Build or Buy: Keeping Pace with Interactive Advertising Growth

The good news is that recently released statistics indicate stronger than expected growth in online advertising.  Here are just a few of the numbers that have crossed my desk in the past few weeks:

The bad news is that these sources don’t address the challenge facing advertisers and their agencies in finding qualified talent to create the increasing volume of ads.  I hear every day at Affinity Express that companies in all industries and ad agencies have a severe gap in mid-level personnel who can handle the day-to-day work producing content and executing campaigns.

Here are a few more opinions I found.

  • Starcom CEO Lisa Donohue, in an article by Shane Steele for MediaBizBloggers, cautioned that we are suffering from a “talent crisis” in marketing, particularly for the skills and experience needed to keep up with the radical pace of change in the digital age.
  • Lynne Seid, partner in the Global Consumer Marketing Practice for recruiting firm Heidrick & Struggles said, “There is a digital talent emergency in publishing companies as they transform into full-blown, digitally-oriented media companies.”
  • Kat Egan (founder of the digital ad agency Exopolis) commented in a New York Times article published on May 12, 2010, “It’s shocking:  even now, in 2010, it’s very challenging to find great talent . . . You can find people, but you know that they’re going to need a lot of mentoring and a lot of hand-holding, and it’s an enormous investment.”
  • Agencies such as Crispin Porter & Bogusky and Goodby and Silverstein & Partners were asked what they needed in new hires and they had a near-unanimous response:  they aren’t getting what they need to grow and develop.

Plus, there continues to be pressure from clients on costs.  CEOs and marketing directors are tasking procurement execs to negotiate contracts and they are often given no other option than to squeeze for more reductions, year after year.  In doing so, they have made it difficult for agencies to attract and compensate the talents needed to deliver the value-creating ideas the same clients demand.

So how do you solve this problem when it is clear today’s marketers are eager to engage their target customers where they spend time, which is increasingly online?

One approach is through education.  Boulder Digital Works is a new program dedicated to preparing students for interactive advertising positions at the University of Colorado, Boulder.  However, this isn’t the immediate answer to the shortage of trained employees.

Another approach is that some firms are setting up production groups.  In 2008, WPP Group set up an offshore digital production arm as a shared resource to build web assets for its agencies.  Called Deliver, the unit used WPP’s capabilities in Asia, Eastern Europe, Latin America and South Africa to build Web site wire frames and resize banner ads in cheap labor markets.  Publicis Group set up a digital production unit called Prodigious Worldwide in 2007.  It is now part of VivaKi, a group Publicis set up to manage its digital assets.  There are many digital agencies that already have offshore production capabilities.  For instance, WPP’s Schematic has staff in Costa Rica and Studiocom has personnel in Colombia.

This seems to be a good strategy but, in this unstable economy, could you imagine telling your CFO you want to add headcount and overhead, even in low-cost labor markets?  And captive operations often don’t deliver the same level of savings demanded by those same CFOs.

In the blog, What Consumes Me, Bud Caddell shared his thoughts on the future of agencies. He reports:

  • Joseph Jaffe (from Powered, a full-service social media agency that plans and builds brand experiences) says the future will be made up of two kinds of agencies:  the idea generators and the executors of those ideas.
  • Ben Malbon, who heads up BBH Labs, believes that crowd-sourcing, or some kind of permeable relationship with creative talent outside the agency, is a necessity for the agency of the future

Clearly, there is a need for a flexible, cost-effective alternative for advertising and marketing production.  That’s why, in this dynamic environment, so many companies are trying to decide whether to build or buy the capacity needed.

As Neil Prescott of Deliver said, “Clients are doing more online, and their budgets generally aren’t increasing.  It often doesn’t make sense to do all of the digital production in the local area. That’s not to say you shouldn’t do any.  An awful lot of it can be done offshore, cost effectively and at higher quality.”

I couldn’t agree more.  Once Affinity Express clients learn about the viability of a blended onsite, onshore and offshore arrangement and the potential savings of 40% over internal advertising and marketing production costs, they are intrigued . . . and eager to build relationships with us.

What has your experience been around finding qualified talent for your advertising and marketing needs?  Is your company or agency feeling the same cost pressure from the finance department and/or clients?

About Kelly Glass
Kelly has been vice president of Marketing at Affinity Express for nine years now. She drives company strategy and all marketing activities.

2 Responses to Build or Buy: Keeping Pace with Interactive Advertising Growth

  1. Pingback: Focusing on Interactive Services « Affinity Express Blog

  2. Pingback: 100th Blog Post « Affinity Express Blog

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