Many being reabsorbed or targeted for acquisition

By Gabriel Spitzer
   
    Something is going on in the world of interactive media, and one key indicator is the common neck tie.
    Just ask Sean Carton, who has the interesting title of chief experience officer at Baltimore's Carton Donofrio Interactive. 
    In a recent account pitch, Carton looked around the table and realized he was the only male not wearing a tie.
    A year ago, wearing a tie at an interactive agency like Carton Donofrio would have been unheard of. 
    But in the time since, Carton's shop has been folded back into the agency whence it came, Richardson, Myers & Donofrio, and ties are back out--at least for some.
    "I refuse. I think I’ve worn a tie maybe four times in the last three years," Carton says.
    All over the media industry, agencies are reabsorbing their once-separate interactive divisions, or they're snatching up independent online firms. For instance, Razorfish, Organic and Agency.com are all rumored to be potential merger fodder for BBDO.
    It's not hard to understand why.
    Several years ago, the pricing and measurement of new media were so esoteric that they seemed to demand the specialized talents available solely through interactive-only agencies like Carton’s.
    These days the web is far less of a mystery, to begin with, but perhaps more important, the web is being integrated more deeply into old-media plans as more mainstream advertisers come to see the web as yet another way to reach consumers.
    "It made sense to keep it separate in the early days of the web because it really was a separate thing," says Carton. "Even the audiences were fairly different."
    Another factor was that traditional agencies were a bit slower to pick up on the web.
    "A lot of ad agencies tried to do web sites and did a really horrible job at it, so people quickly learned, if you want a web site, don’t have your ad agency do it," recalls Carton.
    "Circa 1997, a CEO would go off to some seminar that said ‘what is this internet thing?’ He’d come back all jazzed and look at the hapless art director, who was usually the weirdo who was into the web at that time, and he’d say, ‘you’re now in charge of our web site.’"
    But clearly having two separate agencies posed problems.
    "There are innumerable examples where the online agency was developing something that didn’t fit in with the brand character of what the off-line agency was developing. The kids weren’t playing well together," observes Greg Smith, managing director for New York at Carat Interactive.
    "In the beginning, traditional agencies didn’t have the expertise. Clients then quickly realized that they wanted an integrated solution, and it was easier to lean on traditional agencies to get a competent interactive division rather than dealing with two separate agencies and two separate streams of thought."
    Besides that, some of the obstacles to online ad buying have eased recently.
    "One reason for the freestanding unit was that in the beginning it was very difficult to figure out how to price this stuff," points out Allen Banks, executive media director at Saatchi & Saatchi. 
    "It was such a time-consuming process figuring all that out, the only way agencies could do that and come out on top was to charge separately for it. Now there’s a greater acceptance of the fact that the internet should be integrated in the overall marketing and media program. 
    "The same problems still exist, but since clients who advertise on the internet are doing it with greater amounts of money, it becomes easier to accept."
     Others see the trend as more of a scaling-back in the wake of the dot.com crash.
     "The whole internet boom was too hot not to cool, and now there’s a retrenching. It’s hard to sustain a whole department with just new media, so it’s coming back into the mainstream," says Don Cole, executive vice president and media director at Fletcher Martin Ewing in Atlanta.
    "There was a lot of mystery then, and your agency looked more cutting-edge if you had a separate internet group.
    "It’s just like any other mania, from the consolidation craze in the 1960s to the tulip-bulb craze in Holland in the 1600s. The internet is definitely going to grow, but slower and more methodically than people thought."
    One way or the other, independent interactive agencies will be in the cross hairs of major ad agencies in coming months. 
    Whether or not the freestanding species will survive is very much in question.
    "I think they’re probably going to be gobbled up. There may be a few very specialized firms that will survive, but I think most will form alliances or sell major stakes to bigger agencies," says Cole.
    Others believe that there is still a place for internet-only agencies, if not in the multitudes that exist now.
    "Clearly there are media that have always existed outside the mainstream of the media world," says Saatchi's Banks.
    "Direct-response is not necessarily integrated into the mainstream media world. The internet is probably more akin to direct response than anything else, because you can immediately communicate with people and get a reaction to it.
    "If direct response has existed as an independent entity apart from mainstream advertising components, the internet can continue to exist that way for certain advertisers and agencies."

 May 18, 2001 © 2001 Media Life

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