“THE BIG AGENCY MODEL IS DEAD.” Any close observer of the advertising industry is familiar with this trope. But it’s a bit of self-flagellation perpetuated, ironically, by the heads of many of our biggest agencies, and by our trades, and is typically followed by a litany of dictates regarding what new shape the big agency model must take or fall to irrelevance.
Sorry, but I’m not feelin’ it.
I’ve been around long enough to have witnessed, and been part of, enormous changes in how agencies and clients operate. Throughout my career I’ve worked at a large agency, a boutique agency, and for an in-house creative department.
I started Modular Advertising + Marketing after a stint as creative director of a mission-driven boutique agency dedicated to inner city small- and mid-size businesses and nonprofits. And although we did some very good work for our clients, the scope of our work for them was limited; we were still a New York-based agency with New York overhead, and many clients simply hadn’t the marketing budgets to cover our nut. We failed to adjust our model to help relieve the pain of the businesses we were in business to serve and the agency eventually folded.
Nonetheless, these are sectors I deeply care about. So Modular, which builds discrete teams specific to a client’s need, is the result of lessons learned and adjustments made. We continue to focus on the small- and mid-size business sector, as well as nonprofits, and remain an option for larger clients’ internal projects. (This year we look to add progressive political issues and candidates into the mix.) This is our niche and we’re sticking to it.
Modular is just one variation on the theme of ad agency in an industry that undergoes constant shape-shifting. Indeed, reports of the death of Big Agency are greatly exaggerated. They are alive and well and serve a specific purpose and market.
They have big infrastructures, big teams, big capabilities, and attract clients with really big budgets. For many clients it’s absolutely the way to go. Global brands need global agencies with the same reach and boots-on-the-ground capacity that they have to speak to different markets in their own language, and be aware of and sensitive to cultural nuance.
But as the lumbering dinosaurs that their detractors portray them to be, big agencies also have big staffs, big overhead, big levels of internal hierarchies, big complicated billing systems, and face big obstacles of entry to innovation.
The other issue for big agencies is identity. Where once agencies were selected based on relationships and reputations preceded by the name on the door (been to Ogilvy’s Twitter account lately? They’re still pushing the old man out front. It’s like Weekend at Bernie’s with witticisms), today’s industry leaders are a global rat’s nest of holding companies and subsidiaries. What exactly do WPP, IPP and Omnicom signify beyond hugeness and the realm of possibility for most advertisers? Ogilvy’s continued leveraging of its founder is a smart move, putting a face and philosophy on a mammoth global enterprise. Largely, though, big agencies are at parity with one another, with interchangeable tag lines, mission statements and staffs.
Consider that agency talent rank among the most peripatetic workers of any industry. A study by the 4As and LinkedIn reveals that turnover in the advertising industry is higher than related industries. In 2015 Ad Age reported that “While the national average employee turnover rate is 14.4% annually, according to the Bureau of National Affairs, in the tech sector it stands at 25%. Advertising is even worse, with agencies losing a mind-blowing 30% of their talent each year.” Add to that the rising attrition of veteran creatives and known ageism in this youth-centric environment and the likelihood that those who did such good work for your brand last year are still hanging around is, well, unlikely. So who are you really getting into bed with? And what is the foundation of that relationship?
Independent boutique agencies and intra-behemoth specialty shops are a response to the needs of clients in a complex world. Due to their relatively smaller size, they can respond quickly to changing industry dynamics or client demands. As Greg Paull of R3 Consulting told Adweek, “the long-rumored ‘death’ of the creative agency of record model is proceeding apace as clients look to build more diverse rosters of small and mid-size shops.” While I take issue with Paull’s sounding of the death knell, it’s clear that boutiques represent an appealing alternative. In an effort to position themselves uniquely they often specialize — e.g. digital shops, social media shops, Millennials-focused shops — or serve category verticals like pharma and finance. That doesn’t mean they don’t have a lot to offer. But marketers with broader needs are then tasked with collecting agencies like so many Pokémen and hoping they’ll play well together. They don’t always.
In-house agencies or creative studios certainly have their virtues. When I was at Time Inc. our advertising clients regularly bypassed their own agencies and came to us directly because we could deliver integrated programs that their AOR couldn’t. We had a one-on-one relationship with our advertisers; we concepted; we wrote; we designed; we executed, and we managed. The agency was the third wheel. Threesomes have their appeal, but sometimes it just makes for too many moving parts. As the client, we produced our own consumer and trade campaigns. It was also there that I helped launch the Time Inc. Digital Studio, enabling our magazines to produce their videos in-house, resulting in huge financial savings as well as staunching lost productivity due to days spent offsite at downtown studios.
It would be difficult to argue that anyone knows the client better than those on the inside. They live and breathe the brand day and night, are present at formal meetings and privy to passing who-are-we-what-are-we-where-are-we? conversations that happen every day. But there’s also the forest for the trees effect: every marketer knows the toughest clients to market are themselves. It’s hard to be objective when you’re that close to the product. Inundated day after day with internal demands, client assignments, unreasonably quick RFP turnaround times, high-level strategic thinking — indeed, creativity itself — can get lost in a hurry.
Further, take into account the potential for perception/reality gaps between what the brand thinks it is and how the rest of the world (or at least its target constituencies) sees it. Research may be conducted, but if it doesn’t match up to a brand’s self-perception the findings may not be whole-heartedly embraced. In fact, they’re often disregarded altogether. Herein lies the value of an outside perspective.
The fact is, the future of the ad agency is here and always has been. The model, in all its many forms, is constantly in flux. Clients’ needs change, technology advances, and adjustments are made. Established agencies will merge or be subsumed, some will augment and/or diversify their offerings and yes, some will die. And new ones, of all shapes and sizes, will start up to fill the gap.
It’s the circle of life.