There's also a 'measuring-up' feature where users can compare themselves to various world record holders. So put in your own measurements to compare yourself to the world's biggest woman, for example, and you get a drawing showing the visual comparison.
Oasis Communications and Guinness World Records, www.guinnessworldrecords.com
TOP 20 FOR GROWTH
Rank Agency Turnover 99 Turnover 98 % change
1 Fi System Brand New Media 5,599,756 653,811 756
2 Razorfish 7,158,000 1,101,000 550
3 MultiJac 1,260,000 250,000 404
4 AMX 1,900,000 500,000 280
5 Syzygy 6,610,000 1,824,000 262
6 Absolute Internet 1,200,000 400,000 200
7 European Internet Technologies 343,309 120,760 184
8 answerthink 3,983,542 1,424,822 180
9 Deepend 2,900,000 1086,000 167
10 TechnoPhobia 500,000 208,000 140
11 4i 2,371,679 1,008,482 135
12 Wax New Media 1,200,000 520,000 131
13= Oasis Communications 9,000,000 4,000,000 125
13= Mason Zimbler 1,800,000 800,000 125
15 circle.com 3,215,000 1,465,000 119
16 The Digital Partners 2,400,000 1,100,000 118
17 Head New Media 570,000 265,960 114
18= Designercity 850,000 425,000 100
18= Media Contacts 5,000,000 2,500,000 100
18= Green Cathedral plc 1,200,000 600,000 100
For the launch of the 607, Peugeot's most technologically complex and highest-spec car ever, circle.com's brief was to create a site that would help customers understand the features and benefits of this complex car.
In addition, circle.com was handed the task of helping to implement complex software from Enterprise Resource Planning specialists SAP, which is used to keep track of the options the customer has chosen and to make sure that the customer is always specifying a model that Peugeot can build.
Circle.com applied its 'customer experience engineering' methodology to the problem of explaining the car.
The process turned up some interesting results that had a significant impact on the final design of the site. For instance, circle.com discovered users are always in the market for a new car. As they drive, watch television, surf the web or talk in the pub, they are assessing which car they'd like next. So while the 607 site would need to explain the car, it would not need to sell it - users visiting the site would already have it on their shortlist.
Circle.com also realised that there was a need for an adviser to help users pick the right model based on non-specific qualities like style and performance.
The pan-European football web site, onefootball.com, launched on April 19 2000. Brave advised on the strategy and content for the site, and came up with the name onefootball.com. The site itself was built by Brave's development partner, Compuware.
In addition to Brave's consultancy work, parent company Billington Cartmell handled the marketing campaign to launch the site. This embraced London billboards, press advertising, a global PR campaign and an online banner campaign in the UK and China.
The site launched in English, with Chinese and Spanish versions added before Euro 2000. It provides news, live scores, match results and reports from 26 countries. It covers all European top-division league football, pan-European competitions, international European football and the World Cup.
The site offers tax-free betting in partnership with Coral Eurobet, travel and ticket offers to games across Europe and merchandise.
The site registered 1.2 million page impressions in May, climbing to 4.8 million in September. Unique user numbers have risen from 60,000 in May to 225,000 in September. Users spend an average nine minutes at the site per session. In addition, 8000 members have joined the onefootball club.
NEW MEDIA AGENCIES 1-83
Rnk Agency New Media t''over 99 % New Media Total t''over
(pounds) 99 (pounds)
1 AKQA 21,000,000 100 21,000,000
2 pres.co / Foresight 16,530,000 95 17,400,000
3 IS Solutions Plc 11,818,000 100 11,818,000
4 Seven Interactive 8,000,000 100 8,000,000
5 Revolution 7,280,000 65 11,200,000
6 Razorfish 7,158,000 100 7,158,000
7 Tribal DDB London 6,716,000 100 6,716,000
8 Quidnunc Group 6,703,450 100 6,703,450
9 Syzygy 6,610,000 100 6,610,000
10 Rufus Leonard 5,525,000 85 6,500,000
11 Citigate.com 5,063,000 100 5,063,000
12 Ogilvyinteractive 4,405,000 100 4,405,000
13 Fi System Brand New Media 4,199,817 75 5,599,756
14 Crown Business
Communications 4,000,000 40 10,000,000
15 answerthink 3,983,542 100 3,983,542
16 Oasis Communications 3,600,000 40 9,000,000
17 design net 3,500,000 100 3,500,000
18 circle.com 3,215,000 100 3,215,000
19 Black Sun 2,880,000 40 7,200,000
20 Publicis NetWorks 2,850,000 100 2,850,000
21 Deepend 2,813,000 97 2,900,000
22 Siegelgale 2,679,600 60 4,466,000
24 IDH Group 2,492,800 40 6,232,000
25 Brave Marketing 2,460,000 30 8,200,000
26 View 2,436,500 55 4,430,000
27= The Digital Partners 2,400,000 100 2,400,000
27= Interesource New Media 2,400,000 100 2,400,000
29 PixelPark AG 2,058,000 98 2,100,000
30 Nucleus 2,025,000 75 2,700,000
31 Fitch 1,975,000 25 7,900,000
32 DVA 1,958,796 90 2,176,440
33 Clever Media 1,950,000 30 6,500,000
34 AMX 1,900,000 100 1,900,000
35 PSD Associates 1,870,500 29 6,450,000
36 Domino 1,800,000 100 1,800,000
37 Workhouse 1,650,000 75 2,200,000
38 Good Technology 1,500,000 100 1,500,000
39 Global Beach Group 1,466,000 100 1,466,000
40 Lateral 1,400,000 100 1,400,000
41 Precedent 1,360,000 80 1,700,000
42 FEREF 1,344,283 50 2,688,566
43 MultiJac 1,260,000 100 1,260,000
44 mcb digital 1,227,313 100 1,227,313
45= Green Cathedral 1,200,000 100 1,200,000
45= Absolute Internet 1,200,000 100 1,200,000
47 Wax New Media 1,176,000 98 1,200,000
48 Tableau Group 1,160,000 70 1,160,000
49 Black ID 1,010,428 100 1,010,428
50 NetInfo 1,003,910 100 1,003,910
52 Tayburn 865,620 14 6,183,000
53 Designercity 833,000 98 850,000
54 Digital Outlook Communications 750,000 100 750,000
55 Carnegie Orr 728,000 28 2,600,000
56 4i 711,504 30 2,371,679
57 Line Up Communications 701,581 15 4,677,205
58 Allan Burrows 660,445 6 11,007,422
59 Catalyst Creative Imaging 651,941 20 3,259,707
60 Design House 637,840 17 3,752,000
61 Eye II Eye 578,930 19 3,047,000
62 Twentyfirst Century
Communications 570,500 35 1,630,000
63 Head New Media 570,000 100 570,000
64 Mason Zimbler 540,000 30 1,800,000
65 Bostock and Pollitt 539,733 30 1,799,111
66 kmpinternet.com 519,000 100 519,000
67= HarperKay 500,000 100 500,000
67= TechnoPhobia 500,000 100 500,000
69 96hundred design group 480,700 95 506,000
70 dowcarter 410,000 100 410,000
71 Euro RSCG Interaction KLP 385,000 11 3,500,000
72 Insight Group 383,541 38 1,009,318
73 Orchard Internet 350,000 100 350,000
74 European Internet Technologies 343,309 100 343,309
75 CLK.MPL 336,270 3 11,209,000
76 Content Content 321,000 100 321,000
77 Fish Design 320,000 40 800,000
78 Shelton Fleming Associates 274,308 12 2,285,899
79 A Vision 270,000 50 540,000
80 Panlogic 260,000 100 260,000
81 Ideas 208,731 10 2,087,312
82 Dimension M 180,000 10 1,800,000
83 Uffindell West 149,321 8 1,866,512
Rnk Agency Total t''over Total % Staff
98 (pounds) change
1 AKQA 14,000,000 50 150
2 pres.co / Foresight 12,400,000 40 380
3 IS Solutions Plc 8,745,000 35 135
4 Seven Interactive 5,300,000 51 55
5 Revolution 10,800,000 4 50
6 Razorfish 1,101,000 550 300
7 Tribal DDB London 3,800,000 77 64
8 Quidnunc Group 5,357,085 25 347
9 Syzygy 1,824,000 262 180
10 Rufus Leonard 3,300,000 97 120
11 Citigate.com 3,044,000 66 140
12 Ogilvyinteractive n/a n/a 150
13 Fi System Brand New Media 653,811 756 120
14 Crown Business
Communications 9,400,000 6 130
15 answerthink 1,424,822 180 38
16 Oasis Communications 4,000,000 125 72
17 design net 2,500,000 40 35
18 circle.com 1,465,000 119 120
19 Black Sun 6,200,000 16 56
20 Publicis NetWorks n/a n/a 50
21 Deepend 1,086,000 167 94
22 Siegelgale 3,389,000 32 88
24 IDH Group 5,060,000 23 90
25 Brave Marketing n/a n/a 12
26 View 4,052,000 9 35
27= The Digital Partners 1,100,000 118 32
27= Interesource New Media 1,500,000 60 70
29 PixelPark AG n/a n/a 46
30 Nucleus 2,400,000 13 50
31 Fitch 8,500,000 -7 500
32 DVA 2,082,324 5 30
33 Clever Media 4,300,000 51 40
34 AMX 500,000 280 55
35 PSD Associates 3,700,000 74 74
36 Domino 1,200,000 50 103
37 Workhouse 1,800,000 22 39
38 Good Technology 1,000,000 50 60
39 Global Beach Group 779,000 88 65
40 Lateral 800,000 75 25
41 Precedent 1,100,000 55 45
42 FEREF 2,656,390 1 35
43 MultiJac 250,000 404 30
44 mcb digital 662,561 85 328
45= Green Cathedral 600,000 100 23
45= Absolute Internet 400,000 200 30
47 Wax New Media 520,000 131 38
48 Tableau Group 596,000 95 28
49 Black ID 645,090 57 22
50 NetInfo 730,544 37 45
52 Tayburn 5,362,000 15 86
53 Designercity 425,000 100 29
54 Digital Outlook
Communications n/a n/a 25
55 Carnegie Orr 2,100,000 24 &nb