News Media Focus Group

Therefore, The Drum thought it a good time to get some of Scotland’s leading new media thinkers around the table to discuss how far their sector has come in such a short time, how it has got there, the challenges it faces today and where it is going. Meeting at the headquarters of SMG’s online portals, S1jobs, S1home and S1play, to debate new media where S1’s marketing director, Ewan Colville, Limone Media’s founder, Gerry McCusker, Colin Walker and Dino Squillino of 2 Fluid, John Campbell of Dijitol and John McHugh of Connecti.

As a client, Colville started the debate, giving his opinion of how the agencies that he has relied upon over the last two years to launch and maintain the various SMG web portals have developed in the last five years.

He says: “S1 has only been in existence for two years, but back then we put much of the work we needed to do out to pitch amongst various new media agencies. It was really hard for us back then to really get a handle on exactly who was good in the marketplace and who were the respected names, because, to be honest, some of the bigger names weren’t that impressive. We felt that much of the technology was taking precedence over the design and usability of the site. Sites were very high calorie and Flash heavy. They were not user friendly, but user hostile.

“No one single agency over the last two years has emerged as a real frontrunner, in my opinion. What we have seen is an explosion of new media agencies in Scotland and then a period of contraction. Now we seem to be entering a period of consolidation, with examples like Flammable Jam going into MMI.”

Gerry McCusker, whose Limone Media recently took over Flammable Jam and moved it into the MMI stable, believes that the new media sector in Scotland is still very immature and has some way to go before it really comes of age.

“There are multiple agencies, all with great ideas, but I would say that the agency side of the business has very much followed what happened to the dot.com companies themselves. Everybody believed they had a good idea and everybody believed that they could do it.

“Having played on both the client and agency side, I remember the early days when you would ask for some online work to be done and you would have absolutely no idea what you were going to get or what value you were going to get. You could get the same piece of work done for £5,000 as you could if you paid £50,000. It has taken time for people on both sides of the fence to get to know what is what and how this whole thing should work. It is still a bit of a mish-mash.

“I agree with Ewan, there will be more consolidation to come. Things are tough out there at the moment and if anyone is saying they are doing well since 11 September they are either very lucky or lying. The last few years have not been easy for agencies, but in a way it has sorted the wheat from the chaff.”

John Campbell of Dijitol agrees that after a period of boom a period of harsh reality, which has seen the number of agencies founder, has ensured that the quality available in Scotland remains comparable to elsewhere.

“The dot.com crash was perhaps the best thing that could have happened for the new media industry,” he says. “It took all the hype out of it and clients now come to agencies with a list of expectations that are more manageable and more achievable. Most people in new media today are pretty much self-taught and have come from the ground up. Now they have to deal with very sophisticated clients. It has been a steep learning curve.”

Colville adds: “The smaller agencies now need the credibility that they get from having a bigger set-up with more size and scale. I think it puts the client in the comfort zone when they know they are not only dealing with two guys and a Mac in a back bedroom. There is more behind it, a more creative and organisational force.”

The reasons for this current period of consolidation are many and varied. Clearly, as advertising budgets have been slashed across the globe, the amount of money pumped into online projects has been hit hard, therefore hitting new media agencies hard. If you bear in mind the traditional equation that only between 2 and 4 per cent of a client’s advertising spend is put into online then that must now be a tiny fraction of what it was two years ago.

Colin Walker, technical director of 2Fluid, which was born out of The Reality Group, explains that clients’ increased understanding of new media is also affecting the way in which the new media sector is being shaped.

“Clients have become much more aware of what is available and are now looking to extend their external systems into their websites,” he says. “They are more aware of what they can do and what we can do. Therefore, clients are becoming more demanding of their agency and want more for less. That is taking its toll on agencies and as a result we are seeing them huddling together and consolidating their resources and their skill sets.

“It seems to be cyclical. Groups are being broken up and getting back together elsewhere and I don’t really see that process changing in the near future. If the market gets stronger, I’m sure you will see groups breaking up again and new agencies being born elsewhere.”

Connecti’s marketing director and co-founder, John McHugh, agrees that the novelty factor of new media has worn off and that clients now want more than a web presence that is “nice to look at”.

“We only entered the marketplace three years ago, but the old adage ‘there are three years to every internet year’ couldn’t be more true. In the last four years we have seen the likes of BlackID grow and become the big thing by doing some excellent creative work and then ItsNotRocketScience and Flammable Jam coming out of it. I don’t think it has been a bad thing to see companies falling by the wayside. Either it was because they were not good enough or they were burning too much cash or they weren’t really in it for the long term anyway. There were too many people who got into new media to benefit from the early gold rush but, as we know, the only people who benefited from the gold rush were those selling the spades and shovels.

“The consolidation we are seeing is good because it means that the good players are still around, but the whole novelty factor has worn off for clients. Organisations are now looking at it to get a return on their investment.”

That is true. Clients no longer simply want a website that flashes with eye-catching images and takes the best part of the morning to load. They want a site that has clear commercial benefits to their bottom lines. A site where they can interact with potential customers, a site through which they can sell products, research their target audience and entice potential customers to become customers through CRM strategies. This ultimately means that the online function has to be integral to the traditional marketing activity. No longer can it be tagged on at the end. More often it is now at the top of the agenda from the first client briefing.

Campbell says: “Clients are definitely looking for more bang for their buck. They expect more from us. They expect data collection and other things that can add value to their business. Branding is obviously important to them on their site, but marketing managers are coming under pressure and their budgets are being squeezed. If they want to commit to online there is sometimes a question mark hanging over it asking ‘what can you offer us which will take our business forward?’”

“Clients need to know exactly what is happening with their site. It’s no good for us to say we can get you 300,000 page impressions. That is fine and dandy, but is that 300,000 people going in and out time and time again? Another favourite is people saying we have people on our site for 15 minutes at a time. You have to ask is that because they can’t get out or because they can’t load the flash or find what they are looking for?”

McHugh says: “In the past we were trying to sell e-business or CRM consultancy to clients and they were coming back with ‘But we just want a website because everyone else has got one.’ It was the old ‘me too’ effect. But now they don’t just want a website, they want a CRM strategy and so on.

“The thing that is key to our industry is that it can be measured. There is more analytical capability available than any other traditional marketing medium. That has meant that we can actually evaluate and measure the success of our strategies and solutions. I think companies are now looking at us in expectation that we can give them a return on their investment and we can give them key performance indicators. The clients that we are speaking to are now asking us ‘what can you do for my business?’, ‘how much can you increase my revenues?’, ‘how much can you reduce my costs?’ and ‘how much can you increase our productivity?”

According to Colville, the days of using the website as merely a brochure dump are well and truly over, but he says that clients cannot simply get a website and expect people to visit it, they have to be given context.

He says: “A lot of brands have gone through the process where, early on, their website was just a brochure dump. I remember looking at one particular beer client’s website and it was quite literally a scan of their annual accounts. Tennent’s, where I used to work, had the brand website, but that site was not really on its own. They had to give it some context. That context was tinthepark.com or, more recently, notattheworldcup.com. Consumer brands have got to create a context for people going online.

“Clients really want joined up thinking now from the very start of a campaign or project right through to what goes online. A lot of traditional agencies are moving towards becoming integrated anyway, so they can deliver full through-the-line solutions, or they are pulling together virtual agencies so they have those resources available to them through alliances. So, rather than the website being an afterthought, questions such as ‘does it work online?’ and ‘will it extend online?’ are being asked at the very beginning of the creative concept.”

It seems the subject of integration continues to be a moot point for many in new media. Traditionally, as the creative advertising agency has been the marketing director’s lead strategic agency one train of thought is that it makes sense for advertising agencies to have an online capability to ensure full integration from the press ad in the Daily Record to the online website.

However, views remain mixed on how well ad agencies have reacted to new media.

McHugh says: “I think many of the big advertising agencies have struggled to come to terms with new media. Technology and creativity are often oil and water and I am sure everyone around this table has a team of creative people and a team of technical people. They do not always fit together well.

“The principles of traditional advertising differ a lot from those of new media. We have had most of our success when we have partnered a traditional marketing consultancy. But it is two totally different mindsets. You are explaining the whole new media offering to them and it is a real education process. The first thing we ask the ad agencies we partner is about measurability, defining advertising goals against advertising responses, and what they do to measure traditional marketing, because when clients are asking us about ROIs, KPIs, evaluation, and so on, we are asking what they do and few actually do anything. Some ad agencies are way behind.”

McCusker suggests that traditional advertising agencies may not be comfortable with new media. He says: “I think there may be a technological barrier there. It is almost a fear of the unknown. Advertising agencies may have a role to play in new media if they start taking it more seriously and perhaps start merging with online agencies. At the moment it is still seen by many ad agencies as an add-on, it is still not really seen as an integral part of the process.”

However, Campbell disagrees that all advertising agencies treat new media with suspicion. His consultancy Dijitol is part of the integrated agency Citigate Smarts and he says that he is fully involved in all pitches that the agency works on.

“I don’t really think there is an ad agency in Scotland, other than ourselves, who are doing new media well. Faulds had Megellan and The Leith and The Union have a new media offer, but I think that the new media agencies will be absorbed as agencies or as individuals, which is what is happening down south. It is the ad agency that gives new media its own space to develop which will ultimately succeed.”

However, Colville suspects that advertising agencies trying to get into new media will now struggle to attract the very best people. He says: “The ad agencies are going to have to try very hard to attract the most talented people in new media because they do tend to gravitate towards working for themselves or working with like-minded individuals specialising in new media. Ad agencies have come into it quite late, but they need a whole new media ethos so they can really offer clients a fully integrated solution. What many have done is form alliances with new media agencies.”

So, where does Scotland’s new media industry go from here? Will it grow and expand? Will Scotland’s new media agencies one day replace the likes of The Leith, Faulds and The Union as the lead agencies on many accounts? Which direction is it heading in?

McCusker says: “I would imagine that you will always have a number of small leading-edge-type companies who are out trying to change the way you do things. That is really where the bulk of agencies are right now. But I would imagine that the larger advertising agencies and the larger marketing agencies will start looking at consuming the new media agencies which are around just now.”

So, does that mean the end for the small one man and his Mac proposition? 2 Fluid’s Dino Squillino believes not: “The two- and three-man operations aren’t going to disappear because at the end of the day your leading edge or new ideas sites have no massive budget behind them. There always has to be these guys who are breaking new ground so that the bigger guys can swallow them up.”

Also another big area of potential expansion for Scottish new media companies appears to be software development, as Walker explains: “The last year has seen a lot of new media companies diversifying. They have all come up with a new software product or two. They either have time on their hands to develop these products or someone has asked them to build a software for them which they then repackage and sell on again and again. I think that is now becoming the norm. Agencies are building something for a particular client, realising the value in it, so they repackage it and start punting it out as many times as they can.”

However, Campbell concludes that Scotland’s new media agencies have to move away from the technical jargon and be able to talk marketing speak before clients and ad agencies alike will fully embrace them.

He says: “The new media agencies which are still around today and will be around tomorrow are the ones that can speak the clients’ language. The perfect example of that was Gordon Black, who came from a design advertising background. He would walk into a room of clients and they wouldn’t know if he was advertising, design, DM, new media, or what. I think the image of the geeky, quirky guy in sandals and socks has gone now and the whole perception of new media by clients will continue to become more sophisticated.”