"It is the beginning of the end for digital specialist agencies." Strong words from Zed's newly promoted joint managing director Kevin Murphy. In the wake of ZenithOptimedia's capture of the £24m online chunk of O2's media budget, previously handled by Media Republic, the debate about the relevance of digital specialist outfits has resurfaced, prompting considerable passion on both sides.
The consensus among the bigger, traditional media agencies seems to be that integrated planning is the way forward.
Vizeum recently restructured to put digital "at the heart" of the agency. Media Planning Group, meanwhile, has its own digital agency, Media Contacts, embedded within the group, which operates both as a specialist and as part of an integrated offering.
In one shape or another, the big buying shops have mobilised and reorganised to meet the burgeoning demand for digital know-how.
As Zed's Murphy says: "Clients are increasingly aware that digital doesn't operate in isolation. In two, five, 10 years' time, the world will be multi-platform and multi-influence. It makes sense to go with an agency that can offer a full service."
Blurred boundaries
That was certainly the logic behind the consolidation at O2. The company's marketing director, Sally Cowdry, explains: "We've seen a blurring of lines between online and offline media and we realised we could achieve more efficiency looking at campaigns end to end, rather than separately."
It appears there is a genuine threat to digital specialists from what could be a growing preference for integrated work, at the expense of digital-only pitches.
There is also, according to cross-media players, a narrowing skills gap between the two types of supplier. Jason Dormieux, managing partner of MEC Interaction, says: "Digital was a specialism, but now people and skills are beginning to transfer. I'm not so sure there is a yawning gap in skills anymore."
John McLoughlin, managing director of Media Contacts, agrees that the gap is closing.
He says: "Traditionally, there has been a gap to exploit; many big off-line agencies didn't get digital, invest in it, or prioritise it. But most have recognised the need for a proper offering."
McLoughlin concedes, however, that in many cases there remains a lot of catching up to do. He adds: "Some big agencies are still terrible at digital. Many are struggling to find the manpower needed to deliver the most rudimentary service. Agencies with premier league reputations in offline media quite often offer league one digital services."
Andrew Walmsley, co-founder of digital agency I-Level, dismisses the suggestion that offline agencies have gained ground in the race for digital briefs and insists the gap in capabilities and expertise is "huge". Walmsley also rejects the idea that digital is just another medium, and can be treated as such by clients and media planners.
He says: "There is no evidence to suggest that digital work is moving away from specialists, or in the other direction for that matter. If there is a trend, it's that clients are getting more experienced and more discerning.
"Slowly, a bigger percentage of clients are not prepared to put up with being under-serviced, no matter what the price."
And the cost of digital media, say some, is a red herring when it comes to securing new digital business.
According to Ed Cox, head of interactive at Billetts media consultancy: "There is a much greater correlation between the size of an advertiser and rates, than the size of an agency and rates. If a client wields big budgets, it should be getting good pricing."
Early investors
Cox believes that, long term, media buying power will be concentrated in a smaller number of buying points. And yet, like McLoughlin, he believes digital specialists will thrive, particularly those that invest early in new areas, and are therefore at the forefront of change.
Mark Tomblin, director of strategy at digital agency TBG London, sees a future for accomplished specialists in complex and rapidly evolving areas such as organic search.
He also believes that, as long as demand for digital work remains strong, smaller outfits and skilled individuals may be redistributed, for instance to complete the offerings of start-up communications groups and mobile agencies. There will be no "shake-out" of digital expertise, he argues.
Recent media account reviews by O2 and the AA suggest digital work is gravitating inexorably towards offline players. But not every client wants all of its planning under one roof. The onus is on digital specialists to prove the value of their standalone services.
As Tomblin says: "Where digital agencies can't offer something that is quantifiably better, then we will see a slide to scale."
The consensus among the bigger, traditional media agencies seems to be that integrated planning is the way forward.
Vizeum recently restructured to put digital "at the heart" of the agency. Media Planning Group, meanwhile, has its own digital agency, Media Contacts, embedded within the group, which operates both as a specialist and as part of an integrated offering.
In one shape or another, the big buying shops have mobilised and reorganised to meet the burgeoning demand for digital know-how.
As Zed's Murphy says: "Clients are increasingly aware that digital doesn't operate in isolation. In two, five, 10 years' time, the world will be multi-platform and multi-influence. It makes sense to go with an agency that can offer a full service."
Blurred boundaries
That was certainly the logic behind the consolidation at O2. The company's marketing director, Sally Cowdry, explains: "We've seen a blurring of lines between online and offline media and we realised we could achieve more efficiency looking at campaigns end to end, rather than separately."
It appears there is a genuine threat to digital specialists from what could be a growing preference for integrated work, at the expense of digital-only pitches.
There is also, according to cross-media players, a narrowing skills gap between the two types of supplier. Jason Dormieux, managing partner of MEC Interaction, says: "Digital was a specialism, but now people and skills are beginning to transfer. I'm not so sure there is a yawning gap in skills anymore."
John McLoughlin, managing director of Media Contacts, agrees that the gap is closing.
He says: "Traditionally, there has been a gap to exploit; many big off-line agencies didn't get digital, invest in it, or prioritise it. But most have recognised the need for a proper offering."
McLoughlin concedes, however, that in many cases there remains a lot of catching up to do. He adds: "Some big agencies are still terrible at digital. Many are struggling to find the manpower needed to deliver the most rudimentary service. Agencies with premier league reputations in offline media quite often offer league one digital services."
Andrew Walmsley, co-founder of digital agency I-Level, dismisses the suggestion that offline agencies have gained ground in the race for digital briefs and insists the gap in capabilities and expertise is "huge". Walmsley also rejects the idea that digital is just another medium, and can be treated as such by clients and media planners.
He says: "There is no evidence to suggest that digital work is moving away from specialists, or in the other direction for that matter. If there is a trend, it's that clients are getting more experienced and more discerning.
"Slowly, a bigger percentage of clients are not prepared to put up with being under-serviced, no matter what the price."
And the cost of digital media, say some, is a red herring when it comes to securing new digital business.
According to Ed Cox, head of interactive at Billetts media consultancy: "There is a much greater correlation between the size of an advertiser and rates, than the size of an agency and rates. If a client wields big budgets, it should be getting good pricing."
Early investors
Cox believes that, long term, media buying power will be concentrated in a smaller number of buying points. And yet, like McLoughlin, he believes digital specialists will thrive, particularly those that invest early in new areas, and are therefore at the forefront of change.
Mark Tomblin, director of strategy at digital agency TBG London, sees a future for accomplished specialists in complex and rapidly evolving areas such as organic search.
He also believes that, as long as demand for digital work remains strong, smaller outfits and skilled individuals may be redistributed, for instance to complete the offerings of start-up communications groups and mobile agencies. There will be no "shake-out" of digital expertise, he argues.
Recent media account reviews by O2 and the AA suggest digital work is gravitating inexorably towards offline players. But not every client wants all of its planning under one roof. The onus is on digital specialists to prove the value of their standalone services.
As Tomblin says: "Where digital agencies can't offer something that is quantifiably better, then we will see a slide to scale."
MAJOR DIGITAL ACCOUNT MOVES
HBOS SEARCH AND ONLINE MEDIA FOR INTERNATIONAL DIVISIONS
December 2007
Nielsen 12-month total internet spend, HBOS Group, UK: £91,718
From: Isobar and Spannerworks
To: Profero
SKY PAID SEARCH
August 2007
Nielsen 12-month total internet spend: £14,502,460
From: I-Level
To: Unique Digital
ASDA SEARCH ENGINE MARKETING
January 2007
Nielsen 12-month total internet spend: £980,592
From: Carat
To: The Search Works
O2 ONLINE MEDIA PLANNING AND BUYING
January 2008
Nielsen 12-month total internet spend: £9,698,185
Estimated future value £24m
From: Media Republic
To: ZenithOptimedia
AA ONLINE MEDIA PLANNING AND BUYING ACCOUNT (WITHOUT A PITCH)
When: January 2008
Nielsen 12-month total internet spend: £3,030,948
Estimated future value: £22m
From: I-Level
To: Carat
SKY DIGITAL DISPLAY
January 2008
Nielsen 12-month total internet spend: £14,502,460
Estimated future value: £15m
From: I-Level
To: MediaCom or Diffiniti.