Interactive Shops Take On Larger Strategic Roles

With the fast-changing media landscape making consumers harder to reach through traditional methods, clients are involving interactive agencies earlier in the planning process and looking to them to take a more active role in setting strategy.

The Internet has progressed beyond being viewed as a purely direct-response channel to a key branding vehicle that can offer deeper consumer engagement than TV commercials—with more measurability. This has translated into a bigger role in client relationships, according to Web shop execs. “Online has become an adult, sitting at the adult table,” said Nick Pahade, managing director of Beyond Interactive, part of WPP Group’s MediaCom network.

For a Web shop like AKQA, this more often means being part of the crafting of a campaign from the beginning—or even earlier. The San Francisco independent shop worked with Microsoft on the user interface for its soon-to-be-released Xbox 360 game console. “We were working for 18 months in a secret lab before the traditional agency was even briefed on the advertising launch,” said AKQA CEO Tom Bedecarre.

As consumer habits shift, clients are in turn moving more money to digital initiatives. Mark Kingdon, CEO of Omnicom’s Organic, said his agency has seen clients up their Web budgets by 20 percent or more in the past year. “We’re getting engaged much earlier and at a much more strategic level,” he said.

For last month’s launch of its 2006 Jeep Commander, DaimlerChrysler skipped TV ads in favor of an Organic-developed broadband video series, “The Mudds,” a fictional Jeep-owning family. In a reversal of the process of TV spots translated into Web executions, “The Mudds” were converted into TV shorts to run on DirecTV and Dish TV. “We continue to challenge the here’s-the-30-second-idea approach because it’s so constrained,” said Jeff Bell, vp of Chrysler and Jeep brands.

BMW’s ongoing review for a new agency further highlights the central role interactive is playing for auto marketers. In a brief it sent to agencies in the review, the carmaker stated that “interactive represents a significant portion” of the account, and the winning agency would lead a redesign to make BMW’s Web site “the best and most exciting automotive Web site.”

Interactive media shops have greatly benefited from shifting budgets to online marketing. Chief marketing officers’ focus on accountability in the face of the explosion of digital media has played to Web-focused agencies’ strengths. R/GA CEO Bob Greenberg said his shop is sometimes the lead agency, and even when it’s not, it occasionally has a bigger budget than the client’s general shop. “We’re always at the CMO level,” he said. “When you’re at the CMO level or higher, then you have an ability to do more important work.”

Digital expertise has allowed Carat Fusion, which this year combined interactive and direct marketing, to win accounts it wouldn’t have been in the running for a year ago, said Toby Gabriner, CEO of the Aegis Group agency. In September, it won media planning and buying duties for Napster, including Web, TV and outdoor. For Kodak, it is setting strategy with offline agency MindShare, something Gabriner said wouldn’t have happened until recently.

Despite the progress, interactive agency execs say much work needs to be done before their agencies are on equal footing with their traditional brethren. Part of the lag, Gabriner said, is a generational gap in many marketing departments. “You still have a generation controlling the purse strings on the client side that may not have gotten their head around how the everyday consumer is leveraging digital technology,” he said.

And, despite the progress, there is still a residual from the dot-com boom, when many clients succumbed to the hype surrounding the Internet, warned Critical Mass CEO Jerry Johnston. “A lot of these agencies burned bridges five years ago when they promised the world,” he said. “It’s taken some time for clients to forget.”