Jeff Dachis may have been ahead of his time. Back in February 2000, the then-Razorfish CEO sat down with 60 Minutes II and, in a moment he'd live to regret, struggled to answer correspondent Bob Simon's simple question about what Razorfish actually did. "We've asked our clients to recontextualize their business," he stammered.

That answer came to symbolize the hype of the dot-com era. The Web-shop vision of acting as management consultant and innovation expert, using technology not just to help clients communicate with customers but also to invent new businesses, fell short of reality. To many it seemed like a grandiose aspiration for businesses that mostly built Web sites. The dot-com crash appeared to validate those critiques

But over a decade later, two of the largest digital agencies, Razorfish and R/GA, have slowly returned to this vision. They're betting that a combination of the recession and march of digital to the forefront of corporate challenges gives them an opportunity to move beyond selling Web sites and banner ad campaigns to create new digital products -- and, possibly, new revenue streams for the shops themselves.

"The question we're hearing is, how can digital help me change my business?" said Bob Lord, Razorfish's CEO. In previous years, this wasn't the case, he said, as Razorfish often worked with the lower rungs of an organization, either the online marketing manager or technology department. Now, he said, it's often consulting with C-level execs.

Razorfish recently played such a role in a venture backed by Citigroup and Microsoft. The companies created a new business called Bundle.com that joins together Citi's vast trove of consumer spending data with data visualization tools in an independent brand. Eventually, consumers will likely be able to compare their spending habits to people like themselves.

Razorfish was brought in as a partner on the project, with its CTO Ray Valez serving as the startup's interim CTO. Social media lead Shiv Singh worked on Bundle, which was hosted at Razorfish's offices in New York. Razorfish designed the site, built the tech infrastructure and developed the social strategy. As one of the largest buyers of Web advertising, Razorfish is advising on Bundle.com's development of an ad-based business model.

"I needed someone thinking about this 24 hours," said Jaidev Shergill, the former Citi exec who is now Bundle CEO. "That's different from what you get when you hire an external firm."

Razorfish and peers like R/GA see opportunity for mature digital agencies that have managed to move up the ladder with clients while developing a track record for delivering technology to advance businesses. The ideal is a client that invites shops in to craft a plan to take advantage of digital technology to move the business in a new direction, said Barry Wacksman, chief growth officer at R/GA. This can take time, he allowed, but there's more pressure than ever on businesses. Digital shops can bring not only the expertise of management consultants, but also the tech chops to execute, he said.

"Our model is more powerful because not only can we come up with these ideas, but we can build them," he said. "A lot of great ideas would fail if they're not well designed."



R/GA has codified its approach as "platforms plus campaigns." The idea is clients, many of them in commoditized industries, need innovation before communications. That way, they can develop a long-lasting digital innovation that campaigns can then talk about and draw people to. R/GA used the approach successfully in its string of new-business wins last year, including Walmart and Taco Bell.

Of course, the vision of acting as an innovation engine is easier said than done. It requires relationships at the right level of an organization, and sometimes outside of marketing. Razorfish, for instance, pitched Citi's growth ventures and innovation unit, rather than its marketing or technology units. In a way, said Adrian Ho, founding partner at Zeus Jones, companies are looking to such innovations to spend less on marketing, which puts those agencies in an awkward position because they're also outlets for that spending. "I don't know how you can benefit from that and also help to attack it," he said.

Lord admits that Razorfish's work on Bundle would probably not be possible within most of the agency's large clients, where its role could result in infighting, turf battles and the general lethargy of large corporations. Client silos can kill agency-led innovation projects.

Take an R/GA product innovation success story, Nokia Vine. In 2008, R/GA created an app that let users track their daily routines and tag them with photos and music. Considering the current vogue for location-based apps like Foursquare, Vine was ahead of its time. Yet the project died at Nokia, a victim of mistrust from the services part of the company for a piece of tech coming out of the marketing department.

Still, the vision is compelling to digital shops, said Tony Quin, CEO of IQ Interactive, particularly if companies curtail marketing in favor of other ways of building their brands. "There isn't going to be a stream of marketing," he said. "The way agencies have made money is there's a constant cycle of marketing. It's not going to be that way anymore."

See also:

"The New Tech Heads"

"Reinventing Retail"

"R/GA: Digital Agency of the Year 2009"