Chris Thurling, 3Sixty

Shifting Sands

Apparently we’re living through the first recession since the early 1990s. But if you’re involved in digital, our last major downturn was much more recent than that – when dot.com turned to dot.bomb. 2001 to 2002 were two pretty tough years for most of the fledgling digital agencies, and unfortunately quite a few regionally didn’t make it.

So ever since the wheels came off the ecomnomy in 2008, I’ve been waiting for the resulting tsunami to sweep away agencies just like it did seven years ago.

But so far, to misquote Mark Twain, “reports of our death have been greatly exaggerated” and most agencies, including our own, aren’t hiring new people, but there hasn’t been the wholesale carnage that many of us feared at the turn of the year. Anecdotally digital agencies seem to be holding their own, although most people I talk to have found it a major struggle to get larger projects signed off and there’s even more pressure than usual around fees.

Martin Sorrell predicts a recovery in 2010 – and love him or loathe him he’s usually right - so attention can now start turn to what the post-recession world will hold for digital.

Sorrell’s prognosis is as good a place to start as any. To quote from WPP’s 2008 Annual Report: “More of our work will be in marketing services, the so-called below-the-line areas… – particularly direct, interactive and internet communications.”

The question is, who will benefit from the ever increasing importance of digital in the marketing mix?

I think that there’s going to be an interesting battle between the specialist digital agencies and the integrated agencies for the strategic and creative high ground with clients. Undoubtedly most “traditional” agencies have made major in-roads into digital territory in the last four to five years. For example, those running direct marketing agencies tell me that digital accounts for something like 60% of their business now.

However, there are signs that the more ambitious digital agencies are planning a fight back, hiring some of the best young creative talent and putting together a more full-service offering, including such disciplines as media and account planning.

My prediction is that the term “digital agency” will become increasingly anachronistic, a trend accelerated by this recession. There will be agencies that underestand how interactive, real-time technologies are changing the relationship between brands and their customers – and those that don’t. As clients look to drive down costs – driven by ever more powerful procurement departments – there will be growing pressure to de-couple strategy, insight and creative from production (as happens in TV).

It will be fascinating to see how today’s crop of digital agencies, most of whom make the majority of their fees “building things”, respond to the shifting sands