Stealth Under The Radar

Note to traditional advertising agencies: It’s time to get nervous.

Yes, the economy’s good. Yes, there seems to be a lot of work to do. Those aren’t the problems. No, the problem for traditional agencies isn’t what you can see–it’s the stealth bomber called “interactive” slipping under your radar (and into your clients’ businesses) even as you read this.

If you think back to the good old days of advertising, the ad agency sat at the right hand of executive management. The agency was consulted not only on marketing plans but also on all aspects of how to build the business. But as times changed and cost pressures rose, the traditional agency has been moved out of the spotlight and is often relegated to “vendor” status in the communications department.

Not a good situation. The result has been rapidly declining tenure, nit-picked budgets, project-driven work, and an overall decline in strategic thinking. At the same time, the rise in business consultants, specialists, and out-sourcing firms has taken a lot of the core work out of the agency, moving the level of involvement from being a partner to being a production house.

The web has been a totally different story.

While in many cases the site has come under the auspices of the marketing or IT departments, the “Web Committee” usually includes members from all aspects of the company. And more often than not, it also includes members of the executive management team that a traditional ad agency would never see. Heck, I’ve been in so many meetings with CIO’s, CEO’s, CFO’s, COO’s, and CTO’s that I’ve been tempted to change my title to “E-I-E-I-O” just to keep pace!

The result is that many web sites, done correctly, represent the entire company (and the brand) better and more accurately than the traditional advertising does. It touches all aspects of the company, making an impact on everything from customer service to tech support to sales to marketing. In fact, as I wrote in my last column, the site becomes the brand and brings with it everything that statement implies.

As a result of the all-encompassing aspect of the web, the interactive agencies are more readily seen as partners that can have a direct impact on the bottom line of the business. And I don’t mean an impact just on sales–I mean an impact on the efficiencies and overall business performance.

The figures are now starting to show this out. An interesting study just released by the Giga Information Group estimates that using the web has saved U.S. businesses over $17 billion dollars in 1998. Even more stunning, the estimate that the global cost saving impact will increase to $1.2 trillion dollars by 2002!

Where do these cost savings come from? From order handling and processing efficiencies? From electronic distribution of sales materials? From streamlined supply-chain management and procurement? And from what we traditionally think of the web as good for: marketing and customer service.

If you’re in a traditional agency that hasn’t really gotten around to building your interactive offerings yet, you’d better believe that these numbers are going to make an impact on how your clients perceive your value.

But the relentless march of interactive services doesn’t stop with cost savings. No, as convergence between computers and televisions becomes a technological reality and as more and more average folks go online, all advertising and marketing will become interactive in one form or another. Sure, the traditional methods of advertising will still work (print, radio, and TV aren’t going away), but they may start to be seen as adjuncts to the real deal–the web site and online information.

Many companies are now seeing the web and advertising/marketing as two different things, and many don’t seem to have a problem with hiring both an interactive firm and a traditional agency. But once they start realizing the impact that the interactive is having on their business, I can’t imagine that they’re not going to start looking more and more to their interactive companies for help in other areas–after all, they’re the ones bending the ears of the executives. And when this happens watch out ad agencies!

Even though the trend over the past few years has been for big ad agencies to jump-start their web offerings by buying up small interactive companies, I wouldn’t be surprised if the trend starts reversing. As more and more web companies go public and have the cash to start doing some acquiring of their own, they probably won’t be blind to an opportunity that’s smacking them right in the face.

Right now, both iXL and Razorfish offer business consulting as part of their product mix and are beginning to offer services such as video/film production and relationship management. And as companies like these start becoming true partners with the corporations they work for (like traditional ad agencies used to be), it wouldn’t surprise me if you started seeing them offering traditional advertising services to round out the mix.

The writing’s on the wall. As all business becomes e-business, those companies poised to best take advantage of all media are going to be the winners. Those that want to keep their heads buried in the sand of the analog world aren’t going to be so lucky. It’s time to get in before you get shut out and if you’re already there, it’s time to start thinking about how you’re going to grab the opportunities right in front of your face.

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