Microsoft's digital ad agency, Razorfish, recently released its
2009 Digital Outlook Report. It is definitely worth looking through. The report discusses Razorfish's outlook for the interactive ad space in 2009 (sluggish, though one story I just read suggested it may rebound in Q2), the shifts it saw within traditional online advertising categories in 2008, and some of the important trends it sees going into 2009. Razorfish emphasizes what it sees as the increasing fragmentation of audiences occurring across all different types of media, making it more and more difficult to reach mass audiences. Perhaps most significantly, Razorfish sees three areas emerging as serious factors for marketers in 2009:
- Social Media: As the report says, "your CEO will join Facebook this year". Still not a major spend category for advertisers, but this year more and more marketers will find ways to use social networks to reach consumers. Measurability is an issue, though Razorfish has developed proprietary tools to better measure the value of "social influencers" on the Web.
- Mobile. Also not a major spend area yet, as "advertiser interest as well
as the ad model infrastructure is still catching up". But as mobile continues to get "smarter", more advertisers will find opportunities mobile rich media ads, applications, mobile search and location-based opportunities.
- Digital TV, including emerging technologies such as Digital Cable, Internet Protocol TV (Hulu and others), Interactive TV, and addressable advertising and measurement tools such as those being developed by cable-backed Canoe Ventures. Most of the advertising applications in this area are still in more of a test mode, but expect to see more things coming online in the second half of the year.
I had an opportunity to speak with Katy Thorbahn, Senior Vice President and GM of Razorfish's Philadelphia office, who is a veteran of its days as i-Frontier, last week. Razorfish Philadelphia, about 160 people strong, is an important office for Razorfish in at least a couple of ways. One is its strength in the Pharmaceutical and Healthcare space, which accounts for approximately 60% of its billings. Secondly, it has been home base for developing some of Razorfish's most powerful analytical platforms for web marketing measurement, under the direction of the
recently promoted William Flaiz (a Drexel guy no less).
Thorbahn cited two highly visible campaigns on which Razorfish Philadelphia has done work in these emerging areas. PNC Bank's "
Virtual Wallet" application ( see
Business Week article) , and FujiFilm's
SeeHere photo sharing app, which brings in social media features, though it is not yet connected to Facebook.
Another example of Razorfish's use of social media that has received
a lot of attention this week has been its contracting with
SavvyAuntie.com's Melanie Notkin to promote an anniversary release of Disney’s “Pinocchio” on Twitter in addition to display ads on her site (though this was not done out of the Philly office).
As for Interactive TV capabilities, Thorbahn says "we are going to have to do a lot of testing before we get an idea of how people will use it"
Although some other Razorfish offices announced general cutbacks late last year, the Philadelphia office has held up well and is doing some hiring. Pharma spending on interactive is thought to be doing better than other categories because of the industry shift towards reducing salesforces and increasing "E-Detailing" and other forms of digital marketing to both the trade and consumers. Pharma companies themselves, however, face some serious limitations on how much they can get involved using social media due to regulatory and legal restrictions.
One thought I have concerning Razorfish Philadelphia and other area agencies (Digitas Health, Cadient) is how they are going to respond to the consolidation occurring now within the Pharma industry. There is a general tendency in the agency business to believe they must get bigger when their clients get bigger, and that is usually accomplished through acquisition.
Another issue always in the background is Microsoft's long term commitment to Razorfish. They acquired Razorfish as part of aQuantive primarily for the latter's capabilities (at least that's why most of the $6 billion was spent), and many industry analysts doubt its a good fit for Microsoft to be in the agency business; there is always the issue of conflicting objectives if you are also in the Search business, an area Microsoft insists it won't retreat from. Nevertheless, Microsoft may also see Razorfish as a place to test out some interesting ideas, such as this
Razorfish application for Microsoft Surface announced recently.
