SPOTLIGHT ON: Agencies as new-media owners - The ’Wild West’ e-commerce environment won’t last forever. Walsh Simmons is one of many to grab some dotcom action, Alasdair Reid says

Not so long ago, Walsh Simmons was a humble direct marketing agency

based in Manchester. Times change. It’s still based in Manchester, but

it is no longer quite so humble and it now has a whole handful of

branches in cyberspace.

However, none of its new websites have anything to do with the

old-fashioned marketing services business - Walsh Simmons has been

rapidly reinventing itself as an e-commerce entrepreneur, with sites

flogging everything from insurance and printing services to flights,

hotels and holidays.

It’s not the only service company looking to muscle in on a bit of

front-office business. Only last week, for instance, Static, the digital

design company, did a deal with Canal Plus, the French pay-TV group, to

offer an interactive games service on the CanalSatellite digital

interactive satellite TV platform.

Since the readjustment in e-commerce stocks, most of the online ’gold

rush’ metaphors have been quietly forgotten - but the Wild West

analogies clearly still apply. Where else would you see marketing

services companies effectively becoming media owners?

Isn’t there a huge potential for conflict of interest here? Steve Walsh,

the managing director of Walsh Simmons, doesn’t think so. He says: ’We

get 350,000 people a month going through our websites (they include

LateRooms.com, MiniBreaks.com, EasyCover.com, HolidayDeals.com and

LateSeats. com) so, yes, we are definitely a media owner. But for banner

advertising we use AdPepper. Yes, if we see a financial services company

on there we tend to think about why EasyCover.com, our insurance site,

isn’t there, but the two sides can be kept at arms length.’

Good in theory. But if this sort of thing were happening in more

traditional media there would be an outcry.

There are two potential conflicts of interest here. One is the notion

that companies in a position to offer strategic communications advice

shouldn’t be media owners. The other is a broader point - design

companies could now pitch themselves directly against clients whose

websites they have designed.

’So what?’ many observers say. Greg Turzynski, a managing partner of

Optimedia, argues that the old rules may not apply to new media because

it is more transparent and its effectiveness is easier to measure.

He says: ’The perfection of data and the inherent accountability mean

that the advertiser will immediately know whether a recommendation meets

its objectives.’

It all comes down to trust. If a blurring of lines brings that trust

into question, all the data in the world won’t reassure a nervous

client.

Do clients have genuine grounds for worry? And how do online media

owners with a more traditional heritage feel about this?

Hugo Drayton, the managing director of Hollinger Telegraph New Media,

says that this is just a stage the market is going through. ’Everything

is a bit of a free-for-all at the moment but that will change when the

models become clearer and people will go back to what they recognise

they do best.’

Simon Sadie, the director of innovation at Media Planning, agrees, but

he also points out that there is more than a little admiration in the

business for service companies which cross the divide.

On the other hand, there are obvious downsides. He says: ’My feeling is

that the conflicts of interest are unlikely to be about buying and

selling banner advertising. But if I were a client I would worry about

how much revenue is being channelled away from the service side of the

business.’

Sadie believes that priorities change when you stop being a service

organisation.

’For instance, when you are developing a site for a client, the agency

needs to put in a certain level of investment - but when the task is

completed there is a return on that investment. When you’re developing

the site for yourself you need to make the development investment and

then you need resources to market it. Clients might worry that resources

might be channelled away from their projects.’

Might is the word. But that’s not going to stop people experimenting

with what is possible. Walsh says: ’Yes of course the rules are

hazy.

When you think about it, it is incredible what we are doing, selling the

things that we sell. Only the internet could have made it possible to be

involved in those areas. What other medium could have made it all

possible?’

This article was first published on Campaign