The advertising industry finds itself – yet again – at a crossroads, a confluence, a decision-point, a junction. Attention is needed. Assessment is necessary and action is required. After all, it’s been nearly 10 years since the industry was last stumbling headlong toward extinction.
Every few years "experts" claim the traditional ad agency is going the way of the dinosaurs…
Are there many reasons for concern? – Yes. Are there always reasons for concern? – Yes! It’s most interesting how the “expert class” repeatedly presumes cataclysm at the first sign of economic Darwinism. Chicken Little would be proud.
Remember, not that many years ago, the Internet spelled doom for the industry. Still around – amazing. Before that, there was this new thing that would kill print advertising called TV. Before that radio…
Assuming clients will continue to sell products and services, there is a reason to believe that agencies will survive this most recent report of their demise.
Agencies HAVE Changed
That said, there are indications that more change is needed to stem the tide of marginalization. Agencies have expanded, purchased, and partnered their way into every market, category and discipline. They have leveraged advancements in technology to become as connected globally as their predecessors were in one office tower only a decade earlier. And have scoured the market for the best and brightest to set to work advancing their client’s brands and products.
Evidently, not everyone has been impressed by the results of this effort. (pdf file)
The End of Advertising As We Know ItTraditional advertising players – broadcasters, distributors and advertising agencies – will need innovative new approaches to respond to major industry shifts underway.
What is most intriguing about this point-of-view is that it assumes the clients will sit and wait on the ad agency and their partners to innovate our way into the future.
There is no question that the future of advertising will look radically different from its past. The push for control of attention, creativity, measurements and inventory will reshape the advertising value chain and shift the balance of power. For both incumbent and new players, it is imperative to plan for multiple consumer futures, craft agile strategies and build new capabilities before advertising as we know it disappears.
Bold mine. A truly shocking point of view! I know! The industry will have to “craft agile strategies!” in light of this “shifting balance of power.” This is amazing to hear in this day and age. Particularly from IBM who is serviced by the industries most influential agencies. After all, didn’t the industry spend the past few decades consolidating to deliver on the opportunity of integrated services, or was it convergent communication, or media-neutral communication, or whatever other iteration of the same to better measure and influence consumers. If agencies were delivering on their service promise, then churn would not be at unprecedented levels and clients would not be seeking the same service object as a decade earlier – FROM YET ANOTHER AD AGENCY.
And yet another outside point of view claiming the end of our ad agencies. Speaking at the Cannes Lions International Festival of Creativity, one of music’s most successful brand ambassadors did not soft-pedal his message for a rapt audience of advertising and media delegates.
“Ad agencies are yesterday,” he said. “But ad agencies that can turn consumers into agents that add value to community and life, that’s what it’s about right now.”
So, where’s the rub? Change is coming. And some agencies won’t make the change… See Cliff Freeman’s closing as Exhibit A.
Fingers of fault can be pointed in every direction, but what can an agency do to deliver on the promise of change and better consumer insight?
Options For Change
One choice might be to do nothing. As one CEO of a prominent agency network advised, “it’s not going to happen in my lifetime, so I’m better off spending my time on matters where I can have an impact.” This pessimistic view might work for him and his pre-packaged retirement, but, as an industry, ignoring the issues is not a viable option.
If you are confident that agencies are on the case and see these views as a “Chicken Little” prophecy, consider one advertiser’s recent action. They terminated their agency relationships claiming the agency model to be irreparably broken. Then proceeded to underwrite the organization of its new agency – only to see that model stumble and fall. And now have folded the whole mess into yet another ad agency.
This is an extreme but not an isolated example of how client dissatisfaction has embodied itself in unprecedented levels of client churn.
Some would argue that client’s share much of the blame in these dysfunctional relationships. But these same clients –criticized by agencies – have increased the role and expenditures for their management consultants year-over-year. Perhaps as an industry we need to consider why? Anyone can satisfy and make money off of the handful of great clients. A great agency effectively services and profits from all of their client relationships.
Time is of the essence; a recent study reported that those in the “advertising” profession rank just ahead of Used Car Salespeople in esteem. But neither that nor the changing consumer will end advertising as we know it.
Ramifications For Agency Leaders
"Having a vision marks you as a visionary. Then if you have the ability to get others to buy into that vision, you’re called a leader." Bob Sanders President, Sanders Consulting Group
This shift has big impact on the way you should think about your business. Clients are thinking about marketing differently. To them it’s tactical. And tactical is measured on achieving results, fast delivery and staying on budget. So anything that keeps you from delivering on their tactical-oriented measurements needs to go. Some examples that might be hindering your firm include inefficient operating structure, department thinking and department silos, slow response and low productivity. All these need to change.
Create an action plan to adapt now:
- Take the best thinking from tactical firms and best practices from strategic firms.
- Find your own trusted advisors.
- Understand how to manage change.
Build your business model so you can prosper in this new environment:
- Your agency needs to be positioned and branded properly – focus and discipline are key.
- Most of your competitors are operating without any strong positioning other than a hazy label.
- There is little concentrated branding going on among agencies, meaning few agencies have a clearly defined brand.
Hard to believe but it may be time for your firm to move into a larger and faster growing market area. And that’s consulting. You do this by launching a flanker brand aimed at CEOs offering a variety of services, including serious branding. Serious branding is usually more than communication branding that agencies do just done to win an account but serious branding can be highly profitable work for marketing communication firms that know how.
Understand that to live in the past, you will die. Adapt to the present and you can survive. Plan for the future and you can really prosper!
To find out more including how to start your firm soaring, not just surviving, then give us a call. Our work together often begins with an open discussion with one of our consultants so we can better understand if we can be of help. Start by contacting our office at 800.899.1538 – or drop us a line at info@sandersconsultng.com and we will schedule a call.
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