Happy New Year David. It’s been a couple of years since we talked about FMG coming to the US, horizontalism and de-coupling and we wanted your take on how things are going.
Thanks Dennis and Norman – its good to see you both. When we sat down together over 2 years ago we talked about how we were building a content production company. That has gone well and we have also integrated Pod1 successfully as an E commerce function and have now rebranded as BORN.
Let’s chat a little around the production component. Last time we talked about how agencies were challenged in delivering greater value and one way this could be done was by outsourcing the production function. What is the latest on that?
The big four holding companies have developed internal initiatives to help ring fence the client production budgets: at WPP you have Hogarth, at Publicis Prodigious, IPG runs Craft Worldwide and Omnicom owns eg+ Worldwide. Those groups work with large global clients to bring efficiencies and they have offshore centers around the world. The opportunities for us are limited here and we see greater traction working with the independent agencies.
The bottom line is that more work is being executed in lower cost markets and that means some jobs are moving offshore. Paying $150 an hour for some basic retouching work in NYC when it can be done elsewhere for a fraction of that hourly rate makes business sense. And we are starting to see this trend take hold in the marketing services industry with production and development the most likely roles to be outsourced.
Do you get pushback on what some may perceive as a lack of quality by sending work ‘offshore’?
The proof is in the pudding! Some roles are perfect for outsourcing – others less so. A good outsourcing partner will tell you what they can vs can’t do competently offshore! As a general guide, the more tactical execution roles can be outsourced vs the creative and strategic ones.
Last time we spoke the Pod1 acquisition was just going through. Fast forward 2 years. How has that gone?
Commerce is a key growth area and that is why we acquired Pod1. What started as a B2C initiative is now integrating B2B. The strategy of combining a production business with a premium ecommerce business may seem a stretch for some, yet we see a world where a disproportionate amount of content that is produced in the future will need to be commerce enabled. Consumers will have the ability to shop instantly regardless of the device they are engaging with.
Interesting. What is the competition out there like on the Ecommerce front?
That’s a great question. The larger agencies have been slow to own this space and we have started to see some acquisitive initiatives to help them build their offerings – first we saw Accenture’s acquisition of Acquity Group, Publicis acquired Crown Partners, IPG’s MRM acquired Optaros and then Publicis went really big on Sapient Nitro.
There are a handful of smaller, specialized shops in eCommerce – Fluid, Gorilla and LyonsCG for whom I imagine life is interesting at the moment.
Like any growing field, there are competitors entering the market constantly.
Ecommerce is not really a term that is front and center when we talk to agencies. I assume you are saying it should be?
For many consumers and more importantly shoppers, the eCommerce site is often the first point of contact with a brand. So in that regard it’s pretty important. And of course one has the quantitative ROI metrics as well to support that – how many visitors, what % converted to shoppers and other metrics like basket value size are available. So for some brands it is most definitely front and center. Just ask Zappos!
In today’s omni-channel world it is important to understand the growing impact of the ecommerce channel which puts the shopper in control more than ever before. As the power of brands has eroded somewhat, that influence was collectively leveraged a decade ago by retailers with the categorization of retail channels (mass, club, grocery, specialty etc.) and is now moving firmly to the shopper who will be able to buy what they want when they want. Then things like delivery time and shipping cost come in to play.
We think B2B2C is the new world order which will finally give birth to the ‘elastic enterprise’.
How is BORN doing?
Well last year we grew at 35% to over $25MM globally and hope this year to eclipse that so we are suffering ‘growing pains’ but in general business is ‘brisk’.
David Bonthrone is Chief Marketing Officer of BORN, a fast growing content production and commerce services company formed from the acquisition of two companies in London and New York respectively – FMG and Pod1.
The company mission is to build a best in class global agency for tomorrow’s marketer. The company vision is a world where commerce enabled content will be almost ubiquitous. Aside from the obvious required competency in commerce, be it social, mobile or electronic, the company, supported by proprietary technologies can deliver enormous economies of scale by producing the multiple versions of this content in a seamless, low cost offshore environment. That vision is appealing to not only the CMO, but increasingly the CTO and CFO.
David can be reached at david.bonthrone@borngroup.com