Saturday, November 21, 2009

Traditional agencies: is transition possible?

It's the fag end of November 09. The country has finally realised the extent of the financial crap we're in, the most savage budget ever witnessed is apparently about to be unleashed snarling on the public and just to make sure a sucker never gets a break, God left the bath tap on while doing a ten day Vegas residency. The country is officially riding bell broke and knickers wringing.

But enough of the good news. The latest issue of IMJ magazine has an interview with the highly pragmatic Ray Sheerin, boss of one of Ireland's most lauded creative ad houses, Chemistry. He expresses clear concern for indigenous agencies.

"If you look at the industry at the moment, it is probably about half the size it was this time last year in terms of revenue yet it is only slightly smaller in terms of the number of people servicing it. That to me is not sustainable and I think the industry is facing into a very serious period of realignment over the next three to six months.

This time next year, there will be fewer agencies in Ireland than there are now. I think some were probably holding off making critical decisions in the hope of some sort of an upturn in the last quarter of the year. At the moment, I don't see this happening and it's certainly not going to happen in the first quarter of 2010. So I think reality for some agencies will really only bite early next year and I don't think it's going to be pleasant."

Reality's bite has already been felt at Chemistry itself. Never a profligate bunch even at the height of boomtown, they ran a tight ship. Nevertheless the jobs axe has already swung for several of their agency personnel in the latter half of '09. I'm not sure if this stark interview is their way of starting the process of 'realignment', but it wouldn't surprise me, and it wouldn't be a bad start.

I see Chemistry as a microcosm of the issue facing ad agencies in general. The cold facts of the recession are not lost on them, and the work that they do for clients, in ever more difficult circumstances, remains of an excellent standard. But there is no fat on the figures any more. Lose one account and you can end up closing an entire department of your hard-working agency. It's hard to keep going in the teeth of that disappointment, knowing that you're still doing good work on shrinking resources. And I have alluded before to the streak of cruelty I've observed in (some) bigger clients throughout this recession. They are actively demanding more but willing to pay for less. They are fragmenting business among agencies, leading to a bull pit where agencies are ripping into each other's cost bases for unjust rewards at the end of the campaign, and loyalty meanwhile has taken the boat to elsewhere.


The way forward?
At the risk of sounding like Garret Fitzgerald, I've said this before. The game was changing anyway. Recession has collided with an explosion of new media and all the bingo bullshit in the world doesn't hide the fact that agencies need to find a digital way forward or Ray Sheerin's prediction will include them.
But is this actually possible? I believe it is. Not without a hell of a lot of recessionary pruning, and most likely that includes Sheerin's mooted mergers, but secondly (and here's the Darwinian nucleus) a whole new mindset when it comes to how agencies view control of the medium, the project and the client's budget.
My personal, and some might argue simplistic, belief is that core agency thinking, particularly of the traditional kind, is a hindrance to effective online marketing. The G5 of TV/Radio/Press/Outdoor/Cinema have long since ceased to be the dominant global force they once were. There's nothing new in that. Some recent research from RedC notes that for 16 -30 year olds in Ireland almost half of their viewing time, about two hours, is spent online. Two fifths of the TV viewing is not specific and is on in the background. We're not even factoring in how many people are recording the shows they actually want to watch on the Sky box and then simply ignoring that jewel in the crown of latter C20 advertising, the prized TV spot.

If you want to see the full results from that RedC research
from Richard Colwell, you can access it on video here.
But the machinery that drove agencies, and continues to drive them, is structured in a way that's counter-intuitive to producing rapid-turnaround online creative work. I sat through how many presentations to prospective clients without actually clocking what was wrong with that slide where we outlined the agency structure. It had two triangles, side by side. The head of client service was the sharp end of one, the creative director the tip of the other. Above them, vaguely connected to both, was top management, while below were the various layers of drones (as a senior writer I include myself in one of those layers).
Two triangles that never overlapped. And that was the 'team' that was going to work on Client X's much-sought business. You can see where problems might have gestated, no? Makes me think of that scene with John Hurt in Alien. Ultimately that's how it played out too. And this is even before we start to talk about integrating digital, which in itself is a loathsomely patronising term.

The model where creatives and execs essentially see each other as hindrances to getting the job done properly needs to be dismantled anyway in order not to just include digital marketing media but to be entirely built ab initio around it. The vacuum that's created by the inability of trad agencies to do this has been filled with literally hundreds of small online marketing companies, offering a plethora of varied services, and each month more join the field. It's dizzying, and very often the trad agency, digitally inarticulate behemoth that it is, is overlooking the fact that what these small companies offer, whether it's professional podcasting, mobile app development, SEO expertise or any of a hundred different relevancies, is most likely necessary for the agency's clients in today's marketplace. It may be overwhelming to look at how much needs to be absorbed for an old schooler, but I'd still rather have sleepless nights AND a roof overhead.

No ring to bind them all
I spoke to Orlaith Blaney recently, MD of McCann Erickson in Dublin. Big agency, on the face of it doing a creditable job of working through the recession and still making plenty of traditional advertising. But what about all of the online activity her clients now needed? Was McCann in a position to give Coke and Tayto and Heineken and Nestlé real online expertise? She reckoned that the switch-up to full digital offering (and really, nobody can define 'full' in the ever-expanding world of online media) would be far too costly for an Irish agency to do from scratch. From McCann's perspective, the core issue would still be about positioning themselves at the centre of the client's brand needs, and making sure that those needs were met either through the agency's work directly or through collaboration. But the idea of being 'the one' wasn't sustainable.
I think she's right. Knowing how to market crisps doesn't mean that you need to have someone on the payroll who knows how to make an iPhone app that markets crisps. Just be aware that it can be done, and be clued in as to whether it's right for your client to use it. Same mantra as always: know your shit. Creativity will still be creativity. Just in a different space. I think agencies can take a huge amount of positive juice from seeing it put into practice.
No better example in the past week than Chemistry themselves, who capitalised virally on Thierry Henry's handling of the ball to take France to the World Cup and send Ireland home. The guys in Leeson Park fabricated a diplomatic storm in a virtual teacup with elegant minimalism but huge impact. Google the words Sarkozy, box and letters and see how well they did it, just to prove that they could. People are getting this web thing.

4 comments:

  1. Excellent post that sums up pretty well where things are at right now. Creative people will always be needed no matter where the ad dllars are being spent and the web is getting far more competitive and will need just as much talent to help you stand out as time goes on. The recession is the main resaon for less jobs but as this whole thing shakes down (12/18 months) a large chunk of these people will get re-emlpoyed perhaps with a different job title but doing the same sorts of things through a different medium.

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