When Abbey announced earlier this year it was putting its digital media account up for review, what was striking was not the £8m budget, but the fact the bank had for the first time separated out the digital spend from its media account.
Abbey is not alone. BSkyB, BT and Orange have split out digital spend from their overall media accounts this year, while last week, GlaxoSmithKline announced a global review of its digital creative work and strategy.
As i-level deputy chairman Charlie Dobres says: “Even a year ago, it was relatively unusual for a big advertiser to separate out digital. But now there’s a genuine bandwagon.”
Money for digital marketing tends to come from clients’ overall media budgets or from other areas, such as direct marketing. But Dobres says a significant part of the direct-response work i-level is doing for clients is being budgeted as a cost of acquiring a sale.
Some experts hold that, with the growth of the internet as a marketing medium, this move towards appointing digital specialists by clients was bound to happen; others argue that, had mainstream media agencies paid more attention to the medium earlier, it would have been preventable.
William Corke, managing partner of Harvest Digital and a former Carat group marketing director, says change has come because clients want more and better services, which traditional agencies have been slow to provide. He says: “The way that clients have bought media agency services in the past has shaped the structure of the modern media agency, which is largely price-driven. But with online, that won’t do. It has to be value-driven because of the measurability, speed and the primary importance of results.”
Digital marketing’s huge growth has been particularly pronounced in some sectors. For instance, Corke claims that Tesco Personal Finance and Norwich Union are spending roughly three times more in 2005 than they did in 2004.
Dobres says this has been good for the digital specialists: “Most of them have as much business as they can handle – there is a big trend towards this kind of stuff.”
He adds: “I think media agencies can do an extremely good job in media, but their core competence is in television, print, radio. When it comes to the internet, some of their expertise is irrelevant and there is a danger they will treat the internet as just another display opportunity.
“Traditional agencies such as MindShare have had to create separate divisions to compete with specialists.”
And while former Carat marketing director Jenny Biggam says, “Some of the media agencies haven’t done enough to make sure their teams are sufficiently large or good,” there are signs that traditional media agencies’ digital divisions are fighting back. The three agencies battling it out for Abbey’s digital account are Carat Digital, MindShare’s mOne division and Starcom Digital.
But, according to Biggam, the damage has already been done. She says: “The types of advertisers who are doing this in 2005 are the real leaders – where they go, others will follow.”
Appointing a digital specialist is not without its drawbacks, however. Biggam warns that it could lead to confusion over strategy. She says: “It is fine to have a separate arm to specialise, but who makes the strategic decisions? How do you keep things fresh if there are separate agencies involved? That is quite a challenge.”