Bottom fishing

I think today has topped the lot for bad news. Viant laying off another 211 people, Wheel is cutting 70 and Marchfirst looks like its going under after all. I am ganuinely interested in any views as to where the downturn will end. Is there a future for digital services companies at all and if so, in what form?

You are right of course - digital agencies will exist, but will they survive as seperate entities or will they be swallowed up into technology companies or traditional agencies?

As for the downturn - I agree, but I do think we have got further pain before we start to recover and a number of companies here and in the US won't make it.

On 8:24:43 28 March 2001 xav1 wrote:
>Future for digital companies... opened a car bonnet
>recently... councils to move a majority of their processes
>online this year...
>Internet use increasing daily (been passed Easy Everything
>at 11pm on a Monday, Tuesday, Sunday you name it - any
>night and seen the volume of users ?).
>
>What we're seeing is a state of nerves which knocks on far
>further than it sensibly should. It's cyclical, clients
>read/hear negativity and watch their purse strings despite
>having the funds available. Agencies feels this and so do
>their service providers.
>
>From people I speak to clients/media/friends/contacts it
>seems that we're at or very close to the bottom. People
>tink the next three to six months will see an upturn... my
>GUESS (based on quite a few years experience) is that the
>end of 2001 will see us back to sensible levels and quite
>probably beyond.
>
>
>On 16:17:15 27 March 2001 ispence wrote:
>>I think today has topped the lot for bad news. Viant
>>laying off another 211 people, Wheel is cutting 70 and
>>Marchfirst looks like its going under after all. I am
>>ganuinely interested in any views as to where the
>downturn
>>will end. Is there a future for digital services
>companies
>>at all and if so, in what form?

I'd echo some of these 'let's-not-be-too-alarmist' sentiments. I mean, England are finally doing well in rugby, cricket and - potentially - even football... Not sure whether I feel able to attach a timeframe to likely turnaround, though.

These job cuts - just like the NASDAQ share price falls that have provoked the retrenchment - represent a natural correction of a wrongly balanced market. Too much capital had flowed into those tech stocks - likewise too much human 'capital' had followed. Now it's readjustment time.

Don't think of it as necessarily 'bad', 'wrong' or 'unhealthy'. OK, that's easy to say when you haven't just been handed your redundancy notice. But a human body works in exactly the same way: fill yourself with too many Big Macs, chocolate eclairs or pints of Guinness and your system will take whichever 'steps' are necessary to regain equilibrium. It's pain, discomfort (or a mess on the pavement) in the short term, but balance in the long.

I hope that this correction will also have the healthy effect of weeding out a lot of the chaff that has come into the industry in search of a fast buck. That does not mean that everyone laid off is 'chaff'. Of course not - let me be clear on that.

But who can deny that far too many 'sharks' inhabit this industry? With the promise of £millions to be made overnight, it was inevitable that a lot of distinctly 'under-par' individuals joined in the scramble. How many people have you heard cluelessly banging on about ASPs, ISPs & USPs - expecting you to swallow their jumbled train of thought and genuflect before them in awe of their God-given insight? Answer: thousands - perhaps even millions. Result: a lot of under-par businesses (and often 'gone-under') with under-par web sites.

Well, it's wake-up time, boys. You give this industry a bad name and I, for one, won't shed a tear when you fall out.

A last point is that I think we will see more & more smaller, specialist consultancies or niche agencies developing. There are simple economic arguments for that - the monthly wage bill of a 10,000-strong mega-agency clearly places that company under huge pressure in a downturn (witness what is happening right now).

So I think we'll see a growth in outsourcing - out from the big agencies, 'dotcoms' and bricks & mortar firms with sizeable activity online. It will enable those larger firms to reduce their fixed cost base by having fewer full-time staff (lower NI/office/etc costs). Yet it enables them to retain access to all the specialist skills they need - in many cases, to more and better specialist skills since a niche agency devotes its energies 100% to that area and should have the highest level of expertise in it. In connection with this, have a look at the thread in this forum entitled 'Where's the imagination' - Shilen Patel makes interesting, similar points from his perspective as a marketer/strategist at Guinness (no deliberate plug there, Shilts...).

Example areas include content development, broadband/wireless development, CRM, digital rights management, user analysis, online marketing - in other words, disciplines that a full-service agency (or 'dotcom'/bricks & mortar) would want to have under its own roof, but can't afford to.

So there's a bit of blunt, subjective opinion for debate. What you all think about the 'chaff' argument? And will we see more outsourcing?

Sam

On 8:24:43 28 March 2001 xav1 wrote:
>Future for digital companies... opened a car bonnet
>recently... councils to move a majority of their processes
>online this year...
>Internet use increasing daily (been passed Easy Everything
>at 11pm on a Monday, Tuesday, Sunday you name it - any
>night and seen the volume of users ?).
>
>What we're seeing is a state of nerves which knocks on far
>further than it sensibly should. It's cyclical, clients
>read/hear negativity and watch their purse strings despite
>having the funds available. Agencies feels this and so do
>their service providers.
>
>From people I speak to clients/media/friends/contacts it
>seems that we're at or very close to the bottom. People
>tink the next three to six months will see an upturn... my
>GUESS (based on quite a few years experience) is that the
>end of 2001 will see us back to sensible levels and quite
>probably beyond.
>
>
>On 16:17:15 27 March 2001 ispence wrote:
>>I think today has topped the lot for bad news. Viant
>>laying off another 211 people, Wheel is cutting 70 and
>>Marchfirst looks like its going under after all. I am
>>ganuinely interested in any views as to where the
>downturn
>>will end. Is there a future for digital services
>companies
>>at all and if so, in what form?