Digital media is increasingly being touted as a more cost-effective way to reach audiences in an engaging manner. And much like the offline media world, advertisers are consolidating all their digital media work under a single digital agency of record, or AoR, instead of several different digital media agencies.
Unfortunately, many of the digital wings of media buying and planning agencies are actually just shells with a few digital specialists. Some of these units operate on an outsourcing model, farming out anything from digital media buying, planning, creative work, technology to site creation, search engine marketing and optimization to independent digital specialists.
Says one such specialist, “Some agencies are even outsourcing buying as they are not sure of the rate benchmarks for online ads.” If these digital wings remain mere coordination points and don’t ramp up skills and talent, they could lose more AoR business to the full-service specialists they hand out work to. Advertisers fear that brand integration across digital platforms, along with confidentiality and cost-saving synergies, could be compromised if too many functions are outsourced by their media partners.
Need proof? The Internet ad market in India stood at around Rs500 crore for the year ending March, of which, digital agencies’ share was Rs280 crore, with the rest going to direct advertisers, says Amar Deep Singh, co-founder of full service digital agency Interactive Avenues, or IA. With 120 employees and dedicated teams for each discipline, IA claims a 25% share of the Rs280 crore agency market and is the digital AoR for brands, such as Colgate-Palmolive Co., ICICI Bank Ltd and Travelocity. Singh says the real shake out will happen when advertisers become serious about the medium and ramp up their digital spending—they will then want full-width digital partners with display, search, social, viral, affiliate and email capabilities. “The problem with traditional agencies is that, even if they have the knowledge, they do not possess the wherewithal to execute digital work.”
Patrick Stahle, chairman and chief executive officer, Aegis Media Asia-Pacific, which owns the Carat media brand, agrees that increasingly clients are looking for agencies that can offer the entire range of digital services. “Globally, we have seen an increasing number of the world’s leading marketers, such as Coca-Cola, P&G, Nokia and Adidas seek digital AoRs outside of their media agencies, as they recognize that very few media agencies have the required capabilities in-house.” Aegis provides digital AoR services through its global digital network Isobar to brands such as Coca-Cola Co. in China, General Motors Corp. and Walt Disney Co. in Europe.
Stahle, however, underlines that there is no disgrace in seeking inputs from more competent teams, as their mandate is to identify the solution that will deliver their clients the results. It’s critical, though, that agencies are transparent with clients about what expertise comes from where.
In his view, it is more likely that traditional media agencies which claim competency across the full range of digital services will fail to deliver success. Implementation of ambitious digital strategies requires highly complex and technical specialist knowledge that has never previously existed in media agencies. And that’s where independents such as IA claim an edge—in their larger, sometimes more experienced, specialist teams for each digital discipline and the fact that they offer “all services under the digital marketing umbrella”.
Jay Kulkarni, co-founder of Theorem Inc., an independent specialist, however says that creative and strategic media planning are the two components that truly define a campaign and require a level of expertise that is best delivered by professionals working at a brand or media agency. “For lower-level tasks, such as campaign execution, outsourcing can be more efficient and cost-effective.” Theorem assists online marketers execute campaigns besides helping with the data reporting associated with the campaigns.
However, there are areas which digital wings of traditional agencies just can’t handle. Since the online world is constantly evolving, marketers need to work with true online marketing data experts in the field who are constantly learning, says Kulkarni.
The irony is that most agencies are simply not equipped to handle data experts in-house. This situation creates a space for a company, such as Theorem, which is approached by many global agencies.
To be fair, media agency networks are hardly sitting back. They have been acquiring huge digital companies overseas or small ones locally, creating their own global digital networks (for example, Aegis has Isobar for digital AoR), or forging working partnerships with independent specialists. WPP Group bought full service interactive agency Quasar Media, Aegis bought a stake in SEM, or search engine marketing, Firm Communicate2 and Lintas Media Group has a tie-up with digital agency Pinstorm here. All indicating that local clients, relationships and insights are vital in digital.
Marion Arathoon is Mint’s advertising editor. Your comments are welcome at firstname.lastname@example.org
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