Agency Biggies Struggle To Define Role In Rapidly Evolving Interactive Market

Interactive agency bigwigs convened Wednesday at Jupiter Media's annual Advertising Forum in New York to discuss--and quite possibly define--the changing role of ad agencies in a medium that leans heavily on technology and publisher-side solutions.

An interactive ad campaign can involve the effort of marketers, publishers, agencies, third-party technology providers, third-party consultants, campaign optimizers, the ad solutions departments of major publishers and portals such as Google, MSN, and Yahoo!, and--oh yeah--interactive ad shops.

Sarah Fay, president-CEO of Carat Interactive, says there's definitely an element of "co-opetition" going on between agencies and the varying service and solutions providers. "[Carat Interactive] believes in the agencies' role as more of a strategist/consultant," she said. "We live in a world where you need to integrate or die, and you're taken to task if you're not playing ball."

However, Fay added that Carat doesn't want to become a technology developer, and enjoys being able to work with whichever technology company it chooses to work with. aQuantive, for example, has different functioning properties that fall under its umbrella. They have two agencies (Avenue A/Razorfish and iFrontier), and a technology company (Atlas DMT) that works with other agencies. "That's probably tough for them," Fay said.

Tough for agencies, perhaps, is the new focus being placed by clients on accountability, which Jupiter analyst Gary Stein had coined as the new industry buzzword earlier in the day. Marketers want to see every cent of their spend accounted for in some way, putting more pressure on agencies from their clients.

As a result, agencies are required to seek help. "The idea that the agency used to own everything is starting to go away," said Sean Carton, chief experience operator for Carton Donofrio Partners Inc. He added that the kind of accountability required by clients these days "takes an enormous amount of work" from the agency side. In other words, outsourcing and cooperating.

In fact, Jupiter's research is finding that more interactive agencies are looking for outside help to execute and/or manage their campaigns, instead of hiring new staff. Sixty-two percent of agencies outsource these services, while 35 percent hire permanent positions.

As Carton pointed out, these disparate units don't exactly work together seamlessly. He says that clients sound out RFPs without knowing the full extent of how complicated it can be working together with different entities that have different agendas.

Undercutting all of this, again, is the need for accountability. Clients "have been burned in the past," Agency.com Managing Director Andy Hobsbawm said, "by agencies promising to deliver on all these touchpoints but not being able to." Nevertheless, Hobsbawm said the problem of accountability and measurement is more significant for traditional agencies because measurement is something that's more easily tied to the Web.

Carat's Fay noted that despite the changing face of the interactive space, things are certainly looking up. She declared that the media shift is happening now--and even if it feels slow, one need only look at the progress made over the last year. Her sentiments were later echoed by a triumphant Thoreau- like "Go Westward" speech by Yahoo!'s Wenda Harris Millard.

"If we look at where we are today, we're a lot farther along now than we were a year ago," Fay noted. "Right now, in the interactive space, we're feeling our budgets opening up."

Even so, online advertising accounts for less than 6 percent of the overall advertising spend, and it continues to be a struggle for interactive media to get traditional media to take note of its progress and agree to work toward the future together.

Fay likened traditional agencies and interactive agencies to warring religious sects. "It's kind of like a religious war. Its not that people don't want to work together--they don't want to give up their positions." She said that education is the key, but educating has also been an issue.

Toward the end of the discussion, a member of the audience stood up and asked the room how many came from the traditional side. Only one hand went up; it was a woman from a small shop in Maryland, underscoring the fact that despite whatever progress has been made, the real integration of media is still far off.