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Razorfish issues last rites for Web 2.0

Razorfish issues last rites for Web 2.0 Rich Cherecwich

Online advertising has evolved significantly since Razorfish was founded in 1995, moving beyond simple banner ads into an industry filled with its own niches: SEO, behavioral targeting, widgets and mobile, to name a few.

And now the advertising industry veteran is preparing to be a powerful force in a new facet of interactive because, in the opinion of Razorfish CEO Clark Kokich, the next phase -- Web 3.0, if you will -- won't be a new technology; it will be the widespread integration of all currently available technologies.

Clark Kokich is global president and CEO of Razorfish.

"For us, it's not a new technology or a new technique. Rather, its how clients and agencies are using digital to transform how brands deal with customers," Kokich says.

At the heart of Kokich's Web 3.0 vision is full integration of all the aspects of interactive.

"Web 3.0 will be much more focused on business solutions and less on marketing communications," he says. "We're at a point now where you take all of these tools -- websites, search, mobile, targeted ads -- and put them together in an integrated fashion."

Roadblocks to integration
Getting to this high level of integration is still a work in progress. While agencies like Razorfish are leaping at the opportunities presented by new technologies and developing campaigns across multiple channels, it's often the clients who are standing in their own way. While agencies are breaking down their silos to work across multiple channels, not all clients are thinking along those same lines. This makes it difficult to find the correct person to sign off on all aspects of an integrated campaign.

"The thing we're learning is that clients are not really organized to evaluate and approve digital programs that integrate ecommerce and customer service," Kokich says. "It's easy to figure out who makes the decisions on mobile, on web design and on search programs. But if you're taking all of those things together for a new way of doing business, it's difficult to find one person to make that decision."

Razorfish itself has some experience when it comes to integrating a brand's communications strategy and identity. Formerly Avenue A | Razorfish, the company recently shortened its name, in part to reflect that it functions as one unified entity. "We're one company, and we don't need two names," Kokich says. "It's a mouthful and really doesn't reflect the unified offering we have by combining the companies."

Surviving lean times
Although Razorfish isn't immune to the slowed growth across the online ad industry (the agency recently laid off 40 employees), the company is still one of the largest digital agencies in the world and well positioned to survive a slow economy -- in fact, client spending was up in the third quarter of this year.

"Growth is much less than it's been in the past, particularly in the financial services sector, where there have been significant cutbacks," Kokich says.

Yet Razorfish is in a position to survive the recession thanks to success that is built on three points.

"Most agencies are not really good at differentiating themselves. We believe we've done that really well by focusing on client business problems, not just advertising and web-design elements," says Kokich, who has been with Razorfish since 1999 and has been CEO since 2005. "Razorfish has succeeded where conventional agencies have not, thanks in large part to the ease with which a digital agency can present its clients with data and analytics.

Razorfish's other two pillars of success are seemingly polar opposites. While Kokich triumphs Razorfish's ability to take risks and defy convention -- "We don't allow ourselves to be held back as we would have in the past," he says -- he's quick to point out that you can't build an agency solely on a culture of risk taking. Razorfish would not be the ever-growing international powerhouse it is today without a stable backbone to build upon.

"The third thing that has made Razorfish successful, and I don't think this is mentioned very often, is we have a very stable management group," he says. "We've had virtually no turnover in the management group, so we're able to build strong, high-level relationships with clients."

But as Kokich continues the conversation, he's quick to return to the need to push the boundaries and learn from failures. "You have to be willing to fail if you're going to innovate," he says. And sure enough, Razorfish has taken its share of lumps on the path to integration.

In a sour economy though, brands aren't always willing to take similar risks.

"In the past, if you brought a client a strong idea, there was a good chance you'd get funded, and funded quickly. That's not the case now," he says. "People are more cautious with their budgets."

Still, clients want to work with digital agencies because they offer the ability to look immediately at the metrics to determine if a campaign is working.

"There is much more of an appetite on the part of clients for programs that deliver strong short-term ROI," he says. "Right now, marketers are moving more toward programs that can cut the cost and marginalize costs in the short term."

Razorfish's prestigious client list includes Coke, Kraft, Audi and Levi's, but that doesn't mean every client is necessarily playing it safe during sour economic times. Best Buy has been a Razorfish client for eight years, and increased its digital marketing every year from 2001 to 2003. In each of those years, the company emerged in a much stronger digital position, according to Kokich, and the big box retailer continues to forge ahead, recession be damned.

"Some clients will continue to stay conservative, but I've got to hand it to Best Buy. They are continuing to take risks and are open to innovation," he says.

The next frontiers
To get to the fully integrated Web 3.0 campaigns Kokich envisions, strides need to be made to connect all the channels, perhaps none more so than in the still fledgling world of mobile. While he concedes that mobile has been greatly over-hyped, Kokich is excited about the strides the medium has made. Mobile will be the center of client marketing programs, Kokich says, thanks in large part to a change in advertising philosophy.

"You aren't going to a see a lot of push advertising on mobile," he says. "With the advancements in mobile internet connections, there's an opportunity to have deep engagement with consumers wherever they are. We're reaching a point where penetration is high enough where we can really start to be creative."

One example of how Razorfish is doing this is through a new European campaign for Audi. Neue Digitale, a Razorfish-owned agency based in Frankfurt, Germany, recently rolled out a campaign where mobile users place an Audi Q5 wherever they imagine. For example, users can take a picture of their garage with their mobile phones and virtually place an Audi outside. They can take a picture of water and place an Audi driving across it, then send the picture to their friends.

The other area that excites Kokich is digital out-of-home. Razorfish has worked with AT&T to implement Microsoft touch technology in AT&T stores, letting customers place a product on the tabletop computer to learn more about it. Kokich sees touch screen walls and surface tables as a complete game changer, one that will transform the advertising experience.

"It's a new area where we're still learning in terms of what value consumers need and what you can provide," he says. "It's a whole new way of engaging with consumers in a completely different environment; you're not at a desk, you're not at home."

As consumers interact with touch screens and table-top computers, they'll undoubtedly have their mobile devices with them, making it easier than ever before to move from one medium to the next for more information, perhaps making digital out-of-home the final piece in the quest for Web 3.0. "It is completely able to transform the experience," Kokich says.

Rich Cherecwich is associate editor at iMedia Connection.

A former reporter and editor, Rich Cherecwich has an intimate knowledge of how journalists conceptualize, craft and write their content. At WIT Strategy, he works closely with clients to develop, edit and publish high-level thought leadership...

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to leave comments.

Commenter: George Nikkei

2009, January 05

I wonder if this is what Microsoft told Kokich to say. There business would be cut in half without having Microsoft's interactive business.

Commenter: Jon McKintosh

2008, December 23

Razorfish is a bad company to feature in this article. Web 3.0 is a good topic to speculate on - however many smaller - more innovative agencies are doing great work that at some point will be considered 3.0.

Commenter: jackie minstral

2008, December 11

Web 3.0 for Razorfish is when they downsize to nothing and layoff their entire staff...

Commenter: Jose Martez

2008, December 08

The idea of this article is good... the issue is having a agency with Razorfish's history of failures in it. This is a company that appears to be solid - but if you look at the books - without Microsoft feeding them work - they are dead in the water. No one will know what Web 3.0 is until we are in it... just like before...

Commenter: Carlos Abler

2008, November 29

All due respect to Mr. Kokich.

But whatever Web 3.0 will be, just as only marketers would think that is involves marketing, only business solutions professionals would think that it involves business solutions.

Of course anything can INVOLVE marketing and busines solutions; marketing and biz solutions are parasites that feed on whatever they can. This I know; I am in marketing and business solutions.

But to think that Web 3.0 will just be a better integration of any of these components is more of a rhetorical device than a real take on what the next big emergence will be.

Are we at a point where the industry is maturing and that more orchestrated integration of marketing and business tools is what is happening and is what we need to be doing to be competitive? Of course. But do these represent or even have a foundational role to play in what Web 3.0 will be? Most likely it will be the other way around. Whatever Web 3.0 will be, it should be unforeseen, or should be the emergence of something that was previously perceived to be hard to attain, such as the "semantic web", or ambient web, or something like that.

From there, marketing opportunities and business solutions will emerge as they always do.

Commenter: Daniel Flamberg

2008, November 24

Web 2.0 was about finding, developing and embracing interactive technologies to engage customers, prospects and other constituencies. Web 3.0, says Clark Kokich of Razorfish, is about integrating these cool new toys to work together to achieve business results.
While Michael Leis jokes about the nomenclature, Clark's underlying thought is spot on; the holy grail of integrated digital marketing is to frame a vision of a fully realized multi-dimensional interactive relationship between a brand and its customer base and then implement that vision using the latest and greatest tools we can find to achieve predictable business results.
It's a grand and very difficult to achieve grail. Why?
Four reasons. 1. Because it forces us to get past the "amazing” features of each new tool and focus on end-user benefits rather than first user bragging rights. 2. Because the tools are constantly evolving and we are unlikely to settle on a few at the risk of missing the next big thing. 3. Because it requires both agencies and clients to overcome organizational and attitudinal silos with their attendant politics of self-interest in service to a greater goal. 4. Because it requires marketers to balance measurable business effectiveness against probable marketing efficiencies which demand a combination of proven tactics and carefully considered experiments; risks that both agencies and clients are generally afraid of.
But there is a way forward, if marketers would adopt these four tactics:
Follow a Boss. Altitude is the only predictor of successful marketing integration. Somebody at the top of the organization (possibly a CMO) has to be the boss, make decisions, broker arguments, set the direction and establish the party line. It's a stick-your-neck-out posture that requires vision, guts and political savvy. Too many post-modern, post-industrialist MBA-trained managers publicly shrink from the very notion of a boss, but without it, the natural politics of bureaucracies will overwhelm and undermine any effort.
Build Consensus Goals. The most effective marketers have a vision that sets a goal which then determines a logical series of priorities that drive creative, channel and spending decisions. This is that big strategy piece that everyone talks about and aspires to but few actually accomplish. A broad but quantifiable goal gives context to all the varied tactics and lays out hypotheses for finding synergy within an organization and its marketing partners which can be mapped out as tactics and executed in a coordinated and thoughtful way through a set of channels. The game is won on the choice of strategy not on the choice of channels.
Harness the Mule Team. Nothing great ever gets done unless everyone is in-harness and pulling in the same direction. This requires the greatest application of energy and force and is most affected by staffing choices and vendor selection. Nobody sets out to create a dysfunctional operation, but too many of us end up with one because we don't have the discipline or the appetite to harness, direct and motivate our team in a single direction.
Picture & Measure an End State. Too many marketing efforts attack immediate pain points or address immediate problem areas. Not enough start with an understanding of what the brand needs and wants in terms of its relationship with clients and their identification with the brand that drives adoption and purchase of its products or services. Brands need to set awareness, preference, attitudinal, purchase, loyalty and interactive goals, and then deploy marketing programs to engage customers to achieve the stated objectives. Then measurements of business effectiveness and internal efficiencies can be used to genuinely steer the ship.

Commenter: Adam Kleinberg

2008, November 22

Rich, you undermine this whole article by using the term "Web 3.0." You're essentially allowing Mr. Kokich to use you as an advertising vehicle for the integration technology Razorfish is selling. The reality is that "Web 3.0" (if there ever is one) is going to be whatever wave of innovation drives the economic growth that gets us out of this financial crisis. No one knows what that is.

That said, I do believe that there is a great deal of innovation to come around the integration of marketing and business processes—and the integration of marketing across platform. I'd add to this integrated communications planning as a more structured discipline. An indicator of this is that all of the major agency holding companies have picked up dedicated communications planning agencies in the last few years. There's a dire need to effectively plan communication flows across and through media channels in a unified manner with effective analytics and optimization built in.

But Web 3.0? Come on.

Commenter: Michael Estrin

2008, November 20

Nice work, Rich.

Commenter: Kip Edwardson

2008, November 20

"You have to be willing to fail if you're going to innovate," he says

What a genius. I gotta write that one down.

Funny how nobody guessed there would be a Web 2.0, and then the phrase was coined and given 10 different definitions, and now I'm enjoying the little battle over who gets to define Web 3.0, like we can predict when it will be here.

Commenter: Brett Sherman

2008, November 20

I think Mr Swanson hit the nail on the head.

Commenter: Jon Swanson

2008, November 20

Good article... I just wish the thoughtleadership came from a agency that practiced what it preached

Commenter: Mark Schwartz

2008, November 20

Agreed that Razorfish has had its troubles, but that doesn't take away from an insightful article. As long as marketers maintain separate departments for each discipline (direct, broadcast, search, email) and keep operations of their business distinct (i.e., keeping acquisition separate from brand) we can't get to the next level in communicating with our customers. The marketer that figures out on a very tactical level how to make that happen will have a major advantage.

Commenter: Mark Lassoff

2008, November 20

Comments about Razorfish and Mr. Kokich not withstanding, this article is essentially right on target. The web 2.0 technologies have been used divergently and inappropriately and have often resulted in negative ROI. I think in the excitement to try the new technology and move it forward in hopes of the technology reaching maturity and potential, many forgot to build strong business models. There are great Web 2.0 technologies out there for which strong, profitable business models can built. However, I agree that web 3.0 is about utilizing these technologies in business positive ways that result in ROI.

Commenter: Curtis Martin

2008, November 20

No kidding, Mr. Kokich maintains clients for an average of less than 3 years because they overspend and under deliver. Now that budgets are tight – they are positioning themselves as an agency that takes less risk – please… What about all their failed Web 2.0 work that was a waste . Maybe Web 3.0 is about less waste and more ROI.

Commenter: Jon Swanson

2008, November 20

I stop believing the Razorfish rhetoric back in 2000 – I'm amazed that the CEO of this "leading” company doesn't address or put more weight behind measuring the success of your online channel(and their own work) and having quality analysis to make actionable decisions. There is a big difference between Mr. Kokich and Jack Welch.