by Tom Snyder on Nov 30, -0001


noclueSometime during the new year, you’ll undoubtedly read about (or maybe even be contacted by) traditional advertising agencies who have decided to move into the arena of web site design.

It may seem that creating eye-catching visuals and clever slogans makes web site development a natural progression for them. But In his book “Webonomics,” editor Evan Schwartz (http://www.webonomics.com) points out that only 26 percent of consumer brand Web sites are created and implemented by advertising agencies. How many of them end up being “successful” remains to be seen, but the prognosis (and current track record) is not good.

The primary stumbling block for the traditional agency is the fact that building a successful web site requires a completely different thought process and technical literacy than creating a successful TV or Radio campaign. The “one-to-many” CPM and Gross Impression mentality of the traditional agency is a completely different animal than the “one-to-one” interactive stakeholder-driven mentality necessary for a successful web site. And when their client needs off-the-shelf software, hardware advice or software development services, the traditional advertising agency usually find itself totally out of its element.

The second problem is that the economics of developing a marketing campaign on the Web doesn’t favor the traditional advertising agency.

Advertising agencies traditionally have made their money not from their creative services. Rather, they get paid when they place the ads – making a 15 percent commission (now 8 to 12 percent) on all media purchases. Witness a typical thirty-second television commercial, which is not all that expensive to produce (on the order of about $50,000). However, buying time on local TV stations and national networks can cost on the order of $50 million for a major campaign. You can see how this model falls apart when you try to apply it to the Web. When media purchases become only a small fraction of the overall marketing expense, commissions become minuscule. On the Web, not only are the overall costs much lower, but they shift away from placement and toward production. With no “commissions” to rely on, the result is a high price tag for the web client. One local agency has already made the move to invest over $1 million in a huge “web department.” Guess who will get to pay for that “investment!”

So with the traditional agency, the logical result is a high-priced, unsuccessful web site. Not a good combination!

Schwarz predicts that the agencies that will succeed will be the ones who form collaborative efforts… becoming media advising agencies who refer web customers to reputable web development companies with a track record of internet success, or even becoming collaborative joint ventures.

Watch for the smarter agencies to form partnerships with veteran web development firms in 1998. In the meantime, should an agency come calling, let them know you prefer to work with a company that has a long track record of success with the web… the success of your site is too critical to put in the hands of anyone less!