The failures of mainstream ad agencies to seize the Internet opportunity have become legendary, almost laughable. How will they make their play to come back? They're looking for new, complex opportunities and to people like J. Sandom to lead them there. The former Ogilvy VP now runs Rapp Digital. Success will come through databases, through analytical tools that use those databases, through direct marketing, and by concentrating on "pervasive technologies" and the convergence of all Net access devices.
The failures of mainstream ad agencies to seize the Internet opportunity have become legendary, almost as laughable as last year's "Dan Quayle for President" campaign.
How will they make their play to come back? They're looking now for new, complex opportunities, and they're looking to people like J. Sandom to lead them there.
Rapp Digital is so new (it launched in October) that it doesn't even have its own web site, although Sandom says that's in the works. Before moving to Rapp, Sandom built Ogilvy Interactive to $300 million in billings, and he's no modem-come-lately - he says he launched his first interactive agency in 1984.
I asked why he left Ogilvy. "I left," he said, "because despite its great organization, they didn't have a significant database or analytics capability. Unless you have that, frankly, don't play in the sandbox." Ogilvy did recently announce an alliance with Acxiom, the Arkansas-based database company. "But unless it's baked in, you don't have the skill set," Sandom says.
So how will Rapp Digital succeed? Through databases, through analytical tools that use those databases, through direct marketing, and by concentrating on what Sandom calls "pervasive technologies" (more on those later). All these elements raise barriers to entry for smaller, interactive agencies, and (if Omnicom supports his play) give the traditional players a chance to take the board back.
Everyone in the ad game is talking about CRM these days, and Sandom's take is to call it "ECVM" for "electronic customer value management." "We spend a lot of time trying to understand the value of customer segments," he explains. "Some 80 percent of your profits come from 20 percent of your customers. Understand the value of targets and leverage the technology so it will resonate.
"A relationship is the minimum requirement. It's about maximizing the value of the client brands," he adds.
As part of his campaign, Sandom has a unit called Infoworks, a marketing technology group in Chicago that does a lot of analytical work, and his firm bought 50 percent of Critical Math Software in Calgary, which gives him access to 175 developers.
Here's an interesting take. "Increasingly, consumers are changing," he says. "They themselves are becoming brands. They have email functions and infobots that represent them in cyberspace. It's a digital brand exchange that has to happen."
When Sandom is talking about "pervasive technology" he's talking about mixing messages on things like digital TV, Internet-based cellular phones, palmtops and PCs. Relating to people using all those technologies, then integrating it into one view of the customer, is the challenge of our age, he concludes. That is a job that can't be done by the little ad shop around the corner. "The Internet protocol unifies it all. If we can do the best work using IP, I will be a happy camper," he concludes.
So let the word go out to Modem Media, Agency.com, and all the other interactive agencies that spent the last few years smirking at the big boys. They may look like Dan Quayle, but below the surface they're snarling louder than the Bush campaign. Time will tell if they can do better.
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Dana Blankenhorn has been a business reporter for more than 20 years. He has written parts of five books and currently contributes to Advertising Age, Business Marketing, NetMarketing, the Chicago Tribune, Boardwatch, CLEC Magazine, and other publications. His own newsletter, A-Clue.Com, is published weekly.
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