Marketers are feeling the squeeze as the shockwaves from the global credit crisis reverberate in all corners of the economy. Digital agencies, however, are bullish about their prospects. Despite the tough conditions, digital remains a strong growth area, and is propping up the media market. Internet ad spend grew 21% year on year to reach £1.7bn in the first half of 2008. The Internet Advertising Bureau propelled digital to a share of 18.7% only 3% behind TV which accounted for 21.7%. In value terms, on line has grown by £2bn in three years, and is forecast to hit £3.6bn this year.
Some brands are investing as much as 25% of their budget in the medium. However, the industry is not without its pessimists. However it is also predicted a slowing of growth for the digital sector. Brands would continue to invest in digital, but this investment had to be converted into profits or there would be significant casualties.
Over recent years online has become a mainstream channel and not just in terms of its budgets. A particularly strong performance at the Cannes Lions International Advertising Festival in June brought plaudits for outstanding creative to digital agencies including AKQA, Glue London and Poke. The sector’s buoyancy is reflected in this year with agencies Iris Digital and Syzygy reporting year-on-year growth of 198% and 188%, respectively. Nearly three-quarters of agencies have posted double-digit growth, with only a handful experiencing a decline.
While these figures are from the 2007 calendar year (or the most recently completed financial year), and therefore may not yet demonstrate the full extent and effect of the economic down turn, with such strong growth, digital agencies are well placed to weather the gathering economic storm. One prominent talking point over the past year has been digital’s emergence as a vital channel for branding campaigns. Marketers are more comfortable with digital media, and are thinking more about how all the aspects of their activity can work together.
Digital projects are extending beyond the realms of a website to a more holistic, cohesive plan that encompasses digital advertising, viral and email campaign planning. Over the past year, they have consolidated what they consider to be the digital basics pay-per-click, search, display and affiliates to improve cross-channel integration.
The realisation that consumers view online as a whole entity has led many clients to consolidate digital work into one agency. McDonald’s, for example, pooled all its digital business into Avenue A.
Digital agencies have also gained respect, and won accounts, on the back of their ability to collaborate with other shops and understand that part of a solution might lie in above the line or PR activity.
The agency also worked closely with Focus PR to create a successful campaign for the launch of car brand Lotus’ Evora model. ‘Faceless’ people (actors wearing blank latex masks) were placed at summer events to create buzz and intrigue, and the related microsite received 100,000 unique visits during the first two days of the campaign. AKQA, meanwhile, worked alongside Wieden & Kennedy and Mind-Share on Nike’s ‘Most wanted’ campaign.
This stronger trust in digital agencies and what they can achieve means clients are keen to include them in strategic planning and afford them more influence at a higher level. Clients feel they need an agency that has its finger on the pulse, that is one step ahead and in a place to educate and advise. The experience of joint managing director of Avenue A | Razorfish, typifies this. Since they launched the agency more than 10 years ago, [until this year] they had met only three chief executives in their dealings with current and prospective clients. This year, they have met and worked directly with 12.