Analysis: A New Digital Deal For PR Agencies?
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Analysis: A New Digital Deal For PR Agencies?

Next Fifteen is serious about digital. How else to explain the holding group’s decision to acquire two digital firms in less than a week? Yet the buys of US agency Type3 and Hong Kong’s OneXeno also indicate that PR agencies are increasingly looking beyond the narrow confines of a digital role that focuses solely on social media.

Paul Holmes

By Arun Sudhaman

SAN FRANCISCO: Next Fifteen is serious about digital. How else to explain the holding group’s decision to acquire two digital firms in less than a week? Yet the buys of US agency Type3 and Hong Kong’s OneXeno also indicate that PR agencies are increasingly looking beyond the narrow confines of a digital role that focuses solely on social media.

Instead, PR firms are finally realising the opportunity to provide the kinds of services that, in the digital world’s short history, have tended to be associated with their peers from the worlds of advertising and marketing. The trend begs the question: is the PR world, and the clients that it services, ready for this transformation?

Capitalising on their abilities to understand and manage conversations and influencers, digital PR practices have been built on a strong understanding of ‘earned’ media – the social networking sites, blogs and forums that keep the internet humming with feedback and opinion.

As awareness grows of how social media can impact brand reputation, it is a niche that has become a central pillar of brand communication. “The PR industry’s higher standards, particularly when it comes to making and substantiating claims are now much in demand with brands that know that they need to operate to higher standards given that their comments are under far greater and extremely public scrutiny,” says Text 100 director Jonathan Brayshaw.

Even if that role does sit at the heart of a client’s online strategy, expanding it to encompass the full range of digital comms is a different matter. The industry has been less successful with the two other aspects of this equation: the ‘owned’ websites, blogs, YouTube channels and Flickr streams that clients now see as an integral part of their digital strategy; and the ‘paid’ ads, games and applications that often lead some of today’s most cutting-edge digital campaigns.

Beyond social media

Buying agencies like Type3 and OneXeno is one way of addressing this gap in services, acquiring capabilities in website design, email marketing, online advertising and search marketing. But given that ad shops have been acquiring digital skills for years, and factoring in the rise of strong digital-led agencies like AKQA and SapientNitro, is this all too little, too late?

“In the bigger picture of the development of digital, it’s still early days,” says David Ketchum, Asia-Pacific president at Next Fifteen firm Bite, which made the OneXeno purchase. “This is far from a mature market. The opportunity that Bite sees is when a client comes for to us for a great campaign idea we want to be able to credibly service as much of that business as possible. It makes for better, more consistent campaign management and of course growth opportunities for us.”

Ketchum’s comments are echoed throughout the industry, and there is enough evidence to indicate that PR agencies slowly starting to playing a more central role in digital engagement strategies that span paid, owned and earned channels. In the US, for example, Ogilvy PR has managed all of BP’s online communications in the wake of its crisis earlier this year, including website build, search marketing, video, blogs and social media monitoring and engagement.

Weber Shandwick, meanwhile, has played a lead role developing the new Pepsico website while, elsewhere, digital-savvy firms such as Edelman, OutCast and Qorvis, and specialists like Shift and Horn Group have handled campaigns that span the full range of digital communications and marketing.

Unsurprisingly, these departures from the industry comfort zone are sometimes viewed with caution. Yet the business opportunities offered by new revenue streams mean that it is, quite simply, difficult to identify a single agency that does not seem to be considering how to build out its digital capabilities.

Drew Benvie, who spun-off UK digital shop 33 Digital from tech agency Hotwire, believes that – for big firms – these types of acquisitions are a “no-brainer.”

“Buying a well run business, people – a rare commodity, and a cross sell opportunity is a no brainer for big firms with cash but no digital smarts,” says Benvie, whose firm has developed mobile engagement campaigns for the likes of FT and Debenhams. “And digital is broad. There is plenty of room for plenty of different types of business.”

Others, such as Weber Shandwick global digital creative director James Warren, would rather invest in building their own resources within the agency, an approach that is widespread among US PR firms. These digital ‘studios’ have become a popular method for agencies to take more control over execution and production, of everything from digital creative to mobile apps.

“You can imagine the conversation might be fairly short”

But all of these plans, whether via acquisition or internal investment, are based on the premise that clients want a cross-sell offer from PR agencies. One where, in addition to social media, the agency can also supply such services as web design, online ads and search optimisation. Not only does that bring PR firms squarely into competition with the digital and marketing firms that have been selling those services for years, it may also require a fundamental shift in client structures and mindsets.

By now, there is enough research to indicate that, on the client side, responsibility for digital strategy is rarely coordinated in a harmonious fashion. One factor is the divide between marketing and comms functions; another is the important influence of other departments, such as customer services, sales and internal communications.

“I think this is PR agencies thinking about where their revenue streams are going to come in the future,” says Nissan corporate VP Simon Sproule. “I’m guessing the agencies are looking at this saying, ‘we can take you through seamlessly’, particularly if social media is the catalyst.”

“Frankly, though, marketing tends to have bigger budgets and have historically had more control of a corporation’s web activity,” adds Sproule, whose new role at Nissan is a direct result of an integration between the marketing and comms functions. “You’re talking about an internal battle where PR guys walk into the marketing guy’s office – you can imagine the conversation might be fairly short.”

While Sproule says these moves are “ahead of the curve and bold”, their success is entirely dependent on “the ability of the in-house team to advocate that agency solution.”

This may be why Next Fifteen CEO Tim Dyson, rather that simply add digital capabilites to existing PR agencies, has chosen to try and launch a whole new agency by bringing together Project Metal with Type 3. On his blog, Dyson offers an analysis of his goal:

“To really start anew requires people to do things differently.  This means offering new services and delivering old services in a new way.  This is best done by hiring people that are not familiar with the old ways, people that challenge even the simplest assumptions of the old business model.  This is harder to do than you’d think.

We could have hired a bunch of PR people we knew and sold services that sounded a little different but were, in reality, existing services with a coat of paint.  Instead we’ve hired people that scare me because they talk a language I don’t always understand and have a way of looking at challenges that is alien to me.”

Dyson’s comments also point to another big challenge PR agencies are likely to face – integrating the different cultures and business models that exist in the PR and digital worlds.

“It’s all about the integration,” says Edelman EMEA CEO David Brain, whose agency acquired digital shop Spook Media in 2008. “And the terms of the deal. The business challenge for us was most of Spook’s clients were project based.”

Likes vs links

Ultimately, the success of these strategies will live and die by how brands respond. A few years ago Michael Zung, the founder of OneXeno, would probably have considered an ad agency as his agency’s natural suitor. All that has changed.

“With Facebook recently exceeding Google as the top source for traffic to websites worldwide, it is no longer about just figuring out the right keywords to buy, understanding the analytics and optimising, it is about how to activate a community and start a meaningful conversation, which is where traditional marketing communications and concepts come into play,” says Zung. “It’s not just about links anymore, its about ‘likes’.”

If the PR industry can deliver on Zung’s vision, it could yet redraw the map as far as communications is concerned. Next Fifteen’s two buys may have made a splash; even greater immersion is likely to be required if PR agencies are to take a favoured seat in an increasingly digital future.

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