FEW people outside the marketing industry will have heard of TBG London, an internet advertising agency headed by 28-year-old Simon Mansell.

Yet with clients such as American Express and Marks & Spencer, TBG has enjoyed rapid growth, bringing it to the attention of WPP, the marketing giant headed by Sir Martin Sorrell.

“I had protracted conversations with WPP,” said Mansell. “I was offered the chance to run a team of over 100 people – they were going to put together 60 people from [WPP’s] Ogilvy One with my 40 or so staff.”

But in the end, he decided against selling out to Sorrell. “It did not seem to me that it would be as much fun,” said Mansell. “The big networks have underestimated how much we are excited about the prospects of taking on the big guys.

“I felt I would be just another 100 people in a 15,000-people empire. If you are part of a big established corporate combine, you get bogged down in some of the politics.”

The cultural clash is only one of the challenges facing traditional advertising agencies as they chase marketing business online. Long-established firms such as JWT, Ogilvy & Mather and Leo Burnett still dominate the television advertising business, where the budgets are big and the campaigns high-profile.

However, the industry’s growth – and its clients’ biggest concern – lies in the more complex and fragmented world of digital marketing.

Alan Rutherford, vice-presi-dent of global media at Unilever, parent company of many brands including Lynx deodorant and Dove soap, said: “The digital age has come upon us very quickly.

“As a marketeer, we have to be playing in the space where the consumer is, and we are looking to our agencies to help us do that. Most of the current agencies have grown up in the old world – as has Unilever. Their skills and competences are in traditional media. And we have to look beyond television because TV is in decline.”

British advertisers are now spending more than £2 billion a year online in a wide variety of ways. Pay-per-click search advertising remains the biggest category, but leading brands are also spending millions on digital banners, viral video campaigns, “micro” websites, product-spe-cific social networks, interactive games and mobile messaging.

The range of skills required makes life difficult for traditional creative agencies, according to Luke Taylor, chief executive of the British arm of LBI, a leading digital agency formed last year by the merger of LB Icon and Framfab.

Taylor said: “The digital-only environment is the only place where there is a full service mix – with researchers, information architects, technologists, online creatives, search specialists, planners and project managers. It’s quite a broad spectrum.”

Many of these specialists would feel “disenfranchised” in the creatively led cultures of traditional advertising firms, said Taylor. With skills in short supply, “the digital talent can pick and choose where they are going to land in the agency world”. Motivating them requires an environment that accommodates technical, creative, planning and other skills, “and holds them all in equal regard”.

David Wheldon, global director of brand and customer experience at Vodafone, said: “In today’s marketing landscape, building a brand is about a whole lot more than advertising. An advertising agency alone cannot deliver everything we need – even though agencies may claim to deliver this, it’s a myth.”

He added: “We haven’t the time to teach an agency what mobile marketing is and sponsor them while they get up to speed.”

Partly in recognition of this, Vodafone made a decision to move responsibility for part of its £250m advertising business out of JWT itself, and hand responsibility to its parent company WPP, which owns a much broader range of marketing specialists.

Taylor argues that the cultural weaknesses of traditional agencies explain why they have struggled to develop their own digital capabilities, and why they are likely to have to acquire specialist firms to meet the needs of their clients.

Publicis, the French group that owns Saatchi & Saatchi and Leo Burnett, took the first step a few months ago when it spent $1.3 billion (£650m) on buying Digitas, a leading online marketing firm. Within the past fortnight, Publicis has announced it is restructuring Digitas to create Publicis Modem, an international digital-advertising network.

Akqa, another prominent digital agency whose clients include Coca-Cola and Nike, also put itself up for sale, but the price proved too high for WPP, according to market sources. General Atlantic, an American private-equity firm, reportedly paid more than $200m for a majority stake in Akqa, even though the business is reckoned to have revenues of no more than $100m.

The high valuations placed on fast-growing digital agencies make them hard-to-justify acquisitions for publicly traded companies. “Private-equity companies are prepared to take a little bit more risk [by paying a high price] because they can see the value creation,” said Taylor.

Not all traditional agencies have struggled with the transition to a digital world. Bartle Bogle Hegarty (BBH), which has built a strong creative reputation over many years, is thought to have made a good job of building up its digital capability – partly through working closely with Dare, a specialist firm in which it has a 37% stake.

John O’Keeffe, executive creative director at BBH, is sceptical that there is anything unique about digital marketing skills. “There is a very, very simple truth to all this,” said O’Keeffe. “Nothing is more important than the idea. The people who espouse the view that [digital specialists] have some kind of technological advantage are diminishing in number. It’s just not the case.”

He added: “The technology is functionally very simple. It’s not difficult to find people who can press the right buttons. What’s difficult, and what’s always been difficult, is getting people who can have a great creative idea.”

As an example, O’Keeffe pointed to BBH’s recent success in winning the digital account for Lynx, the Unilever deodorant. Akqa was one of the firms that missed out on the business.

O’Keeffe said: “It does not take Bill Gates to translate the Lynx effect [the supposed impact that the deodorant has on women] into an online game, or a mobile-phone communication, or any number of other interactive platforms. BBH won because BBH’s idea was better than those of other agencies.”

Unilever’s Rutherford sounds less certain that the technical skills are easily acquired. He said: “We’ve given BBH the Lynx account to see if they can get up to speed on digital.

“The challenge for agencies is to work out how to use the new technology in a creative and innovative way. Today you need talent that understands both crea-tivity and technology. Only by fusing these two will you get work that stands out.”

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