By Scott M. Fulton, III, Betanews
Microsoft's sale of Razorfish, which for only two years served as its creative advertising division, to French ad giant Publicis Groupe is not so much the indication of a new trend, but of an old trend that is being suspended for now, perhaps for some very old-fashioned reasons.
In the present-day Internet business model, the principal generator of revenue is advertising. Unless a Web site or publisher is in the music delivery business, or happens to be one of the world's few paid search providers, there's few other alternatives for a steady source of income. But as with nearly all media these days, publishers are contending with whether they actually need to invest in the creative side of the process -- why not let someone else create the content, or better yet, let's see if someone will volunteer to do it for free.
When Microsoft purchased advertising resources firm aQuantive three years ago for a tremendous $6 billion, it was working to put itself on a par with Google, which was just acquiring DoubleClick and looking to make itself an online advertising behemoth in all respects, including creatively. The arrival of the software king in the advertising realm was heralded as a signal of the arrival of logic into the advertising process, and a reversal of the dynamics of all of online advertising.
Specifically, creative talent such as Brian Fling of Seattle's creative ad design firm Blue, proclaimed the traditional advertising agency "dead." His reasoning seemed sound (and may yet be sound at some future date): Since the Web compels users to "pull" information based on the criteria they're interested in, ad firms whose business models are built around "push" -- inserting unrequested content in the middle of streams -- are becoming less relevant, he said.
"Take news for example, a few years ago we got our news pushed to us through the method of a morning newspaper at our front door, or the local news broadcast at 11 pm," Fling wrote just after the aQuantive buy. "The time and medium of delivery was defined, we needed to adjust our lives in order to receive it. Today how we gather information is far different. We pull it from various sources when we need it or when it is convenient to our schedules, our expectation is information will always be available on-demand. The pull model is becoming an increasing pervasive method of gathering information, only to store and retrieve it later using the method or medium of our choice."
The modern ad firm would be one, Fling reasoned, that best applies itself to a more segmented model of information delivery, from sources that fit smaller niches and deliver precise information to more precise targets. But history might have informed him that Microsoft has rarely been the first to ride the crest of a major trend.
As the recession hit, creative resources were the first to be devalued; and as a result, Razorfish -- at one time the creative heart of aQuantive -- was considered less and less crucial to Microsoft's plans in online services, especially in the midst of the Yahoo takeover attempt. With Microsoft trimming down its resources, it made the decision to keep the analytics and technical side of its ad operation, while selling Razorfish (one of whose principal clients is, not surprisingly, Microsoft) for about $530 million -- about one-ninth of what Microsoft originally paid.
Razorfish joins an international network that is nothing short of a colossus, and one of what the advertising world calls the "Big Four." Saatchi & Saatchi and Leo Burnett Worldwide are also part of that school of fish in which Razorfish now swims. The ad agency as we have known it for some time remains alive and well.
Copyright Betanews, Inc. 2009