Are the digital and legacy media sides of the advertising industry heading toward greater integration?
Michael Miraflor, who works at the Zenith agency, gave a presentation at the IRTS Faculty Seminar recently. He claims that ad agencies specializing in “digital” only, that is online and other new media, peaked during 2006-2010. Now, he says, agencies that have been digital only should integrate into legacy media (print, television, etc.), and legacy media agencies should develop more digital expertise.
First, clients have begun to chafe at paying multiple agencies, one digital, one legacy media, for one campaign, not to mention coordinating the agencies’ efforts.
Second, digital-only agencies, while able to exploit an expertise that few had developed in the early aughts, are no longer the only ones developing this expertise.
Third, many digital agencies suffered from too rapid growth and undercapitalization. Without a parent or partner agency, these digital agencies could not sustain themselves and became victims of their own success.
Fourth, digital media placement is far more complex to execute than traditional media, raising costs, but advertisers pay lower rates and CPMs for digital advertising, leaving the agency in the crunch.
Miraflor also argues that ad agencies must not focus on digital media at the expense of legacy media. While the “spends” on digital are increasing, legacy media remains significant. Noting that he is now learning the magazine business in addition to his digital area, he suggests that all agencies should cross train their personnel. Cross platform campaigns will become more common, requiring agencies to coordinate among media.
Miraflor’s comments remind me of the 1930s when ad agencies discussed whether or not to enter the new medium of radio. Some agencies resisted, arguing that radio was a fad and worrying that radio work would undermine their relationships with print advertisers. Some agencies (Benton & Bowles, Blackett-Sample-Hummert) specialized in radio, selling themselves as experts in a medium few understood, developing new strategies for the new medium for adventurous advertisers. Other agencies (Batten Barton Durstine & Osborn, J. Walter Thompson) developed radio departments in order to keep their large, traditional clients who wanted to use radio in addition to print. All these agencies also debated how best to use the new medium of radio, some arguing they could simply extend their print strategies into radio; others arguing that radio, an aural rather than visual medium, required an entirely new set of strategies.
As we watch the digital transition unfold, I would guess that we are today at a similar moment that radio was in 1937, about a decade into the radio era: when radio was well established as an advertising medium yet advertisers were still unsure how best to value it and use it. Advertisers today do not doubt they should be using digital advertising. The main problems advertisers have with digital media are how to value and how to use digital media effectively. Stay tuned for about another decade or so to find out.