What Exactly Is Going On at iCrossing?

Hearst's digital agency is beset by turnover as it expands beyond search

From the outside looking in, iCrossing seems stuck in search. Yet to Powley’s thinking, search represents only 42 percent of the agency’s business, while 22 percent lies in social and content (including a surging video practice). In terms of boots on the ground, competitor 360i—which launched in 1998, the same year as iCrossing—says it has well over 100 community managers alone working on clients’ social media accounts, not including its real-time marketing practitioners and social-focused creatives. That’s triple the size of iCrossing’s entire social team. It’s worth noting that 360i hasn’t been nearly as prolific at search marketing, but comparative staff numbers indicate that iCrossing has a long way to go in growing its social practice. 


 “You just look at the evidence, and there’s one agency shedding a lot of staffers while everyone else is hiring a ton of people,” says Wohlwerth. “It makes me nervous, seeing everyone running for the exits. You wonder what’s going on there. It is one thing if they are replacing people with great new talent, but it sounds simply like more people are leaving than coming in. That doesn’t bode well for the future.”

Adds one director who left iCrossing last year: “Search is still very much the bread and butter—and that’s not bad at all. They might be Google’s top customer. But other things haven’t gone according to plan.”

Several former staffers spoke with Adweek under condition of anonymity—either because they signed nondisclosure agreements or to avoid burning industry bridges. It’s worth noting that most of them went out of their way to mention how iCrossing could be an “incredible,” “wonderful” or “fantastic” (among other positive adjectives) full-service agency with the right level of commitment. But in the opinion of nearly everyone Adweek spoke to, Scales was shown the door last year because Hearst wanted a more profitable bottom line—and brought in Powley to achieve that. Many had expected Scales might leave at the end of 2013 , but not in June.

“Building a state-of-the-art social media practice, a creative practice, takes a long-term commitment to talent,” says another former iCrossing lead. “You cannot do that if you are overly focused on the profitability all of the time. [iCrossing] is trying to become something it’s never been, and that’s a full-service agency.”

Indeed, the picture painted by former staffers was more about the bottom line than the creative process behind paid or earned social media. They believe iCrossing wanted profit margins in social and content similar to those it enjoyed in its sweet spot of search. (There are few media options out there with profit margins that come close to search, where creative can be automated; in fact, search and social are very different disciplines.) According to multiple former staffers, the goal was north of 60 percent profit.

“I found, time and time again, the reason why we were not getting new business was because the margins were outrageously high,” says one former staffer. “We would stay up all night in a hotel getting ready for a pitch only to find out it was all for nothing because of the cost [to the client]. No matter how great the work, the margins were so high—there was no way we were going to win it. That’s actually pretty common at agencies from what I’ve seen,” but the source believes it was worse at iCrossing.

Powley bristles at any suggestion the agency’s moves have hurt the business, noting that the agency grew revenue 10 percent in 2013 over 2012, of which one-third derived from social business, according to agency reps. (eMarketer stats show that social ad buying grew a far more robust 43 percent in the same period, whereas search spending rose 14 percent.) He suggests that he whipped the business into shape after a less profitable first half of last year. And he characterizes his company’s social return on investment as “good.”

“The second half [of 2013] was phenomenal in terms of revenue growth, new business potential, in profits, in realignment of people, in general sentiment of the people,” he adds.

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