In a crowded field where competition is the name of the game, ad agencies are fighting harder than ever to stay ahead of the curve. But a funny thing has happened: They're now meeting in the middle.
Big creative shops whose roots are in traditional advertising continue to throw money at digital stars to inject a bit of 21st-century technology into their hallowed halls, while younger, digital shops are increasingly eyeing creatives with broadcast skills. As agencies tack on new departments and claim competency in every area, how's a marketer to know who to turn to?
"The industry has had an identity crisis," said Bruno Gralpois, who spent 17 years on the client side, mostly at Microsoft, before penning the recently released tome "Agency Mania." "It's resulting in brand advertisers having a raging headache, trying to figure out who does what."
Figuring out your marketing mix in 2011 is far more complicated than it was 20 years ago. Back then, if marketers wanted beautiful TV ads, there was a set of premier Madison Avenue institutions to choose from. When the internet first came along there was a fairly straightforward choice among shops such as Digitas, AKQA, R/GA, Razorfish and Agency.com. But then came word-of-mouth and guerrilla marketing, mobile agencies and, with the rise of Facebook and Twitter, social-media shops. Traditional agencies -- not willing to be left behind -- have hired away digital talent (see: Ogilvy and Lars Bastholm) while R/GA and Firstborn began churning out TV spots.
David Lubars, chairman and chief creative officer at BBDO North America described the trend this way: "Everybody is trying to race up the hill from either side."
And many are going the catch-all route. To wit, the mind-boggling boilerplate for WPP agency G2: "[Our] multifaceted service offering brings together direct marketing, data analytics, shopper marketing, brand and design, promotional marketing, communications planning and digital/interactive marketing."
"The agencies don't want to lose market share, so they say: 'Yes, we can do it!'" said agency consultant Joanne Davis. "They're selling themselves as all things to all people ... and they also don't want to lose the pride or joy of being the lead agency for a client."
The changes are driven largely by consumer behavior. In the past five years, internet and mobile-phone penetration have skyrocketed and more than 60% of people online visit social networks, per eMarketer. Plus, many clients don't want to herd a vast array of agencies all specializing in different things; some are merely asking for their traditional shops to get more digital.
Steve Center, VP-national marketing operations for Honda, has asked its lead shop RPA to develop digital talent. And while RPA manages outside agencies that focus on digital or minority marketing, Mr. Center also likes to mix in a bit of extra competition. "In some cases we still have specialties that compete with RPA; a little bit of competition is a good thing," Mr. Center said.
Some clients, especially those with big e-commerce or technology components, are now opting for digital agencies to lead communications. Travelocity, Intel and Sheraton all recently designated Publicis Groupe's Razorfish as lead agency. Other marketers have looked to their existing above-the-line agencies for digital. Often beating out digital-only shops, BBDO in the last year has won digital work for Campbell's, Lowe's and Mars brands M&Ms. Snickers and Milky Way.
"No more can we find agencies based on reputation," said Shiv Singh, head of digital for PepsiCo Beverages America and former Razorfish exec. "We find that a PR agency has a strong digital concept, or a traditional agency may have something that's rooted in digital. Every kind of agency can play at the strategy level." Under PepsiCo's model, all agencies are briefed simultaneously, and the best idea, no matter where it comes from, wins. After that, each shop -- from TV to digital to PR -- goes back to its respective corner and executes its strong suit.
The fact that digital shops want to make TV spots, TV shops want to do iAds and PR shops are social-media experts could lead to a very real branding challenge for agencies, and how they market themselves.
"I think the moniker of digital agency or creative agency will pretty much have to go away," said Matt VanDyke, Ford Motor Co.'s director of U.S. marketing communications. "If you look at what comes out of each: On the digital side we're producing online video content; on the creative side, TV commercials. It's not broadcast production anymore, it's just production."