Agencies – UtilitesDB

Kristopher B. Jones: The Small-Town Big Man

His speech is peppered with “awesome” and “ready to rock and roll,” as if he were fresh out of high school. He’s only 32 but he feels luck has a lot to do with his good fortune. He took what was basically an idea to sell jam and turned it into a successful online marketing company.

But we’re jumping ahead. Jones is a small-town fellow. He grew up around the quiet northeastern Scranton, Pa., region – in towns with quaint names like Forty Fort and Wilkes-Barre. He still lives in basically the same area where he was raised and headquarters his business not far from those same stomping grounds.

He knew early on that he wanted to be in public service – drawn to the tantalizing returns of politics. After graduating high school in 1994, he got a full scholarship to Villanova University to study experimental psychology in 1998 after graduating from Penn State, but questioned whether he really wanted to be a clinical psychologist.

During that period, his brother Rick called and asked, “What do you think about selling grandma’s Mississippi mud over the Internet?” Jones says while he was the resident computer guru in school and was sitting on a lot of school and credit card debt, he was pretty committed to going to law school. He decided he would finish out his law degree and start this gourmet food business.

Grandma’s Mississippi mud was actually a kind of jelly he had eaten as a kid. He calls it a kind of gourmet dip. He typed the ingredients into the Web and out came the popular Northeast dip called pepper jelly. But Jones didn’t want to sell just another pepper jelly. In the end – and after consulting a friend in the food business – they decided on “Grandma Jones’ Originals Pepper Jam.”

It Started With the Jam

That, Jones says, was when his entrepreneurial spirit came out. He could point to other adventures in his business past – the lawn business he had in school and the 1-900 psychic service he started, even day trading – but they never really made any money.

The pepper jam, on the other hand, had legs. Through contacts in the gourmet food business, it started to get some traction. The business was started in 1999. “My brother was the creative side and he had all these flavors he wanted to do,” Jones says. “It all happened pretty quickly. I was going to do all the marketing. I drove the branding and launched the website called pepperjam.com. We personalized it with pictures and stories.”

Soon they realized in order to get traffic and sales, they needed to rank higher in the search engines. The most obvious way at the time was to cycle in fresh content. So, they then came up with the idea to interview famous chefs and put those up on the site. In the end, they posted interviews with the likes of Paul Prudhomme, Emeril Lagasse and Jorge Bruce, to name just a few.

Bruce sampled the product and loved it. At the time Bruce was looking to hire a consultant to get his brand and other chefs online, Jones said. “I will try to cook with this product,” he told Jones. “He may have thought we had offices when we were really operating out of a kitchen,” said Jones. Bruce suggested QVC. “I went into shock,” says Jones, “and had to put the phone on the bed and take a breath a minute. At the time, he was the highest-grossing chef on QVC.”

The chef interviews were getting a lot of traffic now and the question of how to monetize it all became important. That’s when Jones joined LinkShare and started adding affiliate links (his first check from ValueClick was for something like $37). He was just about to leave for law school and was trying to make money through affiliate marketing when in early 2000, he says he began his marketing journey in earnest. “I still own 50 percent of the gourmet food business,” he said. His brother told him to take the marketing business and he’d handle the product. “I knew that the Net marketing side of this requires work. I just started to build out websites – build out content based on a theme. My first was cookware.”

Also in 2000, he adds, Google came out with AdWords. “I was generating close to $100,000 per month in affiliate profits,” he said. He was doing this while doing his consulting work and serving as law school class president two years in a row.

“Once I had money, I wanted to do something with it,” he says. He put all the cash he had been earning while in school into this single idea – to turn his super-affiliate status into a new kind of marketing business – pepperjam.com. “We got an office. I hired my best friend as COO. We knew we could hire smart, young professionals and could help these businesses that were coming online and had no clue what affiliate marketing was,” Jones says.

Getting Into the Affiliate Game

2003 was the breakout year. Jones didn’t realize the impact his company was having until he went to his first LinkShare symposium (they got invited through Overstock.com). “We went to this event not knowing anybody and thought no one knew who we were,” he says. “My attitude was, ‘I’m a super-affiliate, let me manage your affiliate program.’ We were blown away.” When a merchant rep found out who he was, she hugged him. “You’ve been making us so much money,” she told him and introduced him to a whole bunch of merchants. “We were very well received,” he says.

With that boost in his pocket, Jones parlayed that excitement into a new small office and started to hire employees. From 2003 to 2005 he built his client list. From 2005 on, he says, it took on a life of its own. In 2006, the company was about 28 employees. Then pepperjam made Inc. magazine’s list of the 500 fastest-growing companies in the U.S. It was the only affiliate marketing company on the list. “As a search engine marketing agency, we were one of three with iCrossing and MoreVisibility.” All he could say was, “It was just a big party. We’re pepperjam, we’re in the black and we’re an Inc. 500 company.”

While still nurturing a desire to serve in a public way, he was invited to speak at a conference for the first time in 2004. He’s been hooked ever since and speaks quite often all over the country. It kind of feels like he’s class president all over again.

Somewhere amid all this work, he did manage to get married – to someone who works for the company. He said while his wife, Robyn, and he did attend the same high school, they weren’t pals. One night when home from school for a spell, his COO and he went out for a drink and spied her. They remembered her from high school. Jones sat back and watched his COO walk over and try to flirt with her. Finally, Jones joined them and he said they hit it off right away.

“She kind of asked me out after 60 seconds,” he says, “and here she was talking to my friend for the last 15 minutes; but we’ve pretty much been together ever since.” She wasn’t happy at her other job and Jones asked her to work for Pepperjam.

“I know you don’t want to work for your boyfriend, but I’ll have you work from home and write an employee manual or something. We can have you write out some client case studies,” he remembers telling her. After about a month, she began to come into the office and has been with the company for two years.

Growth Spurt

Jones says there has been a lot of interest to be acquired and from venture capital money. Last year, with about 50 employees “we had to think about crossroads – and decided to focus on our own technology,” he says. The company decided communication in this industry was the problem. “It is difficult to get in touch with your affiliates to admonish or to praise them,” he says. There was a lack of affiliate transparency. “We said, ‘We will tell you who are the key affiliates and can protect your brand.'”

This led to the notion of launching a Pepperjam network. Jones worked and consulted with hundreds of affiliates and merchants to preview the network – robust players such as Affiliate Classroom’s Anik Singal, and super-affiliates Lee Dodd and Jeremy Schoemaker, to name a few.

In January 2008, he launched pepperjamNETWORK. This essentially turns Pepperjam.com into a technology company with exclusive merchants such as luxury brand Judith Leiber, clothier Ben Sherman and Jelly Belly. Jones sees this as a super-transparent network that can be an alternative to the big three – LinkShare, Commission Junction and Performics – as well as an alternative to ShareASale. “We are not going up against the big three networks,” he added. “They are much better financed than us and bigger. There is still only one investor in pepperjam and that is me.”

Jones proudly says pepperjam.com now has about 105 employees in a 13,000 square foot floor of a building in Wilkes-Barre. He has five executives and 15 senior-management-level people. He has divisions now – online media planning and buying, search engine marketing, pepperjamNETWORK and full-time salespeople – their first. In the next 18 months, he predicts 300 employees. But he thinks of everyone as family. His wife is director of affiliate marketing; his bulldog is in the office every day. He doesn’t want it to be a corporate environment – there’s Free-Pizza Fridays, ping pong and “Guitar Hero” on the floor. In early 2007, they launched a corporate blog where a randomly chosen employee is given less than 30 seconds’ advance notice to come up with a presentation to be videoed and then posted to the site (some can be found on YouTube; some featuring Roxy the bulldog).

Amid all this success, Jones was approached in the early summer of 2007 by publisher Wiley to write a book on SEO and search marketing. “Search Engine Optimization: Your Visual Blueprintâ„¢ to Effective Internet Marketing” will be published this spring. “In fact,” he said, “I had always dreamed of writing a book in college. I always thought, how can you make a difference? I can join the clergy, be a great father or write a book.”

If that isn’t enough on his plate, Jones and his wife are expecting their first child in August. That’s not going to slow him down. “We are very focused on building out what we are creating,” he says. “We have a bunch of families now; we’re not just a small family anymore. I’ve always been the kind of person that believes that my time hasn’t come yet. I want to focus on being a great father, and from a business standpoint we want to become a great affiliate network. I want to see where we take it.”

While the future seems like a busy one, Jones notes that “pepperjam has just started.”

Shine a Light

It’s been seven years since interactive agency Razorfish embarrassed itself on national television. When reporter Mike Wallace of CBS’ "60 Minutes" asked the agency’s co-founders what the company does, the answer was none too clear.

Jeff Dachis, co-founder of Razorfish, said to Wallace, "We’ve asked our clients to recontextualize their business." Asked for clarification, he added, "We’ve recontextualized what it is to be a services business." Wallace didn’t understand the answer. "We radically transform businesses to invent and reinvent them," Dachis explained.

Even though Dachis couldn’t seem to come up with an answer to satisfy Wallace, earlier in the program Dachis said of interactive agencies: "This is absolutely real; this is a revolution; we’re packing rifles; and this is going to be something that’s going to change the course of the way the world is functioning."

On that point he seemed to be right.

Razorfish, now known as Avenue A/Razorfish, owned by aQuantive, survived the ensuing dot-com crash and is currently ranked among the top 10 interactive agencies. Avenue A/Razorfish has even flourished, counting a roster of clients that includes Best Buy, Coors, Starwood, Wal-Mart and Weight Watchers. The company has reinvented itself from a Web design firm into a metrics- and response-focused house.

The majority of the top 10 interactive agencies in the U.S. have taken that mantra to heart, spinning out digital firms from their more traditional agency parents and combining Web design with a myriad of client services and metrics-based programs.

While this focus on the end-to-end as well as the most creative solution has indeed changed the way the digital agency functions, there are still lingering questions about who all this change is good for. The two tiers of interactive agencies – the digital arms spun out of traditional Madison Avenue powerhouses and the independent firms that got purely into digital about 10 years ago – are doing fairly well. Still, one faction points to the other a slacking in the forward-thinking bright ideas that will increase innovation and profits in the next phase of Internet advertising, mainly the social Web and search.

"Marketing on the whole still favors the traditional agencies," said Mark Kingdon, CEO of independent agency Organic. "But interactive is coming into its own. How do we work together, is the question." Organic emerged in 1993 as one of the first digital agencies and weathered the dot-com crash to thrive as an agency that specializes in deep customer profiling.

Big vs. Boutique

Organic may call itself an independent, but it is actually owned by giant Omnicom Group, which also owns Agency.com, Tribal DDB and Tequila in the interactive field. WPP owns Grey’s digital marketing arm and Ogilvy Interactive. Interpublic owns MRM Worldwide, R/GA and DraftFCB. The top 10 digital firms earn between $92 million and $235 million annually, according to AdAge. Avenue A/Razorfish leads the interactive pack with revenue of about $235 million in 2006. Omnicom is currently the holding company with the most revenue from its advertising units- about $11.4 billion worldwide in 2006. That’s about $6.2 billion in the U.S. It has also done well on Wall Street. In February of this year, its stock hit $106.90 per share, about 50 cents short of its all-time high in December of 1999.

While Organic is considered a smaller player, with revenue of about $102 million in 2006, Kingdon says that "marketing is under enormous pressure right now." He says that "people want to create a war between traditional and interactive agencies. "War may be a strong word, but the perception is that while independent digital agencies get all the "fun" work, bigger houses spun out of the traditional agency environments are still coming to terms with how to handle search marketing and the impact of social media. Spun-out digital agencies say they are best equipped to scale and meet all the client’s needs, be they digital or older media.

"Traditional agencies started to niche themselves," says Rohit Bhargava, vice president, interactive marketing at Ogilvy Public Relations Worldwide. "They broke themselves into search and email marketing, etc. Now you have social media agencies. But the traditional agency is in real trouble now. With word of mouth, search and social media all coming from interactive agencies, traditional agencies don’t do that well, yet. "

Interactive agencies that came from the ranks of traditional agencies haven’t been hurting. DraftFCB, for example, earns about $95 million a year, and is the fairly recent marriage of FCBi and Draft Digital. FCBi was an outgrowth of traditional agency Foote, Cone & Belding. DraftFCB’s mantra is to stay response-driven but with the added value of more and better data. "In the past decade, the terrain went from silly money to accountability," says Brad Kay, executive vice president, executive director, digital, at DraftFCB. He says that the team has become younger and younger to help stay on top of innovation in thought and technology. The shop also has an elaborate intranet where employees can post "cool" stuff they encounter on the Web. This helps the "stay fresh or die" attitude, Kay says.

The small boutique shops may get a lot of adventurous creative work, but that’s how it was in the purely traditional agency universe in the days before digital. The two-man firms always got the regional business where your ad could feature grandmas in tattoos or precocious babies driving Harleys. "Sure," Kay adds, "some business goes to the boutiques and we’ll just have to get used to it." He says to help win new business they need to take on more people – something they do to stay abreast of innovation and the "hip factor."

The benefit to bigger traditional agencies is their deep pockets. To build a digital house from scratch seems to be a thing of the past. Buying a digital firm is easier. WPP Group has put Schematic, 24/7 RealMedia and Blast Radius in its corral. Publicis back in January doled out $1.3 billion for Digitas and also bought Web agency Business Interactif to bolster its presence in France, Japan and China. Omnicom, as mentioned, owns Agency.com, Tribal DDB and Organic, and continues to grow existing digital assets by taking a 50 percent stake in EVB, based in San Francisco.

Even among some of the independent shops, there is consolidation of the players. The big advertising parent companies now own a mix of big and small digital firms. Omnicom, Interpublic and Publicis, to name a few, own big earners who began as offshoots of traditional agencies and smaller companies that started as two guys with a little Web coding experience. "You don’t need to streamline everything across an agency anymore," says Ogilvy’s Bhargava. "We’re going to use JWT for billing and Ogilvy for PR because it is the same parent company."

Trevor Kaufman, CEO of Schematic, has said that in a case where Schematic is bought by WPP, the intent is to "help change the DNA of the operating company and make them inherently more digital." He says in the case of his company, "it’s a way of leveraging specialized skills over the entire network. It has been successful because, in the end, it is providing better, more integrated solutions for clients."

The CMO Factor

Chief marketing officers may need some convincing. A recent study done by Sapient said that more than 50 percent of chief marketing officers believe that the traditional, large advertising agency is not prepared to meet their online marketing needs. It said that one in 10 CMOs expected to align with traditional agencies for their online marketing, stating that traditional advertising firms have a hard time thinking beyond traditional print and TV media models.

A report by Forrester done in February 2007 said that "agencies struggle to help clients capitalize on emerging channels and technologies. In the meantime, marketers are diffusing agency power by turning to a portfolio of players in search of specialized expertise. As marketers select new agency partners, they must revise their evaluation criteria to build an integrated marketing team."

And a March 2007 study by the Chief Marketing Officer Council said that 54 percent of marketers surveyed stated they plan to quit one of their agencies this year. The study summed up by saying that "marketing is undergoing substantial changes due to a mandate for CMOs to improve the relevance, accountability and performance of their organizations."

A brand may know what they want but have a hard time finding it. "Most interactive agencies have a hard time getting human resources together," offers Robert Tochterman, interactive brand manager for Ralston Purina. "Some agencies don’t know who’s going to be on an account until the work begins. You’re really buying into the confidence of the people at a director level." Tochterman looks for a team that "has rigorous methods for measuring the impact of a campaign, keeping an eye on return on investment. That’s the kind of discipline we’re looking for. Most agencies don’t talk about that. It’s comforting when they do."

Getting in the Network Game

Some big agencies are attempting to streamline their synergy by creating their own networks. The Omnicom Group, for example, announced it is erecting a "digital creative network" to be called Redurban. The aim is to globalize marketing and creative in an Amsterdam-headquartered endeavor out of recently acquired Redurban agency of the Netherlands. Euro RSCG, owned by Havas, also recently announced that its 4D digital arm would be moving into its New York office, with "integration" as its intent. Publicis, headquartered in France, has taken three of its agencies to create what it calls a "central services operation" named The InsightFactory. Leo Burnett, Starcom MediaVest Group and Digitas will contribute labor and technology to The Insight Factory, making a full-service mix of their media, digital and creative services.

This news comes after Omnicom’s push to integrate TBWA/Worldwide agency and Agency.com failed. TBWA was put in charge of Agency.com in 2005 and they just never made it work, according to news reports. In addition, Agency.com’s Dallas office announced it would close down completely, putting half of its small staff on the streets. Agency.com founder Chan Suh returned to the company in April as chief executive after CEO David Eastman held the top spot for less than a year.

Organic CEO Kingdon still maintains that there are some things the bigger digital companies can’t do that they do – what he calls a "client contact strategy." He says the client wants to know not the "what" of defining the traditional brand but the "how" of the digital approach. "Interactive agencies can handle the pace of innovation," he says, "but digital is always changing, so pure digital agencies know no differently. They were there when HTML first came along and when there was no money and they learned to thrive through Flash and Ajax and all that."

A case in point is the vanishing campaign microsite – websites built around a specific product. When Coca-Cola recently launched a new character for its Sprite drink, it did not launch a microsite, but set up the character on Facebook, complete with videos, music and discussion pages on the profile. Microsites are now seen as the "old model," shifting instead to where younger audiences gather – Facebook, MySpace, widgets and mobile applications. Adam Lavelle, chief strategy officer at iCrossing, points out that campaign sites tied to short-term promotions or products consistently rank low on search engines. "I don’t understand how, long term, a site builds brand equity," he says, "and with search, I don’t see that having long-term visibility."

The quandary for some brands, then, is do they sign up with a hot new interactive agency or do they stick with their shop of record? Ogilvy’s Bhargava believes the "top 10 are taking low-hanging fruit," with the bigger clients getting "a lot of follow-on business from other unit business. It is not cold calling. It is qualified leads." Lavelle says there is no monopoly on the best ideas, a sentiment that seems clear from the success of some independent interactive agencies. He says the "most important thing for marketers to think about is, ‘as I move more money from traditional into digital, does this agency have the capabilities that I want? Are there types of activities online, in mobile devices or other things I could be doing?’"

"You’re in trouble if you’re just building websites," says Bhargava. "We don’t want any one type of thinker," adds DraftFCB’s Kay. "The channel changes on a minute-by-minute basis. "We want to compete with the pure-play and the behemoth."

And Razorfish’s Dachis? Has he recovered from his embarrassment on national TV? After the dot-com crash nearly killed Razorfish, he left the company and formed Bond Art and Science, a consultancy that he says is not in the ad business even though reports seem to indicate it covers at least some of the same ground as Razorfish. Evan Orensten, a partner at Bond, says the company does "experience design," which sounds like an interactive agency.

Optimized for the Future: Q & A with Noah Elkin

Noah Elkin is the director of industry relations at iCrossing, which was recently named Best Search Agency of 2005 by industry trade publication OMMA. iCrossing, started more than nine years ago in Scottsdale, Ariz., is jumping into new arenas, such as the mobile search market, and expanding client services to include content creation and website design.

Elkin is responsible for iCrossing’s public messaging and interfacing with high-profile analyst firms, along with sitting on industry committees, such as the Interactive Advertising Bureau, the Direct Marketing Association and the Search Engine Marketing Professional Organization, which puts him in a unique position to observe the online advertising industry from a variety of angles. Elkin, who previously worked as a senior analyst at research firm eMarketer for five years, has a Ph.D. from Rutgers University and received a B.A. with honors from Columbia University. He recently spoke withRevenue senior editor Maria Sample about winning industry accolades, providing services for the little guys and where search marketing is headed.

Maria Sample: Your company calls search marketing “reverse direct marketing.” How would you describe it?

Noah Elkin: It’s something of a philosophical shift in how customers and businesses interact. Customers are now actively searching for brands and products and services, for information. It’s a seismic shift from a typical push-advertising model where you get an email message or a TV spot or a regular print advertisement. It reflects the degree to which the customer is in control. With reverse direct marketing, a customer has already given an indication of what he or she is interested in. Search, as we like to say, is like a giant focus group.

MS: What’s the main difference between iCrossing now versus 1998?

NE: Our recent restructuring of the organization into three main service lines – marketing services, marketing technologies and marketing properties – is a major shift. Another difference is the building of expertise in these separate business units. And the addition of certain services like creative is one of the biggest changes, not only for us, but also for our space as well.

MS: What has remained the same at iCrossing since 1998?

NE: Certainly the talent of our people has been the constant, and the expertise across the board has been a constant since the start, and it’s something we’re very proud of. It will drive us forward as we expand. And as we continue to receive accolades from the industry, it will enable us to attract the top talent that we’ve become known for.

MS: What has changed since iCrossing won the OMMA award?

NE: We’ve been building really powerful partnerships with the world’s leading brands for more than seven years now, and along the way, really changing the ad agency landscape by helping clients connect with their customers anytime, anywhere, however they want, wherever they want, whenever they want. We feel the OMMA award is a great honor. We’re really proud to have worked so diligently to build these kinds of partnerships that we have with Fortune 500 companies. That’s a tremendous validation of the work that we’ve done, and it sends a message about the potential that search and commercial brand marketing have for helping businesses interact at a much higher level than ever with their customers.

MS: How is iCrossing different from its competitors?

NE: As our founder Jeff Herzog likes to say, iCrossing has been an innovator in search advertising since before Google was Google. What we have that’s unique is our full-service approach. We’re not just a search engine optimization vendor; we’re a fullservice marketing connection. I think that’s a major differentiator between iCrossing and other companies. We’ve really been growing the company with the evolution of search as a medium. I think it’s that kind of vision that puts us on the leading edge, helping to drive the future of advertising – with our in-house expertise on the services side and also on the technology side. We’re the largest independent agency out there, and we back up our tremendous talent with our market research, our strategic alliances, planning and client services with our proprietary technology. That’s a one-two punch that most other places can’t really boast of.

What makes us different is that we have this expertise in market research that provides clients with the deep-dive analytics about their company and industry. We give them the knowledge and tools to help succeed by planning how to accomplish short-term goals and long-term opportunities, using a full array of tools and services organized around search.

Another exciting differentiator for us is the creative service we offer. It’s one side of the business that we’ve really been building in the past year, and it’s really going to grow quite a lot in 2006. It’s everything from copy to actual website design, all organized around improving and maximizing both user experience and optimization of search. We see ourselves as a one-stop shop when it comes to advertising online as well as through emerging technologies, mobile included. We are launching a major mobile innovation called mCrossing, expanding our expertise from natural search optimization on the Web to global devices.

MS: What’s the most important service your company offers?

NE: The most important service is the fact that we offer all of the services, but our strength is expertise in natural search optimization. It’s been able to help prepare us to expand to mobile devices. Bear in mind that natural search results are clicked on 80 to 85 percent of the time, far more than paid search. It’s very important to have that grounding in natural search; it’s the bedrock of what we do. It’s important to have strong expertise, and we’ve been able to complement that with strengths across the board as well as market research and our agency services.

MS: What kind of search are you going to be capitalizing on in the next year?

NE: Mobile search is a very exciting opportunity in the year ahead. Global is one initiative, and certainly local search and classified search – yellow pages. We’ll have a product geared toward the small- and medium-sized business market organized for local search that will be going out toward the end of the quarter.

MS: I’ve heard a little criticism that some of the smaller businesses can’t afford the products you offer.

NE: That’s why we built this technology in-house – that’s a real differentiator as well, that we build all our technology platforms inhouse. Technology is the largest department in our Scottsdale office. Expanding on that, we looked at the small- to midsized business market as well and discovered people that don’t necessarily have either the need or the budget, but they probably want some of the benefits of visibility on the Web. If you’re a plumber in Illinois, you don’t really care if someone in New York finds you on a search for a plumber, because chances are that person is not going to use your services. What we’ve done is to build a selfservice platform that integrates our optimization and tracking software in a way that will make it more accessible for the smalland medium-sized business. Our approach is, whether you’re local, national or international, we help your brand make the connection and quantify the results. What we do best is help companies reach their consumer at their point of interest.

MS: How are online retailers missing the boat in search?

NE: There’s a growing need of the importance of integrating search engine optimization into the workflow process and ensuring that this takes place before the product is launched and before the copy for it is written. Companies and clients need to understand that products must be optimized well before they’re launched, and make sure that search is a priority and not an afterthought. You’re going to get the majority of traffic from natural search, so we strongly encourage clients to plan for that well in advance.

Another way companies are missing the boat is not implementing recommendations in a timely fashion. Clients who receive recommendations from the search agency and then sit on them really run the risk of not getting the online visibility for their products that they would otherwise get from implementing optimization recommendations. This can be particularly crucial at specific times of the year, such as prior to the holiday shopping season, which is obviously the most important time of the year for online retailers.

MS: Give me an example of a client that implemented recommendations in a timely fashion.

NE: One of our best examples is Fairmont Hotels & Resorts. They’ve been a client with us for a very long time. It’s really a great success story of crowding out the competition, like critical search engine traffic drivers such as Orbitz, to really control the user experience and the message that consumers are getting. That’s one that we’re extremely proud of because, as a brand, you want to make sure you control the experience and not the search engine. So it’s been a great partnership for both Fairmont and iCrossing.

At the beginning of our engagement with Fairmont, in terms of keyword visibility, we saw the number of keywords appearing on the first three pages of search results increase to 2,579; a total jump of 1,156 percent, from a baseline of 223 keywords. In terms of baseline search traffic, which was established at 29 percent, within a month of implementing optimized coding elements, the search traffic increased by 41 percent and booking reservations increased by 150 percent over the baseline.

MS: Do you have any studies planned for 2006 that you’re particularly excited about?

NE: We have a relationship with Harris Interactive – they do studies for us and we have three or four planned for 2006. But we’re really excited about a couple of themes that we’re going to work on from both a horizontal basis as well as some of the vertical industries that we’re targeting. One is branding search – why major companies are becoming more comfortable with this concept and how we can augment individual marketing and help branding efforts.

In 2005, there was a lot of talk about paid search, and quite a bit of money spent on it, but we really see natural search as the biggest driver of traffic to websites. We want to focus on and evangelize why and how you can provide the best return on marketing spend and how to budget and manage for a successful marketing campaign.

Another area is about marketers themselves, about what kind of website, from a design and architecture perspective, is going to really reinforce the brand. One of our goals is to optimize the creative and maximize the value of the client’s investment in natural search results for years to come. We do this by optimizing Web pages, building specialized microsites and landing pages designed to drive specific consumer actions, and deploying paid media and mobile marketing campaigns. We partner with clients to break down the barriers between them and their customers.

MS: Is that one of the reasons you joined the Mobile Marketing Association?

NE: In part, yes. For us, that was an industry-leading move, and we’re certainly the first search marketing agency to do that. We want to make sure we’re positioned to take full advantage of opportunities in the mobile space and, in some ways, to branch out our contacts and gain potential opportunities to companies that might not think to come to us.

MS: What do you want most for your company in the future?

NE: Continued growth, continued profitability and continued engagement with the world’s leading brands. A deepening of relationships with both interesting and new clients. As online advertising continues to grow, the lion’s share of those dollars is moving to search. And to really be able to apply our expertise on the agency and technology side, to really be the one-stop shop when it comes to interactive marketing. We want to be top of mind when companies are looking to embrace interactive and emerging technologies.

MARIA SAMPLE is a senior editor at Revenue. In the past 15 years, she has worked for Ziff-Davis, CNET, Charles Schwab and Restoration Hardware. This is her first article for Revenue.

Look Ma, No Print: Q & A with Michelle Bottomley

Traditional Madison Avenue advertising agencies have taken their share of lumps lately. More companies are spending bigger bucks to advertise online than ever before. Overall spending on advertising is expected to reach $279 billion this year.

That’s a 5.4 percent jump over 2004. However, Internet advertising is forecast to grow 15 percent over last year and hit nearly $8 billion by the end of the year.

The trend has been building for years, but now many traditional ad agencies are scrambling to change or be left behind.

Ogilvy & Mather is one of the world’s largest ad agencies, with annual revenues of $752 million, and is among those that have quickly adapted to the changing online environment. The agency’s OgilvyOne is a leader in customer relationship management and interactive advertising. As general manager of consulting for OgilvyOne North America, Michelle Bottomley is at the forefront of the seismic advertising shift and is responsible for the data, strategy and direct channels (teleweb, email marketing, partner marketing) practices at the agency.

She joined Ogilvy in 1998 to lead the direct and interactive marketing engagements for the firm’s travel and transportation accounts. Two years later she branched into other areas and launched the relationship marketing practice. During her career, Bottomley has led targeted marketing initiatives on behalf of a number of brands including American Express, Cisco, DuPont, Enfamil, FM Global, Ford Motor Co., Jaguar, Nestle and Unilever.

Prior to joining Ogilvy, Bottomley was vice president of marketing at Epsilon, an American Express subsidiary, where she led teams responsible for the development of marketing data warehouses, statistical analyses, loyalty marketing programs and data-driven marketing communications as the client service director for Amtrak, BizTravel.com, Dayton Hudson, Enterprise Rent-a-Car, ITT Sheraton, Nordstrom and Walt Disney Attractions. Bottomley also managed comarketing partnerships between American Express, Amtrak and United Airlines. She began her direct marketing career at Bronner Slosberg Humphrey (Digitas).

Revenue Editor Lisa Picarille spoke with Bottomley to discuss the current state of advertising, what’s happening with big brands online and why the Net has become such an attractive option for advertisers over the last couple of years. They also discussed what Ogilvy has done to adapt to shifting client needs and where advertising – both traditional and online – is going over the next few years. It’s definitely not a one-size-fits-all world when it comes to advertising online, Bottomley says.

LISA PICARILLE: Do you think traditional creative agencies have lost their way and their relevance?

MICHELLE BOTTOMLEY: The need for a clear and compelling brand proposition creatively expressed is not going to change. Great traditional agencies define an ownable and compelling brand proposition that reflects the passions and strength of the organization. Being able to define the soul of the brand and establish a unifying message architecture that can be expressed through every communications touch point is among the most important marketing challenges and the core strength of a traditional creative agency.

LP: Why have most agencies been slow to adapt to the change brought by online?

MB: For the most part, agencies, and certainly Ogilvy, [are] leading the revolution to make online or digital marketing a more prominent part of the communications mix. A key debate in the next two years will be the role digital media plays in the overall mix among agencies, their clients and the major media-planning-and-buying organizations.

Agencies need to push this forward through understanding the target and developing innovative digital brand-building ideas to reach them, but clients and media organizations will need to reallocate existing budgets to bring these ideas to the marketplace. In 2004 Ogilvy launched VERGE, a series of conferences for the agency and clients that feature top thinkers and companies in the new media space, to forward progress in this area.

LP: What is Ogilvy doing to adapt?

MB: Ogilvy’s 360-degree branding is a philosophy and approach that integrates marketing communications to build client businesses. As an extension of our 360-degree branding philosophy we are working on ways to integrate the best of the advertising world with the best of our direct and interactive capabilities in the areas of creative, production, strategy and analytics.

This integration will improve our ability to target smarter and bring ideas that embrace broad and targeted media, including online, to our clients, as we have done already with the Dove Campaign for Real Beauty. This campaign has driven considerable business growth for Unilever, and lives online, on digital billboards, out of home and in print in the United States and around the world as one campaign.

LP: How has the change been received by your clients?

MB: Very well. Our clients will always ask for big brand ideas, but more and more for the use of nontraditional media, which includes digital marketing via online, digital phones, digital billboards, etc. – media that can surround the targets where they live, work and play. We believe that digital media are a tremendous opportunity for brands to deliver unique messages and offers to their targets and achieve superior ROI from their marketing investment.

LP: How hard of a pitch is it to convince big brands of the importance of the online adspend?

MB: Not hard at all, and it’s been getting better. Big brands such as IBM and Ameritrade have long understood the importance of digital marketing and have incorporated it as a significant portion of their marketing plans. Our largest clients are pushing digital marketing further through the use of behavioral advertising, personalized messages, long-form video and dynamic marketing responses to interactions and to improve conversion of hand-raisers to buyers. There is more experimentation than ever before around bringing the right targets into the marketing funnel and nurturing those leads to accelerate conversion to sales using a combination of digital marketing.

LP: What about branding? A few years ago most concluded branding couldn’t be done online. Has that changed?

MB: Some of the most relevant branding is happening online – in the context of where the target is already going for trusted advice and information. IBM led the way in this area through their sponsorship of the Olympics and U.S. Open years ago, using online to broadcast events and scores “powered by IBM.” Online marketing has helped brands move beyond product-specific advertising to creating branded experiences as a way to foster an emotional connection. BMW films were famous years ago for attracting and swaying the right audience online through edutainment – building the brand – while sparking hand-raisers to come in and test drive.

LP: Are big brands increasing online ad spending?

MB: Yes, and even a few percentage points from traditional budgets start to show big increases in online spending.

LP: What about the traditional ad formula doesn’t work online?

MB: The old model of one-size-fits-all messages has evolved to include more use of search and contextual messages based on where the target is seeing the ad or where they have been before online. There is more testing now to optimize clickthrough rates and conversions using search, contextual messages and behavioral advertising alone and in combination.

LP: How has the adoption of broadband changed online advertising?

MB: The adoption of broadband by more households means we can reach more people with rich media, giving marketers the opportunity to blend edutainment into their online advertising as a way to attract more eyeballs and convert them to prospects.

LP: How has online advertising changed the type of account executive agencies hire? Do they have additional talents not seen in traditional advertising?

MB: Account executives equipped for the new world understand the art and science of marketing in a way they didn’t before, owing to the fact this media is so targeted and measurable. We look for account executives experienced with target definition and brand building along the customer journey from awareness to hand-raising and repeat purchase.

LP: How important is online advertising to Ogilvy’s overall strategy?

MB: Hugely important.

LP: Define what it means to be an ad agency in 2005.

MB: Being an agency in 2005 means being flexible, assembling the right people with expertise from a number of areas to solve big client challenges. Fewer are the days when the advertising team would create the brand idea and express it as a 30-second spot to be adapted by the direct team using mail and the interactive team online.

More are the cases of bringing specialists from all three areas together up front to develop innovative ways to define and express the brand proposition in the marketplace. This is one of the best times ever to be in the agency business.

LP: What’s the downside of online advertising – for client and for consumers?

MB: While the nuisance factor of one-size-fits-all pop-ups can be a downside for consumers, the advances in technology are allowing marketers to be smarter about how to engage the consumer online without appearing to be advertising.

LP: How do brands get heard above all the noise on the Internet?

MB: Be relevant, and seek to build a dialogue with the target in a way that opens and nurtures a relationship and value exchange.

LP: Describe the state of online advertising two years from now.

MB: Two years from now online advertising will expand to really be considered digital marketing and include digital billboards, digital phones, interactive TV, digital billboards, retail signage, etc.

Smart marketers will use these channels to enhance the brand experience, delivering more relevant messages and offers – and reflecting target response and prior relationships to refine that relevance in a synchronized way across these digital channels. Measurement of this relevance and synchronicity will provide marketers the opportunity to optimize the yield of their marketing investments, focusing on those digital channels that bring in the best leads and the combination of channels that optimize conversion of those leads at the most favorable ROI. This is among the best and most challenging times to be a marketer.

LP: What are the major hurdles for companies that have never done online advertising, and how do you convince them it’s right for them?

MB: More and more brands understand the needs of their customers and finding a way to deliver on them online. This doesn’t need to look like product-centric advertising, but instead creating branded experiences that provide a call to interact with the brand. A major hurdle for companies that have never done online advertising can be perceptions around channel conflict; for example, whether a dedicated salesforce would perceive direct communications as threatening their ability to represent and deliver the brand. In this case a tremendous opportunity exists to reach the target online and can take the form less of product-centric messaging and more of creating branded experiences online.

LP: In what ways does online advertising impact the advertisers’ ability to establish relationships with their customers?

MB: Online advertising provides a great entree into a relationship with a brand. Those brands that have been able to provide a compelling offer and deliver on that with an ongoing stream of highly relevant communications are the ones beginning to unlock the potential of this medium.

We have to think of online advertising as the start of a conversation, and the more we understand from that individual the better we can make the follow-up conversations. Smart marketers are mapping out the relationship pathway from online advertising to relationship nurturing as a way to convert more of the leads at the top of the funnel into qualified prospects and ultimately customers. Thinking about online advertising as one component of the overall marketing mix with a very specific role, with defined follow- up treatment, takes little time up front and delivers big payoff in the form of a lead pool and new customers.