ADOTAS EXCLUSIVE — Sapient says it is the largest interactive agency in the world. It bills itself as “the only interactive agency to take creativity, strategy, and technology out of silos, and develop a truly blended approach to creating emotionally resonant, online brand experiences.” But things haven’t always been so rosy. ADOTAS sat down with Sapient’s senior vice president and chief creative officer, Gaston Legorburu, to talk about how the company went from losing millions to riding high – even through the current economic downturn.
ADOTAS: Sapient has been around since 1990 and has had its share of ups and downs. In some ways, the company has created a perfect storm of success with the accolades it has received — most notably as a great place to work (New Media Age, Consulting Magazine, Vault, etc.) and “partner of the year” awards from both Sony and Microsoft – coupled with the company’s first quarter revenues spiking 27% year-over-year. What’s the secret to Sapient’s recent round of triumphs?
GASTON LEGORBURU: The strength of Sapient’s recent round of triumphs comes from the company’s unique position at the intersection of marketing, technology and business. We’re combining the strength of the world’s largest independent interactive agency with a consulting business that offers deep insights into most major industries. This gives us a large competitive advantage over our competitors because we can plan, design and implement memorable multi-channel campaigns. No other advertising agency or smaller interactive boutiques can match Sapient’s technology and business expertise. Combine this unique value proposition with rapidly growing online advertising budgets and you have the fundamental ingredients to why Sapient is currently the largest independent interactive agency in the world.
ADOTAS: I know you can’t give me exact numbers yet, but does it look like the second quarter will be as strong as the first quarter? Why?
GASTON LEGORBURU: The Q2 outlook issued a few months ago estimates Sapient’s service revenues to be $158 million or higher. I apologize, but I can’t answer this question in any further detail.
ADOTAS: Sapient did go through a rough patch – right around the same time many companies were imploding. In 2001, Sapient suffered a loss of about $189.8 million – but by 2005, Sapient brought in about $328 million in revenue, leading Forrester to dub the company “The Comeback Kid.” Can you explain how Sapient muddled through the dotcom bust-up to come back as one of the top interactive agencies around? Did any person or group lead the overhaul and did the opening of an office in India help contribute to the growth?
GASTON LEGORBURU: Our success is really a collective team effort. We’ve always had a very strong business building high-end websites and creating e-commerce strategies and platforms for our clients. This business has always remained strong. Our decision to build a Global Distributed Delivery capability in India during the earlier part of this decade was a brilliant move. Through our GDD model, we were able to outsource application development and maintenance work for our clients, thereby saving them considerable costs. This helped us become even more competitive in the consulting sector, by the 2005-2006 timeframe, we discovered that the e-commerce world was changing – the client decision-makers were now on the marketing side and not on the technology side. To that end, we decided to acquire a marketing services agency to provide an even broader range of services to our growing base of CMO-level clients. In 2006, we acquired PGI (Planning Group International), which is the company that I started in Miami. Today, Sapient is a thriving marketing services and consulting firm that continues to break new ground in both sectors.
ADOTAS: Then in 2006, the company went through a period of significant internal turmoil with three separate CFOs and a stock options-backdating scandal that led to the resignation of Sapient’s CEO Jerry Greenberg. Any advice for other companies currently going through very public tough times? How did Sapient stay focused on growing the business in the midst of the chaos?
GASTON LEGORBURU: We stayed very focused on serving our clients and looking for ways to drive innovation in our respective areas. That is the best way to power through a challenging period.
ADOTAS: Sapient has two service groups: Sapient Interactive and Sapient Consulting. Which one has been more adversely affected by the economic doldrums we’re going through?
GASTON LEGORBURU: Sapient operates in two large and growing markets in both interactive marketing and consulting so both groups are doing well despite the recent economic downturn. Research from the Yankee Group and Forrester Research predicts that North American companies will double the amount they spend on online advertising by 2012 and the consulting market is growing steadily at 6 percent and is currently valued around $400 billion. Furthermore, a recent Forrester report states that well over 70% of marketers queried intend to increase their interactive marketing budgets or keep their spend the same during the recession. These forecasts align perfectly with Sapient’s ability to deliver high value marketing and consulting services.
In addition to Sapient’s positioning, the fact that the company has operations around the globe also helps us mitigate the U.S. recession. The company is experiencing our strongest growth in the North American market but Europe is catching up quickly.
ADOTAS: Can you explain Sapient Interactive’s basic philosophy and focus?
GASTON LEGORBURU: Sapient Interactive focuses on designing and building memorable multi-channel experiences that develop positive associations for our client’s customer base. We are satisfying a growing need for a partner that not only understands the synergy between marketing, technology and business, but delivers the right combination of services, tools and ongoing support to succeed in today’s changing landscape. Sapient is completely distinctive because we have the technology “chops” to truly help companies deliver a more powerful online presence while still remaining a smart, nimble company that delivers projects on time and on budget.
The most important issue for marketers is the proliferations of media channels, customer segments and products, resulting in the need for marketers to embrace complexity and customization while decentralizing the organization. Most companies are going to require new tools, new metrics and new planning processes to adapt to this “new world.” Sapient’s goal is to be the premier guide to this new world.
ADOTAS: Having a presence in several countries always helps alleviate cyclical economic issues. In which countries are you seeing the most and the least advertising activity right now?
GASTON LEGORBURU: We are seeing a considerable amount of advertising activity across all of our key geographies – primarily North America and Europe. We find that Europe has a great deal of potential and we are expanding our footprint in countries such as Switzerland, Sweden and the Netherlands. We already have a very strong presence in the UK and Germany.
ADOTAS: Sapient recently brought Jane Barratt on board as a managing director to execute its interactive strategy and lead its team of 200 in New York. How does she plan to drive customer acquisition and retention?
GASTON LEGORBURU: First, Jane is extremely talented and we are very excited to have her aboard at Sapient. She’s worked on some mind-blowing projects for Intel and Volvo and her level of intelligence, creativity and leadership are extremely rare to find in one individual.
Jane’s role as managing director of Sapient’s New York office is to simply do what she does best. She believes in Sapient’s interactive strategy and will use her extensive experience to help us continue to deliver outstanding results to our client list of the world’s leading brands. The company’s lifeblood is and always will be our intelligent, wildly creative in-house talent and Jane is an excellent addition to our staff.
ADOTAS: Can you explain how Sapient uses technology to measure online consumers’ interaction with ads?
GASTON LEGORBURU: Late last year, Sapient introduced BridgeTrack 5.0, an integrated digital marketing suite that provides real-time reporting and optimization across multiple media channels to marketers and agencies. We are extremely proud of it as we think it is a real breakthrough in the interactive world because most companies rely on ad servers and marketing platforms that provide delayed information on campaign results. Instead of guessing what is and isn’t working, marketers can recalibrate their campaign’s email, display/banner advertising, search, offer pages, transactions and Web sites immediately to optimize the effectiveness of their online campaigns in real-time.
ADOTAS: How quickly can Sapient change tacks in an online campaign?
GASTON LEGORBURU: We can change tacks in a matter of seconds or minutes. We do this in real time with BridgeTrack. It truly is an amazing solution. There is nothing else like it on the market today.
ADOTAS: What was Sapient’s most successful online campaign in the last year? To what do you attribute the success?
GASTON LEGORBURU: We had many successful campaigns last year and won our fair share of awards in nearly every category. If I had to pick one campaign, I would say it was the ‘Burn Alter Ego’ Facebook campaign. We created an incredible experience where a Facebook user could upload his or her face onto an avatar, and send them out each evening. Everything from their outfits to the design of their flats could be customized, and decorated with souvenirs from their adventures. The avatar would then ‘Go Out’ with friends on Facebook or meet other Alter Egos and make new friends. Each night’s adventure was recorded in the avatar’s blog, complete with photos. I still think it is very different from anything else that is out there, and while we can’t release specific results, it’s been very successful.
ADOTAS: You’ve said that technology, financial services and hospitality companies have a healthy mix of online and offline ad spend – do you think that trend will continue? Any other hot sectors on the up-and-up online?
GASTON LEGORBURU: I have seen different industries change their investment at different rates depending on where they perceive their customers spend time. Technology, financial services and hospitality companies have a healthy mix of online vs. offline because of two major trends: 1) the general population is becoming much more comfortable with conducting financial matters on the Internet and 2) companies in these industries are making great strides in creating Web designs that make their online services more accessible and easy to use. I expect this trend to continue because there will always be a percentage of these companies’ customers that prefer either traditional or online sales channels. It would be an enormous lapse in judgment for technology, financial services and hospitality companies to alienate any major portion of their customer base by making any diversions in their marketing strategy. However, if customers begin to prefer one channel over the other, I’m sure these organizations will adjust their marketing budgets accordingly.
One of the hot sectors that we are seeing right now are the insurance industry followed by media, healthcare and consumer goods.
ADOTAS: Does Sapient plan to expand its interactive team or open any new branches around the world this year?
GASTON LEGORBURU: We are definitely expanding our interactive team with top talent from everywhere – large traditional agencies, interactive boutiques, corporations. We’re finding that we are considered a “hot shop” right now and that is making us attractive to top creative and marketing talent – they want to go where the innovation is so they can deliver the best work possible.