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Corporations looking beyond traditional shops for interactive

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Who should create your company's Web presence, a long-standing advertising agency or a red hot interactive shop?

To many, the answer seems to be a no brainer: The agency, of course. It knows your company inside out and has a track record of award-winning campaigns.

But a growing number of corporations that have followed that logic are now discovering the reverse: Many of Madison Avenue's behemoths are not yet up to the job.

Faced with ineffective brochureware, rampant outsourcing and strategic missteps from traditional shops, companies such as Bayer Pharmaceuticals and Sony Computer Entertainment America have defected to proven interactive shops.

Dedicated teams boost sites

In addition to lowering costs, dedicating teams of experts to a project and utilizing cutting edge technology, interactive agencies are driving more eyeballs to corporate sites, say marketers.

Bayer, for one, doubled the number of users and time spent at three overhauled sponsorships sites created for Physicians' Online, a Web-based service. Sony, meanwhile, boosted usage of its Playstation Web site 33% with a recent redesign and new loyalty club.

This flight from tradition comes at a time when agency giants are scrambling to assemble and flaunt newly acquired interactive divisions designed to compete with the country's top Web developers.

But their efforts are often falling short of clients' expectations, as agencies cobble together project teams on the fly, grapple with Web developer mergers, and even farm out work to independent developers, unbeknownst to their clients.

Interactive evolving

"The fact is, most traditional agencies just aren't there yet," says Joshua Tretakoff, manager of alternative media at the Sharper Image, which evaluated many agencies before selecting independent Phoenix-based developer Evergreen Interactive to handle its online catalog.

"That's not to say they're not trying," says Mr. Tretakoff, noting the recent buying spree among top agencies. "By this time next year, we'll be talking about the evolution of the interactive advertising agency."

New interactive identity

As the advertising world comes to grips with its interactive identity, corporate marketers, under time and budget pressure to achieve visible returns, are working fast to ensure they don't become another new-media statistic.

In April, for example, Nissan Motors moved its interactive account from ad agency Chiat Day to Magnet Interactive, a Washington-based developer.

A Chiat spokeswoman says the agency hired Magnet to do the back-end work for the site. Chiat later dissolved its interactive arm to focus on "core competencies."

"Let's just say Nissan realized the value-added [benefit] of working with a firm that has 100 employees, all dedicated to interactive projects," said Magnet President Mark Solomon. Nissan executives were not available for comment.

Increasingly, corporate marketers are calling in Web experts such as Magnet to take over online efforts started by traditional agencies.

Earlier this year, Bayer jettisoned its three advertising agencies in favor of Two Way Communications, an independent Web shop with healthcare expertise, to shore up its three sites on Physicians' Online.

In just four months, the Chicago-based shop lifted Bayer's sagging ranking from the bottom three most visited sponsors on Physicians' Online (http://www.po.com), to the top three.

Both usage and time spent by doctors at its sites more than doubled, from 3,000 to 8,500 click-throughs per month and two to 41/2 minutes spent at the sites.

"Our existing agencies did a good job on the print side, but just repurposed our print sales material for the Web," said Tony Coughlin, advertising manager for Bayer's U.S. pharmaceutical division.

Net knowledge is key

Concerned about heavy outsourcing, which resulted in "too much trial and error," Mr. Coughlin says, "If we were to get a return on our investment, we needed to give our business to someone who understood the Net."

With ad agencies reportedly outsourcing the lion's share of Web work, securing a qualified team has become a major incentive for switching.

Upon moving its Web business from an ad agency to Animated Systems and Designs, a developer recently absorbed by Poppe Tyson, Sony received a team of 22 people dedicated to the account, according to Colin MacLean, manager of online and direct marketing for Sony Computer Entertainment.

Since then, Sony watched traffic grow from 9,000 to 12,000 visitors per month at the Playstation Web site. It also signed up 500 members for its new Playstation Underground loyalty program, which drives users to a password-protected e-mail and chat area on the Web site.

While the company credits a good deal of this success to a shift in strategic direction from product to a relationship marketing focus, Mr. MacLean says, "If the number of people coming to our Web site is a measure of success, then the interactive shop was definitely tied to it."

Besides creating a more bleeding-edge site, interactive agencies are often cheaper than traditional agencies; their overhead is lower and they can usually handle advanced interactive tasks in-house, rather than jobbing them out.

"Based on conversations we've had with clients, we're often 20 to 30% cheaper than an ad agency," says Bob Gear, managing partner of Two Way Communications.

That's not to say interactive shops don't have their shortcomings. Besides being plagued by many of the same afflictions as their advertising counterparts, agency execs are quick to point out that few pure-play Web shops are equipped to provide the consistency in branding and integrated marketing resources of a traditional agency.

Combine ad agency, interactive

"The tendency is to question why do I need the ad agency, why not go direct?" says Steve Klinenberg, Digital Facades, a Santa Monica, Calif.-based Web developer. "But if you're worried about brand image, don't throw the agency out the door."

Janice Gibson, a former account executive, is convinced that the best arrangement involves both the ad agency and interactive shop.

"It's a painful process to teach a new agency your business," says Ms. Gibson, advertising and product manager of Manugistics, a Rockville, Md.-based software company that is currently out to bid for a developer. "But we need an interactive agency, too, because most agencies don't have the vision to take our Web objectives the next step."

Even in a partnership arrangement, however, ad agencies and interactive shops admit they still outsource specialty functions, such as electronic data interface (EDI) or Shockwave programming.

"We can handle a simple commerce solution, but if a client requires a large financial component and zero-fault tolerance, we'd look outside for help," says Jeff Ratner, associate director, Young & Rubicam New Technologies, which boasts 30 homegrown experts in its New York office. "There are companies further along on that learning curve."

Too early for perfect team

Conversely, so-called full-service shops such as Magnet, which handle such back-end integration, claim they're not experts in branding. "It's not our No. 1 expertise," says Mr. Solomon.

Indeed, the day when interactive services fall under one roof is way off.

"The ideal would be an interactive advertising agency that works together in-house to focus on return on investment, rather than assembling a rag-tag team for a one-time project," says Sharper Image's Mr. Tretakoff. "But the reality is, it's still too early."

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