• by Joe Mandese , June 15, 2007

Like the media they plan, buy and create advertising and branded content for, ad agencies are morphing as their business transitions from analog to digital. That was evident Thursday during the American Association of Advertising Agencies Digital Conference in New York, where both pure play digital shops and media specialist agencies said their both their organizational structures and their business relationships were undergoing radical changes as a result of the digitization of the media marketplace.

There's no better example of that than Microsoft's proposed acquisition of aQuantive, President-CEO Brian McAndrews told attendees during an opening interview with the AAAA's Mike Donahue. McAndrews said the line between agencies and technology companies has been "blurring for years" and will continue to as Madison Avenue becomes more technologically focused. In fact, he distinguished acQuantive, which owns digital ad agencies (Avenue A|Razorfish);, ad serving operations (Atlas) and an online advertising network (Drive), as a "digital advertising services holding company." Its ownership under Microsoft would only accelerate the integration of advertising services and advanced media and marketing technologies, and he cited the similar acquisitions of 24/7 by WPP Group and DoubleClick by Google, as contributing to the shift.

Ultimately, he said, all agencies would become digital agencies. "In the future, when all media are digital, all agencies will be digital agencies. Period. I think there has been a blurring of the line, and I think this is just confirmation of that," he predicted.

Those same forces are reshaping every facet and service sector of Madison Avenue, including the most traditional and biggest media services companies. That was the message of Alan Schanzer, managing partner of MEC Interaction, one of the digital media units of WPP's GroupM unit.

Schanzer said GroupM, the world's largest media buyer, is in the throes of a transformative makeover that is redefining how it approaches the media marketplace and the types of services it provides its clients. He said the restructuring is not necessarily an organizational one based on "where people sit" inside GroupM agencies, but how they "behave" and work together.

"We really don't have the answers yet. This is very much in real time," he conceded, adding, "What I'm learning is this is a much harder job than I thought it was. Because it's not structural."

To illustrate how the behavior of GroupM agencies and personnel are changing to meet these challenges, Schanzer cited two recent campaigns that were collaborations of various GroupM units, including a recent experiential event for Dr. Pepper that locked a rock music band in a bubble on the streets of Manhattan for several weeks to produce a new album that was showcased online and on MTV, and a series of webisode commercials that GroupM produced for client Nautica Jeans, that likely could not have been done by a creative shop.

At a cost of only $10,000 per spot, Schanzer said traditional creative agencies "have no interest in that, because they can't make money off of that."