New Media Age, Opinion, 10 July 2003

DMC’s MD, Justin Kirby, argues in New Media Age this week that the lack of innovation in the new media industry is largely the result of bigger online agencies needing to produce work that supports old-agency-style business models.

DMC Letter to Editor, 10 July 2003, New Media Age

It was interesting to read Michael Nutley’s recent comments about the economic climate and resulting corporate conservatism stifling innovation and risk-taking in the new media industry (Leader, NMA 3 July). I’d go further and say this lack of innovation is largely the result of bigger online agencies needing to produce work that supports old-agency-style business models and high overheads, rather than moving the industry forward by developing and adopting new and more effective ways of working.

The majority of online creative agencies have modelled themselves on the traditional above-the-line (ATL) ad agency structure, with functions like planning, account handling, creative and production all departmentalised. This model evolved so that ATL ad agencies could score the big-budget, big-brand work, which is designed to achieve opportunities to see distributed via expensive media such as TV and outdoor. It’s also designed to stand up to regular, repeat, passive end-user viewing.

This model became self-perpetuating as agencies needed to support and justify the overheads of such an infrastructure. Not surprisingly, therefore, sizeable agencies (both online and ATL) with this structure tend to produce the kind of creative work that first and foremost requires a big client spend, rather than the kind of creative work that’s designed to push any boundaries, achieve a marketing objective and add measurable value to the client’s business. As an aside, it’s ironic to note that the online creative agencies currently rated as most respected by their peers are structured in this old-style, turnover-driven model, while the ATL ad agencies that are seen as most innovative and creative by their peers are more flexible and organic in their structure.

I don’t believe that the old-style ATL ad agency model and the kind of creative work that it produces are best suited to the online medium. The ability to create work that’s innovative, truly takes advantage of the Internet and which focuses on delivering response is severely impaired if you’re a big agency locked into large overheads and forced to focus on turnover (often with a financial big brother from an umbrella agency group breathing down your neck, especially in the current economic climate).

The point about the Web is that it not only alters the relationship between companies and their customers, but can and should have a huge impact on agencies’ business practice too. The companies that do the most innovative, response-generating online work are those that can move quickly, understand the medium and evolve new business methodologies, taking advantage of and challenging, rather than relying on, existing structures.

For example, agencies should be using the Web to deliver interactive creative work that clients demand. But in the main they’re delivering ’safe’ mediocre work that supports their own business purposes. The Web is more accountable than any other medium, yet few marketers in client companies are knowledgeable enough about how best to use it to achieve their marketing objectives. Equally sadly, few online agencies can prove that their work delivers user response that benefits their clients’ businesses.

Yet clients feel justified, or perhaps just safe, appointing one online agency to manage all their digital marketing communications. With a huge raft of online marketing techniques available, it’s unrealistic to expect a large, one-stop digital agency to have the expertise, structure or business strategy to deliver innovative, best-performing work across the board. But the practice persists and is perpetuated by fear, indifference and ignorance.

I mention all this not only because I think the core set-up of online agencies contributes hugely to the lack of risk-taking work being produced, and to the reticence of both agencies and clients to change the way they work, but also because I see NMA is calling for applications for its annual Top 100 Interactive Agencies guide. That exercise caters predominantly for larger agencies by placing the emphasis on turnover and staff numbers. Is there a case for NMA to start the winds of change blowing by kicking over a few old new media industry traces itself and looking at rating online agencies by more than the size of their innovation-stifling wedge? It’s the quality that counts, not the quantity.