Specialist digital agencies Vs traditional advertising agencies - Part 1

Robin Thomas advertising in India currently constitutes a mere 2 per cent of the total advertising pie at around Rs 600-650 crore. Over the last few years, specialised digital agencies have gained prominence in India and digital advertising have become part of marketing plans for brands. However, digital advertising is still at a nascent stage in India.

The scope and growth opportunities are there, and now even mainline or traditional advertising agencies are setting set up digital agencies to explore the medium and include them in their overall marketing initiatives. While there may not be many specialist digital agencies in India today, nevertheless in the near future there is scope for more specialist digital agencies. Moreover, in the long run there lies scope for consolidation, which could be through mergers and acquisitions.

exchange4media spoke to some digital players from both traditional and specialist agencies on the advantages each of them have over the other and for the brands, the challenges and the road ahead.

What the specialists have to say:

According to Anurag Gupta, Managing Director, DGM India observed, “The key difference lies in the ‘Centre of Excellence’. Barring one or two, mainline Ad agencies have not created digital offering as a centre of excellence and hence the offering they have on Digital is very pedestrian. On the contrary the bread and butter of specialised stand alone digital agencies is digital media and hence their offering is far superior compared to the mainline agencies.”

Sandeep Singh, Business Head, Quasar observed, “I believe digital advertising agencies can bring lot of focused effort and expertise on digital. In the hands of digital agencies clients digital initiatives get their due weightage because digital is not just one part of our business, it is our business. If you look at specialist digital agencies most their top management is from hardcore digital backgrounds, so it is in the DNA. Hence digital advertising comes to them more as a passion than compulsion.”

Atul Hegde, CEO, Ignitee Digital Solutions Pvt Ltd stated, “To begin with we are ‘specialists’ that says it all. The domain is new, the consumer interaction with this medium is different and more often than not technology can be a differentiator in the way the brand message is delivered. All of this requires a certain expertise which only pure play digital agencies can offer. Also this is one medium which is changing at the speed of thought may be even faster, hence you need a dedicated team that follows this change and helps clients leverage new platforms for brands.”

Amardeep Singh, Co-founder Interactive Avenues explained, “Digital advertising encompasses a host of services beyond the regular creative & media services that mainline agencies offer. It also requires a strong understanding of technology and the skill sets are required are much diverse. SEO, SEM, analytics, online creatives (which are very different from offline) web development, social media monitoring and marketing, online reputation management, mobile marketing, application development, CRM & technology services- each of these are specialist functions and mainline agencies’ understanding of these functions is limited.”

He further explained, “Digital agencies not only have this expertise in house and are looking at the new trends in each of these functions but, are also able to integrate the advertisers approach across these functions.

There is a shift in consumer mindsets and the marketing paradigm is moving towards two way interactions & meaningful conversations.

The 30 sec commercial is dead as the consumers are vocal and demand “More” from brands- more interaction, more responsiveness, more recognition and rewards.”

What the traditional agencies say:

Sandiip Kapur, CEO, Promodome Communications highlighted, “Traditional agencies have a “huge advantage” over pure digital agencies when it comes to strategic capabilities. Specialised digital agencies have a reputation for recycling ideas across brands and categories. That doesn’t always work.

Integrated shops have people in them that understand digital. The need of the hour is that traditional agencies need specialized people who understand both.”

“While some digital agencies specialise in a wide variety of media, traditional agencies are highly specialised in their own particular niche. For example, some agencies may specialise in web, search engine optimization and streaming media while another digital agency may specialize in television and print. The advantage with traditional agency is that it can look at net as well electronic media” he added.

Sudhir Nair, Vice President G2 South Asia noted, “The most obvious advantage which a mainline digital agency can offer is the ability to provide integrated communication ideas. However there are many aspects to this conversation. One of the key differentiator probably is the fact that, mainline digital agencies would keep the brand and the brand thought at the centre and create ideas that deliver on those. Technology just tends to be an enabler to deliver those ideas. Also a mainline agency with global presence has the luxury of tapping into international expertise and case studies, which makes it easier for global brands to work with the agencies local offices.”

Sanjay Dhar, Co-Founder and COO Integrid Media Pvt Ltd, said, “Mainline agencies generally have vast strengths when it comes to traditional media. Advertising on digital media requires a very different set of skills and expertise and deep understanding of the complex technologies that are the mainstay of digital advertising, which is not generally a strength with most mainline advertising agencies. The single most compelling advantage that specialist digital agencies offer is the ability to de-mystify the complex world of digital media and harness its true power to deliver results to advertisers that most traditional media and mainline agencies are not capable of doing.”

The challenges:

Singh of Quasar said, “I believe the only challenge that we face is that we don't get opportunity lot of times to be part of developing the core communication idea. Digital most of the time is an afterthought to clients so we have to make good with offline creatives which may or may not work on digital. The scene is changing for sure.”

Gupta of DGM India said, “The irony of the matter is despite being far better than the digital arms of mainline agencies, the specialist digital agencies have to fight much harder to win and sustain same client!! Also, advertisers think of digital medium as another extension to their media plan and hence will want the agencies to work with similar margins. The problem with this is that digital spends are a fraction of the offline media spends and the digital medium has to not only do media planning, buying, but also creative design, execution and the most intensive part is the ad operations and campaign optimization. Hence even a full 15 per cent fees in some cases may not be profitable for an Agency handling a digital campaign.”

Hegde of Ignitee Digital Solutions said, “The good news is that challenges are fast turning into opportunities in the new media space. The downturn last year was a boon for us, as it took the dependence away from BFSI clients and got more traditional categories like auto, FMCG etc on board. The one biggest challenge that I see is the mindset of the brand manger and the inertia to try out a new medium, but have to confess that even this is fast disappearing.”

Singh of Interactive Avenues said, “The advantage that traditional agencies have is that of existing client relationships and scale. Digital agencies have to put in twice the amount of effort to get a client on board. However the trend that we have noticed is that when advertisers become serious about their digital advertising and when it becomes key to their marketing initiatives, they realize the need and prefer to work with specialist digital agencies. In digital advertising the job of the agency does not stop after media planning, buying and releasing the ads. Infact, a whole lot of work is done during the campaign in terms of continuous optimization to ensure the best ROI for the advertiser. Hence, it is impossible for specialist digital agencies to work on such thin margins since its more manpower intensive.”

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