Foreign Digital Expansion in Oz

A further call to Australian advertisers to get into digital technology comes with the news that French advertising business Publicis is to start a digital agency network Digitas in Australia in 2009.

http://www.theaustralian.news.com.au/story/0,25197,23905084-7582,00.html

Publicis global chairman and chief executive David Kenny broke the news at the Cannes International Advertising Festival and The Australian reporter Lara Sinclair was there.

Ms Sinclair saw this as evidence of part of a ‘land grab’ by global advertising companies in order to expand their own business to be the most successful on the international stage.

Publicis Groupe president Maurice Levy said reported that the group was "growing very fast in digital" and intends to create Digitas as a separate company to the Publicis group. He confirmed that growth would only come from digital.

Digitas was bought for $US1.3 billion in March 2007. It has been speculated that Publicis bought into digital because it did not have the experience within its original business. It has expanded from two offices worldwide last year, to 16 to date.

However, the main debate on digital between agencies is whether it should be contained in a mainstream agency group or kept separate.

Business chief executive Hamish McLennan, who is looking to buy into digital business, said ‘the internet was so entrenched in mainstream marketing it had to be central to an agency's operations‘.

Another advertising company has reported that it was best ‘to combine digital and mainstream’ media.

Further, company Euro’s marketing section has unveiled an operation that incorporates digital in advertising in New York. Global chief executive and former head of its Australian office David Jones said its inspiration came from a ‘Sydney model’, called so because it created by the Euro branch in Sydney.

Mr Jones went as far as to say: "I wanted everyone (in New York) to understand that this was the digital agency taking over the ad agency."

But there are other companies such as Publicis, Leo Burnett and Saatchi & Saatchi, and media networks Zenith Optimedia and Starcom MediaVest are creating ‘stand-alone’ digital companies to accompany their advertising companies.

Good news for Australian economic growth is Australian company Omnicom. Their digital business is earning 13 per cent.

More news that Australian companies are lagging slightly behind; while Australian advertising businesses will be facing an economic downturn in the near future, global companies are coming to Australian shores in order to expand on an international scale. But it’s not all bad news: it is good to see companies such as Australia’s Omnicom, are holding their own, and to see that Australians are at the forefront of innovation new synergy in Euro’s new branch. However, the advice is important for local advertising agencies to take note of – it seems the future of advertising is a combination of ‘digital and mainstream marketing’, whether this means stand alone companies, or companies that combine digital investment with their current advertising groups. Personally, combining the two disciplines makes more sense to me in terms of synergy. Evidence suggests the digital element of advertising will become inextricable, as noted in the Cannes advertising awards this year (see blog entry ‘Australian Advertisers Warned’).