There’s an interesting article in the Evening Standard today by Gideon Spanier (http://www.thisislondon.co.uk/markets/article-23855161-death-of-the-traditional-ad-agency-model.do). In essence, he focuses on the cyclical nature of the advertising industry where companies move from the big, one-stop-shop, full service agency to the specialist niche business.
He mentions a number of recent examples of the present “diversify and grow” trend:
- Beattie McGuinness Bunday (BMB) is on the look out for a public relations firm
- M&C Saatchi has moved into mobile marketing
- Chime, which includes PR firm Pelham Bell Pottinger and ad agency VCCP, is moving into international sports marketing
- Engine, an advertising and marketing group, is buying specialist social media agency Jam and setting up a behavioural economics division
- Dare, Campaign magazine’s digital agency of the decade, no longer wants the media to pigeon hole it as just digital any more
- Other companies are moving into television production
So what’s driving the change this time? Is it client demand, the digital revolution or recession-induced increased pressure on margins? The article mentions the Institute of Practitioners in Advertising report that shows marketing budgets were cut in the second quarter of 2010 – disappointing when the only increase over the past 10 quarters was in the first quarter of 2010.
Others suggest that, as in the past, the ad agencies are trying to gain a greater share of the strategy and management consultancy markets following the lead of firms such as McKinsey. More cynical commentators suggest that the creative industries are merely reflecting the reducing impact and influence of the marketing departments in the companies they serve – where general managers and entrepreneurs are leading more fundamental change and driving creative strategies.
Personally, I think that there are two main forces at work here. The first is that the marketing services sector has always spawned small, sometimes breakaway, highly successful specialist agencies that identify a new niche and enjoy massive growth before being tempted by the cash of a larger, more established player. And second, clients want to investigate and experiment with the wealth of new technologies and media but quickly realise that they are not panaceas and still need to be integrated within an overall corporate marketing , brand and advertising programme.
But as always, I would be interested to hear the views of our clients in the creative sector and from our clients who make use of agencies.
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