Wednesday, May 19
It is fashionable for journalists and other commentators to proclaim the imminent 'death' of advertising agencies. The problem is, it has been fashionable for 30 years. The brilliant American TV series "Mad Men" goes back 50 years, yet at the end of the third series we are shown something which has happened in real life time and time again. The partners of the advertising agency it depicts, Sterling Cooper, had previously sold their ownership to a British agency. They then discover that the Brits are going to sell them again - to McCann -Erickson. Even though the partners are very rich, they are not ready to retire. But they would rather die than work for McCann, so they decide to start all over again from zero - and some of their biggest clients go with them. Nothing new under the sun then; McCann was always seen by agency people as a dull factory, yet it is still chosen by many good companies; and a good agency is simply a group of talented people.
Agencies will not collapse and die, like for example major airlines have done. Airlines have huge fixed assets, namely aeroplanes. An agency's most valuable assets walk out of the door at night, and there is little else left of value beyond some Apple Macs and an office rental contract.
Over the years I recall various potential "killers" of agencies; management consultancies were the big ones of the 90's. I never could quite understand who in McKinsey would write and art direct the next great Guinness ad. Then there were the clients, who were going to form their own buying groups and thereby kill the media agencies. What happened to that one? I believe they tried it in the Netherlands, and...Now it is the rise of the internet based media.The internet provides huge challenges, but "agencies", i.e., small groups of talented people, will rise to the challenge, as they have done in the past. When people call the 'death' of agencies, they are really referring to the current structures of big network agencies. Of course these big agencies are slower torespond than new independent agencies. However they can change their structure and shape far more quickly than a company like CSA can do. Those who believe clients will do better taking these services in-house, are mistaken. There are a number of reasons, but the most important is that expertise in communications is developed by exposure to different market sectors. Agency people have the personalities that demand that variety.
I will make one prediction about the changing shape of agencies, which can already be seen in Western Europe. "Digital" people will simply become a part of the main team. There will be creative and client service people who understand the medium of Facebook as well as they do television. I know of at least one agency in this market which is moving in that direction and they will pose a considerable threat to the network agencies who maintain a separate digital agency or division. My second prediction is that McCann- Erickson will continue to thrive...