Tuesday, July 31, 2007

Is Digitas China deal about outsourcing?

Almost lost in the headlines about Digitas and its sugar-daddy, Publicis, buying a major Chinese interactive company, CCG, is that it will also expand Digitas' three-month-old digital production arm, Prodigious, into China as well. Or is it really the other way around? My guess is that while one can yammer on all day about the potential of the digital market in China, one of the best near-term reasons to enter the market is to get access to a low-cost workforce that can build out digital advertising applications for clients all over the world at a fraction of the cost of employing North American or western European labor. For the most part, people in traditional advertising aren't attuned to the potential of outsourcing production overseas (well, there's not nearly as much to outsource), but digital shops including Organic and Critical Mass have been outsourcing—at least to Canada—for some time. Look for this to solidify Digitas' relationship with a lot of clients, particularly General Motors, which isn't exactly in a position to throw its money around.

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