Let us dedicate the year ahead to sleeping with the enemy, since ad agencies will increasingly snuggle with them. Some call this co-opetition, or competing and collaborating with a company that is both customer/vendor and rival at the same time.
Sir Martin Sorrell, WPP Group chief, refers to Google Inc. as “frenemy” or “froe”—an inimitable joining of friend and enemy, or friend and foe. Others call it riding the bear.
Frenemies abound in the digital world. For one, WPP is Google’s largest customer, and buys about $150 million (Rs5,925 crore at current rates) worth of interactive ads, etc. from them. However, Google permits anyone to directly buy ads, which would disintermediate ad agencies. They’re also creating advertising and hiring creatives to create advertising.
Everyone is reinventing themselves and becoming the agency’s froe. Microsoft Corp. bought aQuantive Inc., the parent company of various digital marketing firms and hence an ad network and ad serving unit.
AQuantive’s family includes interactive agency Avenue A/Razorfish, the largest buyer of online advertising. The corporation wisely keeps these operations separate from Microsoft units that sell ads, to skirt conflicts and retain impartiality over media decisions.
For ages, management consultants and communications specialists in direct marketing, promotions, film-making, etc., have been viewed by agencies as the froe. They work closely with them on projects and compete with them fiercely for work related to brand strategy and creative. Management consultants are especially feared for their relentless invasion of the marketing and brand/media strategy space. Today, the feared outsiders are the geeks and technology giants.
The irony is that the froe is increasingly being found within. Ad networks belonging to the same holding company race for the same clients and pitches. Some sibling ad networks, however, unite back-end production and even creative resources to optimize synergies and cut costs and time. Some may even come together on business pitches when it is conducted at holding company level.
Curiously enough, the global holding company itself can become the local agency’s biggest joy or pain—joy, when they get global funding and resources, and pain, when they have to answer to foreign network bosses on tough targets and standards, or are urged to sell majority stake to them.
Media buying is also seeing froe friction since some local media buying agencies are loath to join the consolidated media buying operations of their holding companies and pass on hefty commissions. Some are wary of global digital media and specialist communications companies coming in to’ call the shots in these emerging spaces.
Lesson for 2008: Keep your friends close and your froes closer.
Marion Arathoon is Mint’s advertising editor. Comments are welcome at firstname.lastname@example.org