• by Mike Bloxham , Op-Ed Contributor, August 2, 2007

For years now, many of us have bemoaned the vice-like grip that media and creative shops alike have maintained on their long-standing business structures and practices -- structures and practices that are TV-centric and that have become increasingly out of step with the wider media landscape, consumer behavior and client demands.

While all of the serious players in the market have acquired or formed digital units of one sort or another, the underlying approach has been much the same as that used in the '80s and '90s, when integrated marketing was all the rage. Then it was all about buying a capability to keep hold of as much of the client budget as possible and presenting it as part of the broader offering from Conglomerate-U-Like. Never mind that the kind of internal integration necessary to make this work to the fullest extent never really came off, with the net result that clients still found themselves dealing with multiple suppliers, multiple cultures and a barely masked competition for budgets, much as before the much-heralded supply-side integration.

To a large extent, the same story has been true of the relationship between digital units and the "traditional" media units, though as the media themselves have increasingly blurred the lines between them, this is by no means as divisive as it once was.

However, until last Friday, we had still not seen any major examples of the kind of digital integration on the supply side that has been so often called for.

Hats off then to Carat -- the first top-tier media agency to fully integrate its digital operation (Carat Fusion) into the main operation. What's more, the people running the newly merged entity are both from the digital side of the fence, which will be important as much for communicating the substance of the change externally as for addressing internal culture and operational issues.

One can only wish this union well and hope that it provides enough evidence of success to justify others following this lead. The first instance of success will likely be an uptick in the number and value of new business wins (Carat has not enjoyed its best days of late). Longer-term gains should come in the proportion of business retained, and a culture of platform-neutrality that produces work that flows across all relevant platforms, delivered seamlessly and cost-efficiently because internal processes have been designed and resourced with that in mind.

Of course, it's easy to say that all media will be digital soon, so this is no big deal, but the fact remains that Carat has set out on this path to transform itself before it had to. Those that choose to view the merger from Cynics Corner will always be able to point to the imbalance of revenues between the parties (if the figures I read were accurate, then it's 14:1 in favor of the "traditional" business). Similarly, one could point to operational efficiencies and cost savings as a motivator. All of this could be true, but there are other ways to find efficiencies, and you don't need to promote two execs from the digital side to run things if you are looking to save money.

At the end of the day, the success of this merger will show in the company's bottom-line performance across all platforms, and the amount of client business it wins and retains for the long term. If its output can really be seen to be sufficiently -- and profitably -- different for itself and clients, we won't need to debate it. Assuming that it's reached that success, the company's biggest problem then will be maintaining a point of difference from the others that will have followed its lead.