New Media World Means Big Changes for Ad Agency

The Internet has turned the advertising world on its head. As the media has changed, so too has IT at the $144 million agency.

A few years ago, Greg Folsom, vice president and director of IT at ad agency Arnold Worldwide Partners, decided to test the company's Internet monitoring software by blocking access to porn sites. About five minutes later, his phone rang: Someone was complaining that he couldn't view X-rated material on his browser -- apparently necessary research for the creative process. Folsom turned the porn back on.

"It's a great place to work," Folsom laughs. "You can justify anything."

Boston-based Arnold is one of the top 20 ad agencies in the U.S., known for its innovative campaigns for clients such as Volkswagen and Jack Daniel's. But Arnold is also a midmarket company in a highly competitive sector beset by whirlwind change as technology upends traditional advertising channels.

"Advertising technologies and operations are trailing pretty far behind the evolution of media and consumer habits," notes Andrew Frank, an advertising analyst at Gartner Inc. "You're still seeing a lot of legacy advertising practices. Agencies are struggling to adapt to the new media world."

A recent survey by Forrester Research Inc. found that ad agencies and their clients have far different views of the ad industry's effectiveness. Ninety percent of agencies rate themselves as well-prepared to deal with changes in online advertising, for instance, while only 50% of marketing executives had the same opinion of advertisers.

"That tells me ad agencies are really behind the curve," says Forrester Research analyst Elana Anderson. "Marketers need to be a heck of a lot more savvy than they were 10 years ago. Marketers are caught in a vise grip of technology. Technology is changing how consumers behave. Consumers aren't glued to a TV anymore. At the same time, new technologies are emerging, like analytics, that enable marketers to communicate with their audience in a new way."

Arnold is trying to adapt to this new world. Last year the agency reinvented its creative model by replacing separate departments, such as direct marketing, with cross-disciplinary teams -- or "tribes" in Arnold-speak -- that are meant to break down barriers and foster creativity and out-of-the-box thinking.

"Results are our results," says Pam Hamlin, president of the agency's Boston office. "Measurability is the second most important thing on the minds of our clients. The quality of the idea is No. 1. People are really asking what the return is."

Folsom and his 16-person IT department are trying to help the business evolve by introducing more standardized processes -- such as rolling out a new workflow system this year -- that a maturing company requires. It's a challenge familiar to many midmarket CIOs. "What does the company want IT to be?" Folsom asks. "What are the tools of tomorrow that will help us to get to the next level?"

This was first published in April 2007

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