The Ad Agency model died.
But it has taken us agencies a while to discover the body. Advertising Agencies in T&T got going sometime in the 50’s. And ad agencies had a good run. Until this blasted digital thing came along and spoiled the party. Agencies had a nice arrangement. We were the only game in town. Consumers had limited media channels to get their news and entertainment. So it was easy to reach them, with our one-way broadcasts, to sell them stuff. Clients were happy. Consumers were happy. And agencies were happy too. Once upon a time, being invited to an Agency Christmas Party was the highlight of the season. It was big on premium drinks and catered food.
We gave away the steak for free
Agencies do a few things well. Mostly, we help to turn products into brands people love. We do that by organising a bunch of skills including copywriting, art, media buying, public relations, and organising promotions and events. One thing we didn’t do well in T&T is make it known that everything we do, is built on a strategy. We sold the sizzle (and still do). And we gave the strategy (the steak) away for free. My theory is that over time, the sizzle became the steak. Clients just like to do stuff, “don’t bore me with research, analysis, differentiation, and reasons to believe. I need to get on the 7 o’clock news”, was the cry of clients in the 80’s and 90’s.
I’m in the unique position that I have been a client for much longer than I have been an agency owner. So I’m not bad talking clients here. I’m speaking from experience. Clients are largely sales drivers because the 12-month window is sacred. It’s what career promotions are made of. It’s where bonuses are spawned. It’s where bragging rights are made. The twelfth month is the anniversary of profit parties. Our local businesses have been run by self-made mostly men, who clearly picked the sales road. So we have strong performing products but only a few great brands. And that’s changing with their sons and daughters now running the business because it’s easy to duplicate a product. Not so easy to craft a brand.
Agencies tell clients to be flexible, but are rigid themselves
Back to our funeral story. When this digital thing came along in the late 90’s, the 15 agencies that existed at the time welcomed it the way you greet your mother-in-law. That is to say, it was not greeted, and agencies hoped it would leave soon. Consequently, websites were slow in coming or poorly executed. Blogging was non-existent and still is so even today. In-bound marketing and thought leadership didn’t get attention and is still not occupying agency leaders brain space. Digital outputs are driven by traditional. Digital-first is a slogan, not a truth. All of this to say, some of us are still pining for the good old days, when cow gum was a vital supply in any ad agency.
Here are some more examples of what’s happening to agencies that are impacting revenue and viability:
- The masters of none are being replaced by masters of one: Once heralded for broad experience across multiple sectors, up comes along specialists in banking, or health, or QSR or Pets. The specialists are eating generalists for lunch and they are coming from down the street and across the oceans
- Advertising & Promotions budgets are being slashed. There is only so much that can come out of a dollar to leave a profit. Security costs are up. Transportation costs are up. Employee EAP programs didn’t exist before the 90’s, in any major way. As Yul Brynner said: Etcetera, etcetera, etcetera. Agency budgets are the casualty of digital disruption and changes in operating priorities
- Trade marketing, non-existent 40 years ago is now a line item on the Advertising & Promotion budget and guess where dollars were found to pay for that?
- Traditional media is under severe pressure. I don’t see anyone whose under 35 reading the papers in my office. Netflix has kidnapped some of the 7 ‘o’clock news audience and so has streaming, social media in all its different faces, podcasting et al. There are now over 40 radio stations in T&T and a bazillion online versions. The non-existence of media market research adds salt to the wound
- Freelancers abound. And many of them are pretty good. They are also more responsive as they have less on their plate and don’t have an organisation to run
- Some clients have installed in-house agencies and this can work extremely well or be a complete disaster
- Digital disruption has meant ad budget shrinking. For example, one full page traditional press ad could pay for social media boosting for a month
- No agency can do an event, virtual or in person better, than an Event Specialist
Ad agencies must find new revenue streams
Ad Agencies are faced with an existential crisis. To survive ad agencies must drink the same soup we’ve been encouraging our clients to drink all these years. It’s basic marketing. The right product, at the right price, at the right time with the right promotion. Someone moved our cheese – actually, a long time ago. So now it’s urgent that agencies reorganise, specialise, increase their relevance, and find some new cheddar before we starve to death. At Pepper, we are launching two new services before year’s end, because we don’t like funerals, especially our own.
