Grey Interactive, Leo Burnett USA's Giant Step and Kirshenbaum Bond & Partners all are staffing up interactive buying and planning units.
It's a sharp shift from last year, when most major agencies were either in a wait-and-see position or were attempting to incorporate online work into the traditional media environment.
With $300 million in online ad spending last year, according to figures released last week by Jupiter Communications (see story on Page 32), agencies now believe they can generate new revenue and handle the work more efficiently if they train specialists instead of educating everyone.
"As clients require more capabilities, we're listening to what they want," said Rishad Tobaccowala, president of Chicago-based Giant Step, Burnett's interactive subsidiary. "It makes a lot of sense for the interactive media experts to be here rather than at Burnett."
Grey Interactive, New York, is spinning off its interactive media unit as Media.com, which will focus on strategy, planning and buying. The 10-person group is affiliated with MediaCom Worldwide, a global media company owned by Grey Advertising, and will be located in the same building as Grey Interactive.
CLIENTS DEMAND EXPERTISE
David Dowling, director of the new unit, said clients are demanding more online media expertise.
"Media continues to increase in importance in [the online] area," he said. Marketers that built Web sites are looking for creative ways to promote them, he said.
"We can benefit from being a separate entity," said Mr. Dowling. "There's a lot of opportunity in this area." Mr. Dowling was the first Grey Advertising employee who was dedicated to work full-time on interactive.
The new unit already has a diverse list of clients from parent Grey Advertising: Procter & Gamble Co., Seagram Americas, Sprint Corp., Dell Computer Corp., Panasonic Co. and Glaxo Wellcome.
Giant Step, in its latest move toward asserting its independence from Burnett, is staffing up more slowly, adding two online media specialists.
Megan Griffin and Brooke Moll join the company as directors of media and analytic services, effective March 24. Both women previously worked for the Chicago office of TN Technologies' Northern Lights Interactive, Ms. Griffin as media manager and Ms. Moll as strategic development manager.
NORTHERN LIGHTS DEFECTORS
The Giant Step move is a blow to Northern Lights; it lost its top exec and two other staffers earlier this year when they left to form their own company (AA, Jan. 20).
At Burnett, Taki Okamoto, an assistant media director who has overseen interactive media for the past year, will be reassigned.
"We're not going to have an interactive media director within our department," a Burnett spokesman said.
Mr. Tobaccowala said Giant Step will continue to work with Burnett on shared clients, but that Burnett media executives will serve in an advisory role rather than as actual planners and buyers of online media.
Burnett and Giant Step have been slower to respond to the rise of the Internet as an ad medium, choosing to do a few large-scale content tie-ins, such as a year-long Oldsmobile sponsorship of HotWired's Packet site, rather than a consistent media buying plan.
Kirshenbaum Bond & Partners, New York, will also launch an interactive media-buying company by the end of the month. The company has already signed clients with nearly $1 million in media billings. Kirshenbaum owns less than 50% of the company, which will serve only clients outside the Kirshenbaum agency roster.
EYEING $3 MILLION IN BIZ
The company will be led by Steve Klein, managing partner-director of media services, who serves as chairman and retains his agency title.
Kirshenbaum has handled online media-buying through a five-person staff. During 1996, the agency placed just under $600,000 in online media and in 1997 expects to handle $3 million in online buying.
Generating real revenue will be difficult for these agencies, however. Clients are experimenting more and more with results-based compensation, where the amount paid to the agency depends on the success of the advertising.
A survey conducted last month by Advertising Age and Mediamark Research Inc. found that only 4.7% of 300 respondents compensated their interactive suppliers on media commission (AA, March 10).