Digital Shops Caught in Transition

NEW YORK Just three years ago, The Barbarian Group's executives made clear what they were not: an agency. Instead, they likened their skills in building projects like Subservient Chicken with Crispin Porter + Bogusky to how TV production shops work with agencies. In late 2006, TBG began to shift from purely working for agencies to taking clients on directly. What at first were projects for viral videos or Internet games soon became brand assignments. Rick Webb, TBG's COO, remembers sitting in a meeting with new client Kashi in 2007 and realizing the shop was in new territory."It was our first time spending time at the table of marketing people with a brand," he said. "The conversations were totally different. When we were talking to agencies, the strategy was, Let's do something cool. With the brand, ROI becomes incredibly important, sales decks, retail channels, all that stuff we'd never had to deal with before."TBG's experience is one shared among a band of digital shops that worked for years in the background of digital work. Ideas dreamed up by a creative at an ad agency would get thrown over the fence for tech specialists to bring to life. The upside: The production model is more flexible during downturns, since shops aren't at risk of losing a big account. The downside: Credit for the work, particularly at awards shows, was hard to come by, and access to clients was limited at best and often nonexistent. While they had ideas about how brands needed to change to operate in the digital world, they didn't have a seat at the table to air them.Shops like Firstborn Multimedia, EVB and Big Spaceship are all at various stages of making a transition from pure production to an agency-like model, although where they end up will inevitably differ. More often than not, the shops have found the evolution difficult, changing their dynamics internally and hiring for new roles that make an odd fit in their tech culture.TBG needed to reconcile a culture that celebrated itself as a group of "barbarians" with the need to beef up client services, strategy and planning. The experience with Kashi convinced Webb that the shift would take longer than he originally thought. Eventually, TBG aims to help brands become relevant in digital regardless of the execution."If you want to be a true partner in digital," he said, "you have to do more than production."It's a path similar to the one EVB has taken. The San Francisco shop began its life in 2000 doing production work for agencies. It partnered with Crispin to build the Cannes Lion-winning Whopperettes site. The path for a shop like EVB wasn't clear as it would have been in previous times, CEO Daniel Stein said. With the constant changes in digital technology, EVB saw the opportunity to move into the agency sphere after Omnicom acquired a 50 percent stake in July 2006.But EVB ran into a frustrating problem: Its roots as a production shop were often held against it. Stein recalls a pitch for the Gallo wine account where the client was impressed with the marketing strategy it laid out, but "they said we were too much of a digital production shop," said Stein. "There's almost an assumption you're not a great strategic shop."EVB ended up building a roster of direct clients, including Adidas, Major League Soccer and Alberto Culver. Its work stretched beyond digital to events, print and TV. It recruited Stephen Goldblatt, a group creative director from Goodby, Silversetin & Partners, as ecd. But the cratering economy meant a strategic retreat. In March, EVB decided to put its excess production capacity to use by going back to agency production work. Production work will now make up 50 percent of the shop's revenue this year, Stein said."We're not looking at the agency of the future being an 'either/or,' production or strategy," Stein said, pointing to the model R/GA has built, which relies heavily on production prowess.That's the approach followed by Firstborn, a 50-person New York shop. It has raised its profile with projects like the Puma Lift site with Droga5 and the "Join the hunt" M&M's campaign with BBDO. But for the most part, Firstborn is content to split direct client work with production for agencies. It is intent on building its 3-D animation capability, for instance, rather than try to beef up brand strategy. Lately, agencies have gotten better at treating Firstborn as true partners rather than "IT monkeys," said Michael Ferdman, the shop's president."Production is so much different in digital," Ferdman said. "I say to clients it's better if we're involved early even if we're doing sheer execution."Clients continue to shift money from traditional to digital channels. Yet the pressure on general agencies might mean they are less willing to pass as much revenue through to digital shops -- and are more protective of their turf as trusted advisers to clients."What I'm starting to see in this economy is big clients have come into their big agencies and said, 'We need to do a 50 percent fee reduction,'" said Colleen DeCourcy, chief digital officer at TBWA Worldwide. "The big agencies are saying they can't maintain headcount. You start to get clients pushing digital back into agencies, whether they're ready or not."Those kinds of moves are old-school thinking to Michael Lebowitz, CEO of Big Spaceship, since the idea of integration "hasn't borne fruit." The changed landscape will inevitably lead to new models that blur production and agency services. "One of the big issues for the traditional TV-driven agencies is they have outsourced craft that forget how to do it and its value," he said. "Craft is more important than ever. Making things and seeing what sticks in a time of flux is the only answer."

Performance Marketing

Digital Shops Caught in Transition

Brian Morrissey

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Brian Morrissey