Study: Publishers, Agencies Clash over Web Billings

The dearth of ad dollars is contributing to online media companies and advertising agencies finding themselves at odds, according to a new report by Jupiter Media Metrix.

The conflict comes about as a result of two complementary forces — publishers’ desire to boost fees by taking on new duties, and advertisers’ search for unique and eye-catching ideas that often integrate closely into Web sites’ designs. (The greater acceptance and desirability of rich media, too, has encouraged the latter tendency.)

As a result, publishers often pitch their own creative services to advertisers, circumventing the client’s agency.

Additionally, publishers might be inclined to skirt agencies because of advertisers’ increasing willingness to bring agency work in-house. A recent Jupiter survey of top executives found more than a quarter of major advertisers were already taking over work previously handled by their agency, while an additional 21 percent said they were considering leaving their agency.

But Marissa Gluck, senior analyst at New York-based Jupiter, said it behooved publishers to be wary of alienating agencies. For one thing, traditional companies unfamiliar with Web advertising are increasingly relying on their agencies for guidance in their online ventures.

“Media companies are on the prowl to capture additional fees for creative services,” she said. “As the battle between agencies and media companies extends to creative budgets, media businesses will find themselves unable to compete over the long term.”

Additionally, Gluck said, advertisers ultimately would find themselves drifting back to agencies anyway, because of their creative expertise.

The issue recalls Web advertising’s first years of operation, during which sites routinely went directly to clients rather than through their ad agencies — which were hindered by a slowness in developing Internet practices.

During the initial phases of the dot-com burst, online publishers appeared ready to work with agencies to bring in new business to replace that of failed Internet ventures. Months later, several large online media players again seem willing to follow Jupiter’s advice in lieu of working to cut out the middleman.

Yahoo, for example, recently signed a sizable upfront deal with Arnold Worldwide. That’s a marked turnaround for a company that epitomized the straight-to-advertiser deal, and additionally, had a reputation for being difficult to work with.

Microsoft’s MSN too has made moves to strengthen relationships with agencies — establishing an Agency Alliance as part of its Advantage Marketing initiative, launched late last year.