Internet Advertising I: The Role of the Agency

When the Web began to explode as a publishing medium in 1994, few major advertising agencies had anyone on staff who had even surfed the Internet let alone thought of creating ads on it. This void was quickly filled by a number of small dynamic "Web shops" who got major accounts and began influencing how advertising was created to suit this new medium.

Some of these (with their clients listed in parentheses) include: Vivid Studios (SGI, Microsoft), Organic (Colgate, Kinkos, Levi-Strauss), Modem Media (ZIMA, AT&T), Site Specific (Duracell Batteries), SiteLine (L'Oreal), and Agency.com (GTE, Met Life Online).

These companies were created by people with a passionate interest in the Internet--they seldom had backgrounds in the traditional advertising industry. Through sheer initiative, knowledge of the medium, and imagination, they were often able to catch major agencies flat-footed and steal the Internet portion of a big account before an agency principal could say HTML.

But concepts and strategies are what agencies sell, not production. Arguably, there's no greater need for an agency to house a Web production shop than there is for it to house a TV commercial production house. Agencies do, however, need to know how to integrate Web advertising into campaigns and how to hire and direct Web production.

Agencies should have been able to exploit the low cost of production available from Web shops. Instead they lost on both ends.

1. Either they didn't have a clue what the Web was about and lost their clients to small shops because they couldn't even talk about it
2. Or, they confused technical knowledge with a knowledge of how the medium should be used. In this case, they hired expensive production talent but couldn't sell anything because they couldn't explain how the Web served the needs of advertisers.

During the past two years however, some large agencies have become major players in this medium. A few of these include: Poppe Tyson, a division of Bozell, Jacobs, Kenyon & Eckhardt (Netscape, Chrysler, The White House); Messner Vetere Berger McNamee Schmetterer (MCI,Volvo); Margeotes, Fertitta, Donaher and Weiss (Stolichnaya, Sotheby's); TBWA Chiat/Day (NYNEX); and Ogilvy & Mather Interactive (IBM).

Poppe Tyson and Ogilvy and Mather Interactive employ large production staffs. Most of the others outsource production to Web shops, including some of the ones just mentioned. What then is the proper role for the ad agency in this new medium?

Shannon Mullen, Interactive Communications Director for Lowe & Partners, says that advertising agencies are in the communications business. Their role is to create brand positioning and to develop a creative strategy for communicating that positioning to consumers regardless of the medium:

At Lowe & Partners, we follow the same process to develop interactive communications for our clients as we do to develop radio, television and print communications. We do not own a television production house and have TV directors on staff. Likewise, we do not own an interactive production house and have full-time designers and programmers on staff. We work with our clients to develop a creative brief for creative teams to follow when they develop their concepts regardless of the media to be used. And the production of all interactive design and production work is bid to third parties, the same way all television work is. All production is directly overseen by our creatives whether they are making a print ad, recording a radio spot, shooting a TV spot, or developing an interactive piece. The Web is simply one more medium we can use to communicate with consumers.

Rob Sassino, Director of Digital Multimedia for Margeotes, Fertitta, Donaher and Weiss, also believes that a Web presence is for corporate branding. He feels that in order to compete it is not just a matter of creating an attractive and technically sophisticated site, a company also has to develop a Web strategy that is a part of a larger marketing or advertising effort, and that is supported with traditional advertising in other media. In this capacity the expertise of media planners and buyers is essential.

Tery Spataro, Creative Director of the Web ad production shop SiteLine, believes that one of the most important roles for traditional ad agencies in new media is media planning. She feels that agencies should work with Web shops to help clients make the Internet a vital part of marketing and promotion efforts--whether as supplementary vehicles for the execution of cross-media campaigns or as the primary vehicle.

Spataro notes the unique connection between Web sites and direct marketing: "A focused Web site can be the basis for contests, direct marketing or in-store promotions." Too often marketers confuse the Internet with broadcast media and completely overlook the fact that its greatest power is its ability to give things to and get things from customers on a one-to-one basis. At its best it's much more like an in-store booth than a commercial on television or an ad in a newspaper. This is the great untapped power of the Internet--the real genie in the bottle.

But can the Web shops really work with the big agencies? A lot of money is at stake--not to mention ego. Mark Cohen of Premiere Interactive believes they're capable, but that it's an uphill battle:

Not to get defensive or anything, but just because small agencies don't "do" multiple media, it doesn't mean we're not capable of working with the client and/or the traditional agency to drive the integration process. Indeed, if the large agency is interested enough and has the wherewithal, they should be the ones to drive integration and manage all of the small guys.

My experience though tells me that many large as well as mid-sized agencies won't really want to be bothered with that scenario. They will ultimately establish an adversarial relationship with the "little guys," and the client will be forced to moderate, which won't bode well for either party or the project at hand.

In the long run the best agencies and the best Web shops will absorb the weaker ones. There is already a movement toward consolidation that is likely to continue at various levels. Eventually, Web advertising knowledge and creative talent will merge with advertising knowledge and talent in other media. This has already happened with radio and television; certainly it will happen in this new medium. Talent can be bought, after all. The best Web designers, like the best commercial directors, will work independently, and the best Web theorists will become agency executives.

What we might see, however, is a new generation of agencies forged in the creative furnaces of New York and San Francisco where the new media industries were born and boomed--agencies whose guiding principals are derived from an intimate knowledge of the power and subtlety of the Internet and interactive advertising. These will be the new titans of Madison Avenue--in ponytails and T-shirts, not gray flannel suits.

By the way, much of this debate has been taken from the postings to the listserv of a new and very dynamic industry group, the Advertising SIG of theWorld Wide Web Artists Consortium. This group is comprised of people from ad agencies, publications, and production companies who meet monthly and use the list to discuss topics ranging from the measurement of site traffic to the future of advertising agencies.

Past installments of Multimedia Web