Are Digital Agencies a Bad Idea for Media?

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borrell logoI’ve gotten a number of calls and emails lately that leave me wondering whether local media’s rush to create freestanding digital agencies is a lemming jump. It’s one of the more important topics we’ll address head-on at #LOAC2014 March 3-4.

The latest notice came from Sinclair Broadcast Group, which last month created a standalone digital unit and named longtime media executive Rob Weisbord to head it. In so doing, they joined the ranks of LIN Media, Gannett, Yellow Media, GateHouse, The Dallas Morning News and dozens of others who’ve created separate brands with cool names like G/O, Mediative, Propel Marketing, or 508 Digital.

With big companies like that entering the space, it couldn’t possibly be a bad idea. Or could it?

First off, I don’t think it’s a bad idea for certain companies. It takes a clear strategy that the entire organization – especially the owners – need to buy into. I’m not talking sipping the Kool-Aid. I’m talking eyes-closed swallowing. The bitterness they’ll have to accept is lower margins and internal hard feelings as a business unit that represents 10% of the business gets 90% of the attention.

In the past 18 months I’ve watched a half-dozen companies create, then collapse, these freestanding units back into their organizations. They didn’t abandon the idea entirely. But after the leader left (or was asked to leave), things disintegrated. It happened to radio, newspaper and TV companies in Pennsylvania, New Jersey, Indiana and Maryland. I expect to see more disappear this year.

One of them was Strawberry Fields, a digital unit created 10 months ago by Federated Media, which owns radio stations and newspapers. While Strawberry Fields still exists in some form, its leader, Kelly Bolyard, left last month, and the company placed the remnants under the guidance of existing sales managers.

What happened? I’ve asked Brandon Erlacher, publisher of Federated’s The Elkhart Truth, to speak at our conference. He’ll be joined by none other than Rob Weisbord, who will describe Sinclair’s strategy and – more important – its level of commitment.

Digital agencies within traditional media companies represent change. Change is difficult. So it’s fitting that we kick off #LOAC2014 with one of the biggest change agents in the business, Jeffrey Hayzlett.

Hope you can make it.

Bring a seat belt.

Gordon Borrell is CEO of Borrell Associates.