If you know me, you know I spent almost 30 years in the ad agency business. 26 of those were working at one of the most creatively recognized agencies in the world, the last 5 as the agency’s CEO.
For years there’s been handwringing about the disruption of the agency business, and for good reason. It’s a completely different business than the one I joined in 1989. Recently, Ad Age published a piece that summarized the changes roiling the agency business -- you should check it out.
I left the agency business in 2018 and the last few years have given me perspective that only comes with distance and time. It’s helped me see things about the business I love more clearly than I ever could when I was in it.
Recently, I got to talking about my thoughts with a former agency executive. Myself.
Agency Matt: You know, the changes in our business are scary but we’re the holders of the creative flame and creativity will always be valued. So we’ll be ok.
Former Agency Matt: Yeah, I used to tell myself that, too -- it helped me sleep at night. But clients don’t value creativity the way they used to. Creativity used to be a high-stakes purchase. You ran a campaign for a year, longer if you were lucky. So that was a high-level, high-involvement strategic decision. Now the shelf life of most creative ideas is measured in days or weeks, not months or years. That lowers the stakes of each creative “purchase.” It also makes the creative relationship transactional -- clients buy ideas à la carte. Hence, the move toward roster agencies, projects, and pricing pressure.
Agency Matt: Ok, the structure and process might be changing but at the end of the day it’s all about the work.
Former Agency Matt: Yeah, but not in the same way. We’ve seen a few exceptional agencies succeed that way because they‘re just that good. Think W+K.
But the mere mortal creative agencies won’t succeed simply around “the work.” Sure, they need to have good ideas, but they’ll succeed around their people. I suspect my former agency is doing well because they have compelling leaders like Kristen Cavallo and Danny Robinson. We watched McCann reinvent itself over the past decade by bringing together remarkably talented people like Suzanne Powers, former CCO Rob Reilly, Chris Macdonald, Alex Lubar, etc. Their work got better but I’d argue the clients bought the team.
In a time when the product is being commoditized, the increased focus on people should be good news. But the agency business is filled with revolving doors. And the best and brightest young minds aren’t exactly flocking to the ad business. The question for agency management is, how do they attract and retain the kind of people who can attract and retain the best clients?
Agency Matt: Ok, smart guy. So who wins in this terrifying new world?
Former Agency Matt: Well, if creativity has become a frequent, commodity purchase, the high-stakes client decision becomes a data-driven strategy. That bodes well for consultants and digital agencies adding creative capabilities and badly for agencies who continue to position themselves around “the work.”
Just look at the recent spate of agency mergers. Who’s the lead in ALL of them? The consultants and digital agencies. AKQA is leading Grey. Accenture bought Droga5 (David Droga is in charge, supporting the point about compelling people). VML leads Y&R. Wunderman leads Thompson. In every case, the agency defined by traditional work is taking the backseat to consulting or digital/measurable work.
Agency Matt: Well, my agency may have been founded on traditional advertising but we’re moving quickly into digital and data. We can do all that, too. It’s the best of all worlds and clients should eat it up.
Former Agency Matt: Good luck with that. In the Ad Age article, Avi Dan says agencies are telling clients, “Oh yeah, we can do social. We can do digital. We can do technology. In reality, it’s nonsense. What they want to do is a TV commercial. That’s how their model is built. That’s how they make money. That’s where their margins are.”
Actually, it’s worse than that. In my agency life, we didn’t make any more margin on a broadcast producer than we did on a social media strategist. The creative agency’s real motivation to do TV isn’t financial, it’s cultural. They’re hanging on to the belief that “true creativity happens on TV and in film.” That’s BS, but most traditional creative agencies are run by people who grew up in that world and can’t let go of it.
Agency Matt: There’s a vibrant set of up-and-comers in the agency business. How are all those smaller shops doing so well?
Former Agency Matt: There are some bright spots for sure--one of them, Arts & Letters, is right here in Richmond. They’re proof that a new company, unbound by the old assumptions about creativity and structured for what clients need today, can succeed. They’re built around those changes from the ground up; they’re not scrambling to adjust to them, or worse, in denial about them. They’re fast, centered on data, digitally-native, and structured for a more flexible and efficient staffing model.
Agency Matt: You’re depressing me. I’m going to the bar for another rosé so I can pretend it’s 1992 and I’m on the patio at the Carlton.
Former Agency Matt: Those were the days. Say bonjour to David Ogilvy for me.