The Convergence of "Traditional" and "Digital" Communication

Reading Jeremiah Owyang’s post on the hiring of Matt Dickman to FH Cleveland as Director, Digital Marketing, I saw a line that got the synapses firing -

“Many PR firms are hiring social media practitioners and strategists, expect this trend to continue”

From where I am, I would certainly concur. In the Canadian community, Michael Seaton and Bob LeDrew, both ardent supporters/practitioners of social media, have been hired by Thornley Fallis while my old boss David Jones was hired by Hill & Knowlton.

You can barely go a week without reading about another blogger who has been hired by an agency (marketing/PR/advertising/whatever) to help get them up to speed on social media.

But I can’t help but feel that this movement is just a prelude to something more. If PR firms are hiring people, are they *just* testing the water for something bigger?

A Prediction:

PR agencies will start buying entire digital agencies, bringing them in-house and really ramping up their own social media capabilities.

Why?

The direct, personal, one-to-one communication that social media affords organizations naturally lends itself, in my opinion, to the communications/Public Relations function so it’s no wonder that blogger relations, blog coaching and internal social media will be handled by a PR agency.

But once the client has signed off on doing a blog or interactive concept, an agency without technical capabilities has to push the actual heavy lifting to an external agency. Thus, the “lead” agency gives up high margin revenue to outside its own Profit and Loss column.

But, for agencies with in-house capabilities, this social media consulting leads to a (potentially huge) technical engagement.

Will this be allowed to continue to happen? Surely not.

If nothing else, Dell’s Da Vinci project shows us that big clients are looking to make one phone call to one, integrated, agency and have all their problems solved for them.

Parallel Industries:

The PR/marketing world can definitely draw lessons from the software industry. In this industry, new upstart players, such as middleware providers or open source databases, come along and change the game for the bigger players by creating a new category. These new categories are then consolidated, through acquisitions into the bigger existing players. In fact, two examples of this happened this week. My old client BEA Systems (middleware) was bought for Oracle for $8.6bn and Sun Microsystems bought MySQL (open source databases) for $1bn.

The PR industry operates on slightly smaller numbers, but I’d imagine there would be a number of $1.5m – $3m digital shops with 10 – 15 employees being acquired by PR agencies in the next year or so.

Caveat:

In retrospect the credit crunch and impending recession (actually, is it already here? Two quarters of declining GDP?) in the U.S. means that client budgets may shrink. This could go either way: either agencies will be so desperate for new revenue streams that they buy digital shops for their clients and expertise or agencies considering acquisitions will hold off for a while and continue to hire people, not buy clients.

Interesting times…

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8 Responses to The Convergence of "Traditional" and "Digital" Communication

  1. I think you are spot on, Ed. To be fair though, I work at an agency where digital is in-house, and there are still debates over budget. That will never go away completely. Great post.

  2. Good points Ed. There is a convergence indeed. I see it coming together in the area of content, conversations, campaigns and ultimately commerce.

    As a digital marketer, I’ve seen social media cross the traditional marketing bridge and reach the right audience(s) in more relevant ways than we have seen before. And it can drive results. The way marketers traditionally ran point in time campaigns with one-dimensional objectives is changing. It is exciting to watch as disciplines come together and have a hybrid mix of talent drive the future.

    Smart ideas will win in the end. The right people around the table representing all potential sides of the story and the opportunity is what I see happening. Thanks for shining the light on what is going on.

  3. Lisa Caroline Leung says:

    100% agreed.
    I forget what blog highlighted it earlier, but social media has emerged as an important TREND, not fad. Since PR agencies seem to be buying each other as it is (isn’t iStudio owned by Fleishmann-Hillard? Which owns a few?) I think its more than reasonable to predict they will soon buy entire digital agencies, and indeed any other agencies they begin to increasingly rely on for outsourcing.

  4. Kristen Zemlak says:

    It’s funny, just the other day, I found myself saying, “Okay, so this is what blogging is all about. But, where will it go from here?” Great insight into the future of social media in PR. I do believe you answered my question.

  5. Jessica Myers says:

    Ed–
    I really enjoyed reading this post. As a student of public relations, I am being taught that social media has become an indespensible part of almost any PR campaign. This continual integration proves that social media is not just a fad, but is likely here to stay. Although technology will dictate what form it takes, I believe it is something practitioners will have to embrace for the long haul.

    With that said, it makes sense from a financial point of view for PR agencies to acquire digital agencies for in-house use. In-house digital will surely lay the ground for more comprehensive and integrated planning.

  6. [...] UPDATE: Ed Lee left a comment and I encourage you to check out this post of his that hits on one of the predictions below. [...]

  7. [...] 2009-12-13T01:59:02  “Many PR firms are hiring social media practitioners and strategists, expect this trend to continue” – [link to post] [...]

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