Looks like 2007 will be the year that online advertising finally becomes the “core competency” of traditional ad agencies. According the the Boston Business Journal, Arnold Worldwide recently let go of 40 people in traditional ad jobs, and will be adding up to 30 new hires focusing on “interactive” media.

Our digital group used to be a department. Now, they are right at the center of the agency, digital guys are imbedded into every account,” said Fran Kelly, CEO of Arnold, which now has 100 digital experts in its 600-employee workforce in Boston. “Arnold will really morph into a digital marketing company over the next two to three years. Digital used to be on the edge of what we do. Now it’s more and more at the heart of what we do.

Whereas agencies used to be “all about pitching television and print campaigns as the end-all solution to clients,” now online media has assumed a vital role in clients’ campaigns.