PERSPECTIVE: Ad industry cannot emerge unchanged from this recession

By CAROLINE MARSHALL, caroline.marshall@haynet.com, campaignlive.co.uk, Friday, 06 December 2002 12:00AM

A depressing opener to my penultimate column for 2002, I'm afraid. According to the current Campaign Top 300 report, the largest ad agency in Britain, Abbott Mead Vickers, employs 317 people. Ten years ago, Saatchi & Saatchi, then the biggest, employed 508.

This, as we know, has something to do with new technology and with the seismic shift towards media buying by media specialists that led both agencies to shed their media departments. A generation of media people has grown up that has never directly experienced the process of producing a good creative idea, and, similarly, a generation of planners and creatives has emerged whose only experience of media is their own consumption of it. The potential for confusion and conflict has proved enormous.

But it's not just about media. It's also because - ironically for a business noted for glamour and excess - advertising agencies do a lot less of everything these days.

Less packaging and logo design, less basic market research, less public relations, less sales promotion. The best specialists have set up their own companies and no-one talks about full-service agencies because they barely exist. Full-service conglomerates such as WPP, Omnicom and Interpublic are now where the really big clients do most of their shopping.

An interesting point to ponder is, therefore, in what shape will agencies emerge from this recession. Looking at the top performers in today's market, we can predict with some certainty that the days of the 500-person London agency will never return. This is not just because the media people have been stripped away, it's because the shrinkage in the other services agencies offer and the move to specialists will be permanent. I'd bet that London's current fastest-growing agencies - Delaney Lund Knox Warren, Mother or Clemmow Hornby Inge - know that permanently avoiding the old models (oh yes, we can throw in a bit of new product development for free or for a minimal fee, if you like, Mr Client) is indeed the only way to keep the adrenaline flowing and the new business coming in.

So agencies will inevitably emerge smaller from this recession, both literally and, you could argue, in their aspirations. But while they might not offer everything on the premises, they'll absolutely be required to offer high-level communications channel planning advice and therefore to be more commercially aware than ever.

Given the reduction in jobs over the past ten years and the premise earlier in this piece that ad agency giants have been cut down to size by specialist rivals, it would be easy to conclude that Armageddon is around the corner.

But all industries have to mature and in advertising's case one thing is certain: nothing threatens the application of blinding creative thinking to commerce. In many ways, the opportunities are as exciting as the challenges.

This article was first published on campaignlive.co.uk

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