Sunday, July 12, 2009

Congratulations! I am the one millionth person to title a blogpost "The end for advertising agencies?"

Piece by piece the structure of advertising agencies is being disassembled. That's the polite way of saying it. If you've seen any of the Saw movies that might work as a more incisive visual. Just last week I heard unconfirmed reports of nine people being let go from Cawley Nea. It could be the Chinese Whisper figure I heard, but more often than not there's substance to the story. It's always glum to hear, and even more difficult to accept when it's from a good agency, doing good work for its clients. That alone is not enough right now to save anyone.

Ad agencies have their head in the vice alright, and it's not only the economy that's turning the handle. A rampant spend culture, the seeds of which were sown over the last decade, is now being harvested. Across town the memories of the office Christmas party that simply had to happen in some other continental capital aren't too distant to be forgotten yet. The endless, needless taxi trips to locations ten or fifteen minutes away on foot. The ugliest, most expensive furniture and bibelots scattered around reception.

It's not fair to blame a high-on-the-hog agency culture solely. I think that at this moment in time a lot of clients (unquestionably under pressure themselves too) are using stringent wartime conditions to let a bit of a wanton cruel streak cut loose. Agencies are scrabbling for project-by-project appointments, expending a huge amount of effort on mini-pitches. It gives the illusion of a busy beehive but it's based on vapour. The majority of it is energy and expense that is spent unrewarded. Not sustainable for very long. I hear of clients who demand more work on a purely speculative basis, more often than they ever have previously. It's fun to toy with the agency, I guess, now that it's turned into a mouse. Maybe it relieves their own stress in these faltering days. And with each genuine big account that is pitched and moves (or stays, it doesn't really matter) the staff at the unsuccessful agencies will hold their breaths and the management will most likely have to make that horrible call to the singled-out few.

Needless to say, I'm generalising quite a bit here. Not all clients are complete tossers and not all agencies are in headless chicken mode. And maybe soon that'll all be an academic question anyway, over redundancy pints in Smyths. But other questions need to be asked in the meantime. Fundamental questions. Like What is the agency now? What does it represent for clients? Can it reassume a place of relevance at the heart of client communications needs?

I'm skeptical. The last 18 months have seen wholesale changes, but the erosion for agencies has been going on for a lot longer than that. The removal of the media function that began 15 years or so back was huge. The growth of external researchers. The outsourcing of production facilities. The splintering effect of creative-only agencies, or service-led agencies that would hire in creatives on an ad hoc basis. The setting up of independent BTL agencies. The growth of digital media that have largely remained unharnessed by agencies. All these changes have led to an emasculation of the agency's raison d'etre in client terms. And clients have grown exponentially more sophisticated in marketing terms. It's been a long time since any decent-sized firm would simply rely on an agency as its go-to guy for all its needs, preferring instead to operate an a la carte system. Who could blame them? Nobody really expects one body to have all these competencies and be master of each one. Not gonna happen.

And more pertinently, when clients are exposed to the cost structures of various marketing specialists, it quickly becomes apparent as to who is costing the most and who is the least effective. Nowhere to hide. That became true in the late eighties with investment in direct response advertising and the set-up of direct marketing houses. Not as sexy as the big ad campaign makers, maybe, but effective and far more valuable to a lot of clients because of it.

Measurement has become ridiculously more quantifiable now (yes, I am aware of the tautology, but cannot be arsed to take the time to improve, better or refine it) with the true ascent of digital agents. 'Digital marketing is a speciality full of specialities.' That's how Jonathan Forrest of Cybercom put it recently in an interview with Pat Kenny. Recession or no, why would a client give any ad agency a huge chunk of business, welded as they are to an ever decreasing portion of the way we were?

Is there a way forward for agencies? In my stomach I don't believe there is, unless it's as a reinvented entity. And I don't mean rebranded. I mean as a valuable go-to resource for clients, a hub where expertise can be marshalled, so that even when an agency does not possess the skill to complete the required task, it can be an essential part of the overall equation that does. Nobody possesses all the specialities. Film production companies have always operated on this basis. You form the network for the project. Next time out you build to order all over again. But always, you have the option of positioning yourself at the centre of that hub. The brand guardian, if I may use that wanky old scrote of an expression. But it necessitates knowing all lines of communication, from Google Adwords to what the hell use an iPhone app might be. Things that you didn't need to know before, when everything was just radio/tv/press/outdoor lovely. There's no time for complacency at all. There's barely enough time to decide to act. The steepest learning curve adland has ever faced is pointing up to the sky right in front of everybody's face.

Last week's Business Post had a great article on the current state of affairs for agencies in general. It had a perfect cross-section of panic, denial, optimism and pragmatic decisiveness. Sometimes all from the same agency spokesperson. But what stood out clearly was everyone's fixation with digital. For some because it's what they do, for others because it's what they know they need to be doing. Necessity, to tweak a phrase, is the mother of reinvention.


  1. hi Nick, Good post. Like all decent companies, agencies need to identify where they can add value - and identify the bits of stuff they used to do that don't really add value. What clients valued before may be different to what they want or need now. Different needs for different clients I'm sure, but this is the challenge.

    As a simple example, the need for website design for lots of clients must be smaller than before - it is easier to do. Quicker. Less technology needed. Fewer design skills much of the time.

    But the need to converse with customers online will increase. Moderators. Social managers etc.

    The agencies that recognised this have found new sources of revenue.

  2. Thanks for the thoughts, Paul. I have detected a slow turnaround from once-sniffy agencies alright. As budgets have dwindled and projects just simply disappeared, what was once too smalltime is now being pounced on by all and sundry. At this moment the knowledge gap for clients and agencies is a brake on the cart, but that's changing and frankly, I'm a little bit excited at the prospect of what new creative avenues are out there. A blogpost to follow soon on one of them.

  3. One word - Internet. With it came high ROI and lots of transparency, even in offline advertising, as data became freely available on just about every marketing metric you could wave a stick at.

  4. Digital is huge yes. But ad agencies out there, have you spotted that Google favour good old fashioned, printed on a piece of paper, with a cut out and keep coupon, method of new customer acquisition. They offer (every few months) generous £60 off Ad Words AND (brutally I think) an online design service for direct mail campaigns - targeting SMEs with a Google Account? You can upload your pics, your text, your mailing list and in collaboration with Royal Mail they will post the damn thing for around 51p a piece. Which client needs a design/ad agency with this service at their fingertips? Let's hope it's just the big piss-taking agencies that go to the wall but I suspect lots of genuine talent, with passion and ability, will become victims of this new power in the client's hands. Glad I'm in the content creation business, for sure, but like every consumer I am far more moved by the power of good, strong, smart visual design. Give me imagery and inspirational art direction any day to sell desire - and eventually product. As digital dominates, it's all too easy to let text and quite frankly dull web pages take over our real, vibrant world. So by all means embrace the new media (and as Nick says, reject it at your peril) to pull in the punters with clever keywords and smart SEO, but when you get them, wherever there is, PLEASE remember what brought you to your vocation in the first place, way back when, when you could sketch, innovate, jot down ideas and photograph little bits of gorgeousness. In a text dominated world (and this is a time served copywriter speaking 18 years in) the consumer expects all of the above but always wants something different.

  5. Once again I find myself thinking:

    "hey, there is this new thing called 'The Wheel' - that will make all carts move better, and I know how to make it but does everyone realise they need it? (not yet) and by the time they do will I be just be one of many who can help provide it?"

    But the wheel needed the cart. It kind of improved it, but on it's own it wouldnt be much use. So Sarah, everytime someone tells me that traditional advertising is over, I think of the Cadburys eyebrows. Yes - Youtube and viral marketing launched it But the creativity and production saw it through to the mainstream and bus adverts, print ads and good ole Television.