Questions for Chan Suh, CEO of Agency.com

Quick: name one person in the interactive agency business who still has the same title he had back in 1995.

If you haven’t already guessed, it’s Chan Suh, CEO and co-founder of Agency.com, an interactive agency that’s seen its share of ups and downs in the past few years, and may now be set to be re-absorbed into its former corporate parent, Omnicom Group.

Suh sees the wave of mergers and acquisitions in the space — most recently exemplified by the acquisition of digital shop Freestyle by Carat Interactive last month — as an inevitable and positive stabilizing factor, rather than as something to be feared.

“I do expect more consolidation,” Suh told ClickZ. “Really out of necessity more than ambition. There are quite a few companies that would be better off a part of a larger organization.”

Suh’s early experience was in publishing, first at Condi Nast and later at Time Warner Inc., where he led marketing for Details, Life and Vibe. He founded Agency.com in 1995 and since then has helmed the company through the brief, convoluted history of the interactive media biz. His leadership has often been praised as among the most dogged and clearheaded in the Alley.

Suh recently talked with ClickZ about media buying trends, Agency.com’s work with traditional agencies, and how he managed to keep his job for so long.

 

• Do you see the online medium driving offline creative?

 

For the majority of clients, offline agencies are the big drivers. This is a simple matter of economics: They spend so much more money there. While that’s the case, we’re seeing an increase in integration between offline and online media. That means the best creative should win.

The ideal scenario is for the offline and online agency to get their creatives together to figure out what’s best for the client or the brand. In the end, I find the best ideas win.

But clients are clearly putting more faith in the online medium. A good example is Miller, which created a virtual racing league online. Users win “dollars,” or points, through offline and online both. Offline drivers include “on premise” promos (in bars and restaurants), on-pack promos and other mechanisms, all of which are what I would call traditional viral marketing — really the original viral marketing — but it’s all driving people online.

Online viral marketing raises many ethical concerns. We advise our clients to be careful about respecting the privacy of online communities. The technique of sending messages out to people in the hopes that one in two million will hit — that’s not using dollars very wisely.

In the near term, the horizon is going to open up very wide because of mobile devices. It’s a frontier that we need to approach very carefully. There’s going to be a consumer backlash. We need to make sure we’re the good guys.

 

1. So what about that horizon? When and how do you expect to start marketing to mobile devices?In recent history, we have gone back to our core competencies – which are in interactive media. And mobile devices are not interactive enough, not quite yet.

   We’re back to profitability now, and have been for the last few quarters. We’ve also built up a credibility chit with clients, who know they can trust us. When mobile communications does become major league, we’ll be there.

   In Europe, mobile is much more a part of everyday life. People text message like crazy. Especially in our London office, we’ve had a lot of success using SMS, working with Heineken and other clients.

   Mobile is good for curiosity and buzz. Most of our clients are more concerned with immediate sales metrics.

    

2. How is it you’re still in charge?I think that people are not so much ousted as they take themselves out of the game. I’ve always tried to be consistent with how the company is run. That’s sometimes been derided as a conservative approach to an innovative medium, but it’s worked well in my case.

   I’ve also been careful about getting great people and giving them the room to do what they do well. Our COO Don Scales is a good example.

   Actually, clients also like it. They want to know there’s a stable core to the company.

   Of course, I’m not involved in every project in the way I was in the early days. That’s just a matter of volume. When you think about it, six to seven years is not that long in terms of tenancy.

    

3. One of your clients, Discovery, last year bumped its online spend after a year of retreat. Are other clients doing this? What are the broad spending trends?Generally, our clients are upping their spend online, sometimes at the expense of offline. British Airways, Visa, T-Mobile, and BT are all good examples of this. These clients are looking for efficiency as well as a return on investment. And the work we provide gets results. It’s that more than any theoretical analysis of spending that’s driving our clients to spend online.

   I’d say most clients are either holding or slightly increasingly their spend. That’s good news, when you consider that most clients are still cutting their spend overall. It’s still a tough climate, and they have to be very careful with each penny. Which is a good thing, from a certain view. It really separates the men from the boys. At this stage in the life of the interactive industry, it creates new pressure to get results.

    

4. How do you feel about the half-page banners, full page interstitials, the bigger and bigger-ness of formats?My opinion is that bigger is not necessarily better. We’ve had incredible success with smaller sizes. We’re going to try larger sizes if the clients want it, but success is success, and our campaigns have shown that real estate is less of a factor than creative.

   It’s really about interactivity, not how big a piece of the screen you take up. From a consumer’s standpoint, the larger formats are very intrusive. From my point of view, they’re all right at best.

    

5. You were in publishing before you founded Agency.com. What words of wisdom would you offer online publishers right now?I would suggest to them that efficiency and effectiveness should win out over CPMs. We don’t look at cheaper as necessarily the determinant for placing ads. We look at how effective campaigns can be.

   I also think publishers ought to do some clear studies of their audiences. It’s really very useful to agencies to have that info. I’m talking about studies on a more individual basis than what the IAB does with its interactive effectiveness studies. Each magazine is different, as is its audience. How is it different? That’s the kind of specific data we need.

    

6. How do you work with Omnicom agencies on the traditional side?At the moment we are not wholly owned by Omnicom; the ad company is looking to acquire our shares from Seneca [an investment company Omnicom formed in a joint venture as an effort to divest itself of its interactive investments]. As far as the day-to-day is concerned, the relationship doesn’t make a whole lot of difference.

   We work with traditional agencies quite a bit. Increasingly, traditional agencies see the interactive medium as a legitimate means of communication. The clients see it that way as well. So they expect the traditional agencies to work with interactive agencies.

   Even if we do become a part of Omnicom, I don’t think that will change the fact that traditional agencies will fulfill these client expectations. They leave the prioritizing to the clients, and the clients are asking for interactive.