• by April 23, 2007

Digital media, marketing and creative shops are seeing strong demand for their expertise both with clients and their offline siblings.

"MPG is looking for more and more support from Media Contacts on the digital side," said Ed Montes, executive vice president-managing director of Media Contacts, a digital media agency owned by Havas. "There is a greater demand for our services internally and externally as the overall demand for digital services is growing."

Montes offered his comments during a wide-ranging conference call on a variety of industry topics coordinated by investment firm Piper Jaffray and led by Aaron Kessler, senior Internet analyst.

Montes and Andrew O'Dell, president, interactive marketing at AKQA, an independent digital shop, discussed digital agency trends, industry consolidation, the recent Google/DoubleClick deal and the slow shift of offline media dollars into online media.

"We consider ourselves a full-service digital shop offering creative solutions and strategy on how to use the interactive space," O'Dell said.

AKQA has bulked up its media offering in recent months and while it's been known as an expert in Web site design and development, has intensified its creative output and expertise in telling stories across a range of media platforms.

"We're focusing on the idea, and not so much the channel," O'Dell said.

Increasingly, holding companies are snapping up digital shops with a range of capabilities: Publicis acquired Digitas late last year, and more recently, Interpublic Group scooped up Reprise Media, a search agency.

"If you're a digital shop today, what will you be even two years from now? What happens to pure-plays like aQuantive's Avenue A/Razorfish?" Montes questioned.

Regarding shifting offline dollars into online media, particularly search and online video: "We're seeing a huge demand from Fortune 1,000 companies that haven't spent a lot of money online to date," Montes said, adding: "There's a huge demand for toe-dipping and education. The advent of video has certainly put people in the position to start thinking about the online space."

Montes said that MPG, Media Contacts' offline media sibling, teamed up to organize a channel-neutral approach to the TV and cable upfronts. Most programmers and networks now include digital planning tiers. That said, "I don't think we'll see a huge change in the advertising approaching the upfronts this year--80% of the TV commitments get made in that period; I don't expect to see a huge shift in that."

On the proliferation of ad networks and probably consolidation in that space, Montes noted that so many networks mean less expensive inventory simply because there are more places to place your ad today than there were even 18 months ago.

Media Contacts, which is a tester for DoubleClick's new ad exchange technology, is attempting to advance the strength of its data and intelligence-gathering model. "From a media buying and planning context, ad exchanges give us intelligence. If the marketplace becomes a commodity-driven marketplace, we'll have an advantage," Montes observed. "We believe there's a greater opportunity to bring value to the clients and to be better buyers. I think there's a huge opportunity to buy smarter and pass the value along to your clients."

Apart from ad exchanges, online video is hot--and more marketers want to work with it. "I think video can be a game-changer as people adopt it more," O'Dell said, adding: "It's video across devices ... iPod, phones, computer, gaming devices."

Regarding Google's mega-deal to acquire DoubleClick, Montes maintained that there's now a greater chance for DoubleClick to develop next-generation ad-serving tools and products given Google's deep pockets, and perhaps more of a willingness on Google's part to support ad-serving products overall. "I think there are high hopes that the Google acquisition will improve [DoubleClick's] offerings," Montes said.

While some interactive industry players worry about a Google domination, the fact is that Google and DoubleClick don't own any content--yet. They have a technology to serve ads into other properties. "There's no doubt that the name of the game at the major publishers is yield management, they're all trying to figure it out and increase their average CPM," Montes maintained.

Meanwhile, DoubleClick on Friday denied that the data it collects would be used by Google to check consumers' spending and browsing habits.