• The Wall Street Journal, Thursday, May 22, 2008 11:15 AM

As oil prices rise and the economy slumps further, more and more marketers are looking overseas for cheaper, and sometimes smaller, production houses to create their Web ads. One beneficiary of the trend has been San Jose, Costa Rica-based avVenta Worldwide, which does behind-the-scenes production on Web ads. AvVenta's rates are between 20 and 50% lower than what agencies pay for similar work in the U.S.

These production houses usually don't come up with the creative ideas, nor do they polish the ad copy or pick which pictures or graphics go where, they simply execute a Web site, digital ad, or interactive promotion for less. Often times, these shops don't even have direct relationship with the marketers. In the case of Publicis Groupe's Digitas, they've created whole unit, called Prodigious, devoted to overseeing the agency's offshoring efforts.

During the company's fourth-quarter earnings call, Publicis CEO Maurice Levy stressed that offshoring will be very important to the company's long-term profitability. "Everything will hinge on our ability to have digitized platforms that will enable us to generate large-scale production. ... We decided to create Prodigious now, whereas we could have waited a few years because we're not there yet in terms of large-scale output production. We believe that not only must we learn now as it's still in its infancy, and above all be ready when we -- when the economies of scale kick in."

Read the whole story at The Wall Street Journal »