Twitter speculation suggested that €14m had been spent on Cannes entry fees alone this year. That raised the eyebrows of many. However, to one US digital company it put a challenge they face in Europe into perspective: the relative size of digital budgets.
Said Marita Scarfi, the San Francisco-based CEO of Organic: “That is a lot, lot more than most European digital budgets. In the US our average account is worth around $6m. However, we also have account spending up to $15m. In fact, we even have an account which is in its very early stages spending $3m. In markets like the UK $2m would be considered huge.”
Organic, which launched in 1993, claims to be the oldest digital business in the market. But that is not its only claim to fame. It also developed the Apache software as an open source platform. Today it has four offices in the US, but no plans to open in centres such as London any time soon.
Scarfi says the fees “just make the economics too difficult, as the staff costs are not necessarily any lower.”
She is not alone in pointing out the issue. Huge, a New York digital agency, launched into London and have pointed out that the size of UK budgets are a major challenge too. They believe that more has to be done to sell the benefits of digital and persuade UK firms to start investing a higher proportion of their marketing budgets in the area.
The agency told The Drum that many clients still look on digital as an opportunity to save money. What they should be doing is investing more, and benefitting from a far better ROI.
Organic, however, believes the issues are more complex. Said Scarfi: “I think the US is simply a bigger market, with some key differences. It is a much more consumer-oriented market - people buy a lot of stuff they do not need and are prepared to take on debt in order to do it. And in places like the UK, people are still spending in print.”
Scarfi was speaking to The Drum in Cannes, along with Steve Kerho, the senior vice president for strategy, media and analytics.