Size and Specialization?

  |  August 28, 2013   |  Comments

As channels become more integrated and email is more central to CRM programs as a whole, the pure specialists cannot provide the breadth of capability that is required.

I must start this column with a disclaimer. As the CEO of an Omnicom agency I cannot comment on and am not commenting on the Omnicom-Publicis merger. I also have no insider knowledge of the merger, just a perspective on the history of email in big advertising agencies.

Innovyx has been owned by Omnicom for 13 years now. Over that time much has changed in the email world and also in the advertising and marketing worlds as a whole. So it was with great interest that I read Simms Jenkins' column "Size or Specialization?" His view from the outside hit on some key points about the relationship major advertising and marketing agencies have with email.

Though the major headlines regarding the Omnicom-Publicis merger focus on potential client and talent losses and whether or not there will be economies of scale and synergies within the organizations, I think Simms highlighted the real issue for email with big agencies.

I'm not convinced that Adam Kleinberg's wobbling drunkard analogy was anything more than a cheap dig, but I agree that the question of where email fits in a big agency is significant. Simms hit the nail squarely on the head when he called email a hyper-specialized discipline. Stifling of innovation, client, or talent diasporas, etc. are aside from the real challenge.

Email is a hyper-specialized discipline. It is complex and sophisticated with its own do's and don'ts, capabilities and limitations, even its own laws and regulations. It is also a major sales driver for many companies. The challenge this presents for large agencies is that it requires significant focus and expertise, and yet despite driving sales, generates relatively insignificant revenue for the agency when compared to other channels. This is why so few major agencies have effective email practices and so much work is done by small independents, systems integrators, and the email service providers themselves.

With all that said I see the challenge of "Size or Specialization?" somewhat differently.

There are benefits to size. It takes a certain size to handle an entire cross-channel advertising and marketing program and ensure that it is coordinated and integrated across the globe. In addition, the economies of scale and the stability that come from an organization with substantial resources are an important consideration for many clients.

There are also benefits to specialization. It's great to work with a small, hungry, nimble agency that punches above its weight and that focuses on a niche in which they are true experts. I've written before about how I believe many agencies underestimate the complexity and sophistication of email as a (I really like the phrase so I'll use it again) hyper-specialized discipline.

Here's the rub. I think that increasingly enterprise clients aren't prepared to accept the compromise of size or specialization. They want to have their cake and eat it too. They require both size and specialization; breadth and depth in services; deep channel expertise across all channels, not just one or two.

This presents an opportunity and a risk to email specialists. The risk is that as channels become more integrated and email is more central to CRM programs as a whole, the pure specialists cannot provide the breadth of capability that is required. The opportunity is that, like clients, larger agencies (and holding companies) are increasingly recognizing the value of email specialists and many are becoming open to partnership.

The risk for large agencies is that they'll fail to recognize what a key revenue driver and hyper-specialized channel email is and continue to underestimate it. As an Omnicom employee I certainly hope that Maurice Levy's statement does relate to email and a future vision for breadth and depth of services. I'm convinced that's what clients want and what we need to deliver.

Image on home page via Shutterstock.


Derek Harding

Derek is the managing director of J-Labs, Javelin Marketing Group's technology skunkworks, a role that draws on his 20 years of experience and leadership in the fields of marketing and technology. A British expatriate based in Seattle, Washington, Derek is perhaps better known as the founder and technologist behind Innovyx, one of the first email service providers later acquired by the Omnicom Group. An industry veteran and thought-leader, Derek is a regular expert author, contributor, conference speaker, and takes an active role in a number of industry and trade groups.

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