Demand from the tech community for quality digital talent is so fierce that agencies are struggling to make any money, says the New York-based chief executive of emerging global communications holding company Project:Worldwide.
Bob Vallee completed a small Australian acquisition of experiential and PR firm Dig & Fish earlier this year after former Grey Global Australian chairman Paul Gardner bought into the company and on-sold a minority stake with co-founders Angie Bradbury and Caroline Ryan to the US firm.
Vallee says Dig & Fish’s model is new to Project:Worldwide and it wants to replicate its approach of building PR capabilities with experiential, digital and event management across its 44 international offices – the biggest company in the portfolio is George P. Johnson but it also owns Spinifex and other agencies in the digital, social, creative, experiential and retail sectors. It also owns San Francisco-based ad agency Argonaut, which produced Volkswagen’s Super Bowl ‘Wings’ commercial this year. But one of Vallee’s most pressing concerns is the escalating cost of digital talent.
“One of the problems with digital agencies in general is that while there may be decent revenue there, most are not making any money,” Vallee told AdNews during a recent Australian visit. “It’s expensive to develop software and create apps by the people that are in great demand by technology companies around the world. A really good digital technologist that understands the advertising and marketing world can cost up to $200,000. If we use an average of 2.3 to 2.6 multiplier on an individual’s salary, one person has got to generate half a million dollars in revenue alone. That’s very hard to do, right? We suffer on the digital side as everybody else does. It’s not a money maker for us but it’s really, really important part of the overall mix.”
Vallee said it was pointless for communications companies to take on the tech giants. “We’re not going to be able to compete with Salesforce or Google,” he said. “They control, in a sense, how digital is disseminated and they’re working overtime to create their own revenue models from the placement of advertising and the positioning of brand content. For us, we believe it’s going to be a strategy play more than a pure code play.”
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