Battle in Adland: Big Shops Encroach on Little’s Digital Turf

As the global economy continues to waver, things are looking positively rosy for advertising and public relations firms. With Veronis Suhler Stevenson predicting a 55-percent increase in U.S. spending on public relations services by 2013 (up to $8 billion annually), news has been rushing in from all sides of the major ad holding companies of expanding revenues and new digital opportunities.

The uptick in optimism started last week when Publicis reported a 19.8-percent increase in full-year revenue. Omnicom added to the fun after reporting 2010 revenues that were up 6.4 percent, which prompted this headline from the normally stoic Financial Times: “Omnicom heralds advertising acceleration.” Not a bad assessment of happy days to come.

But things really picked up this week after WPP announced it was developing a new interactive ad network to fully vest itself in all things digital.

From WSJ.com:

The network will stitch together four digital ad agencies that WPP has acquired since 2005—New York-based Schematic, Cincinnati-based Bridge Worldwide, Singapore-based Blue Interactive and New Delhi-based Quasar —creating an organization that will have roughly 1,000 employees in 18 offices around the globe.

By acknowledging the vast opportunities that large digital agencies have, both for meeting client demands and forecasting and delivering upon future innovations, WPP may have made the strongest statement yet that the age of small, nimble digital shops holding an edge over their big, traditional brothers is coming to an end.

For the longest time, one of the knocks on the big ad and PR agencies has been that they’re too slow on the digital side, too ingrained in old-school silos and just too big to handle the myriad real-time marketing and communications challenges faced by modern businesses. Thus, many small, digitally-focused agencies have made a name for themselves by expertly meeting clients’ immense digital needs.

But I’m not so sure that advantage will last. Don’t get me wrong; I’m a big fan of the young, vibrant digital shops that have cropped up in recent years. Just in the New York City-area alone, we’re privileged to have several great, digitally-savvy boutique agencies, such as Attention PR, Carrot Creative, Droga5 and a whole host of others.

But let’s be honest with ourselves: many of these agencies have built their business and reputations on being not like the big agencies. They eschew silos, they’re incredibly savvy on the digital side and are more nimble in helping clients meet today’s modern marketing and communications challenges.

But the large agencies are starting to catch up. They’re realized that trying to keep traditional marketing and advertising separate from digital doesn’t work too well. As the big-boy agencies continue getting smarter when it comes to digital, they will have the resources and financing available to take on new initiatives and develop new partnerships to benefit clients, which can be difficult for digital start-up agencies.

That doesn’t mean all is bleak for the small shops. Certainly not. But it does add an interesting twist to the ongoing small-versus-large battle in PR and ad land.

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