Is all the fun going out of the ad business?
By common consent, the media agency business model is not in the best of health. Is some kind of burnout going on? And are all agencies really ‘in a deep hole’?
Several commentators seem to think so, and if Ad Age‘s ‘Creative Exodus in Adland’ article is anything to go by, “a veritable Cannes jury worth of senior creative talent has shrugged off the leashes of big agency networks for their own start-ups or for creative pursuits outside the ad industry”.
Creative talent appears to be departing the industry, or at least leaving the big agencies. There are a few factors to consider, of course – the pressure of agencies’ business models is increasingly intense, afterall, we’re barely out of a hard-hitting recession; reduced margins have become accepted; clients are less-willing to experiment; there is more competition from smaller shops; and business models are still reliant on the production of ads, not ideas.
In the US, BBH’s chief creative officer Kevin Roddy put it: “I can’t quantify this, but I have a strong feeling that the business is getting harder.”
For creatives, management in a big agency means taking on more and more responsibility, going to endless meetings, handling clients sometimes impossible needs, and managing budgets. Creativity rarely comes in to it. The job description certainly seems to have become blurred, which is why the big boys appear to be starting a new trend – in search of the ability to ‘make things’ again, presumably why they were attracted to the ad industry in the first place.
For agencies, maybe there is an issue with the business model. Commenting on the UK media scene, Nick Manning said, “when times were good, the old business model just about held up. Media agencies were making plenty of money, and OMI boosted margins. The defects in the business model were ignored as long as the agencies’ shareholders were happy and everyone got handsome bonuses.”
However, times have changed. There is increased pressure from holding companies such as WPP, Publicis and Omnicom; there is a lack of investment in people, technology and resources to support the digital age; and traditional income has started to dwindle. Manning says it is time for a “radical rethink” while Brian Jacobs says agencies are in danger of blowing their chance.
Jacobs believes agencies have serious potential to blend creative abilities with analytical skills, working across disciplines to give clients exactly what they need. However, this won’t work if agencies become purely trading organisations, where “the agency simply buys; the sector invests in online auction technology, stops investing in research and tools, automates everything, and moves to an industrial estate.”
He says clients depend on their agencies more and more, so it is up to the big agencies to train better, engage and learn, and to push boundaries. However, they’ll need to keep hold of their best talent to make this a reality, and if this comment is anything to go by, that might be easier said than done –
“One agency CEO, who remained anonymous for fear of jettisoning all revenue from his company, put it like this: ‘Hal Riney and Phil Dusenberry were treated differently. Business then was much more civil and respectful. Now we work in an incredibly disrespectful environment. Clients are know-it-all assholes, with the exceptions being few and far between. There’s a lot of greed operating under the guise of ideas like ‘efficiency’ and ‘creating shareholder value’ and that grinds away at character.'”
Read the full article on AdAge.com