Campaign Annual 2007: That was the year that was - Adland's 2007
By John Tylee, campaignlive.co.uk, Friday, 14 December 2007 12:00AM
The past 12 months have seen adland's freedoms come under fierce attack, digital continue to march inexorably on, and BBH's John Hegarty visit Buckingham Palace.
Cries of "enough is enough" reverberated around Britain's advertising industry throughout 2007 - and for a variety of reasons.
Delivered to politicians and pressure groups who continued their sustained attacks on advertising freedoms, the message provided welcome evidence of adland's willingness not merely to man the barricades, but to carry the fight to its opponents.
But the big worry was how often it was being uttered by the number of high-profile agency leaders as they headed for the exit, exhausted and disillusioned by the relentless pressure to hit the numbers.
All this appeared to confirm the perception of an industry that is continuing to undergo a painful reinvention and trying to make sense of facts and figures that don't seem to add up.
Indeed, it was hard to reconcile February's news that more than half the UK's top agencies had recorded billings drops considering that marketing budgets were at their most buoyant since the beginning of the decade. And how was it possible to explain why the number of people working in IPA agencies (more than 17,000) was the highest since the year the Saatchi brothers first set up in business?
What's more, if the ad market was so dynamic, how come news emerged of only one major start-up? (The former Rainey Kelly Campbell Roalfe/Y&R senior management team of James Murphy, Ben Priest and David Golding quit in June with the intention of setting up on their own early next year.)
Closer scrutiny revealed the seemingly contradictory tale of 2007 wasn't really like that at all. It showed the industry's tectonic plates were shifting.
The rise in digital has been the catalyst for this. If ever there was a signal the medium came of age in 2007, Dare's sale of a majority stake to Canada's Cossette Communication Group for a payment of £10 million was surely it.
Moreover, the sector showed it could attract mature and experienced management to guide its development. Notably David Pattison, the former PHD Worldwide chief executive, who became the chief executive of ILG Digital, the i-level holding company.
Digital may not yet be ready to sweep aside traditional advertising, but, as the numbers showed, the rising employment levels are accounted for by the growth of digital opportunities.
Not only were mainstream agencies fearful the parade would pass them by, busily recruiting online specialists, but digital shops staffed up as their businesses grew. Direct agencies, rapidly growing their digital offerings and getting to grips with how it could work for their clients, pushed the recruitment drive still further. And so did the vows of most media agencies to "put digital at the heart" of what they were doing.
Digital's onward march was symptomatic of how the old order was changing. Who would have believed that Saatchi & Saatchi, the agency that helped propel Margaret Thatcher's Conservatives to power, would one day be helping ensure that Gordon Brown's Labour Party hung on to it?
And who could have imagined the day would come when the Charlotte Street agency would drop out of the top ten rankings for the first time in 30 years? Or that it would need to be shored up by aligning itself with Fallon, its Publicis Groupe stablemate?
With such a catharsis going on, it was hardly an ideal time for the industry to be forcing a showdown with its critics. Yet it had little choice but to come out fighting in the face of a relentless assault by single-issue pressure groups or ministers looking for a soft target and a quick fix for the rise in obesity.
The big cause for concern was the extent to which the lobbyists had been allowed to set the agenda. In September, Gordon Brown raised the prospect of more controls on alcohol ads. Even the Conservatives, adland's long-term friends, seemed not to be averse to tighter restrictions.
Meanwhile, Ofcom failed to win any friends among advertisers, agencies and broadcasters over what was seen as its craven climbdown to political pressure by imposing Draconian rules on food advertising to children. The fact the rules were shot through with anomalies seemed to emphasise the undue haste with which they were forged.
What dismayed adland the most was that the anti-advertising activists were smelling blood. Michael Grade, ITV's executive chairman, warned the ISBA conference in March: "The lobbyists will be back for more, whether it be food, alcohol, or who knows what."
It became clear that research would play a pivotal role in the battle for hearts and minds. And the industry realised it could not hope to counter the headline-grabbing, but frequently spurious research by lobbyists without some robust analysis of its own.
But research costs serious money - and that presented Baroness Peta Buscombe, the Advertising Association's chief executive, with a dilemma.
Buscombe disclosed she would like to introduce a minimum membership fee of £10,000 to help fund such research. But it was plain this couldn't be done without the AA risking the loss of its poorer members and undermining its claim to represent the broad church of advertising and marketing.
Agencies, meanwhile, seemed united only by a common set of problems. The ceaseless downward pressure on margins and the hassles from holding companies to hit financial targets took their toll on senior managers.
Some onlookers cited the departures of Steve Harrison, Wunderman's worldwide creative director, Jon Claydon, the Claydon Heeley chairman, Michael Wall, the co-founder of Fallon, and Walker Media's Christine Walker (who may well return to the scene in some shape or form) as symptomatic of an underlying disenchantment at the most senior level.
Not all found the grass greener on the other side of the fence, though. Lee Daley, the former Saatchis chief executive, left his role as Manchester United's commercial director "by mutual consent" after just four months.
Others, though, sensed a managerial sea change with the skills demanded of an agency chief executive needing to be deeper and broader. Significantly, two agency groups chose ex-clients to lead them. In May, the Grey UK Group signed up the Sony senior marketer David Patton to replace Tamara Ingram as the chief executive.
Four months on, Publicis gave command of its UK group to Neil Simpson, who had honed his marketing skills at Coca-Cola, Adidas and Vodafone.
Simpson acknowledged he needed to inject energy and confidence back into the agency after one of its most turbulent periods. Not only did it lose £12 million-worth of Post Office business, but was also brutally dumped from the £44 million Asda account by Rick Bendel, the retailer's new marketing chief, and the former chief operating officer of Publicis. To compound this further, the agency was left without a leader after Grant Duncan, the chief executive, chose to fall on his sword ("The problems happened on my watch") and Tim Lindsay, the UK chairman, quit to replace Paul Bainsfair at Omnicom's TBWA Group UK.
Leo Burnett, the Publicis sister shop, also endured top-level turmoil. Jim Thornton left the executive creative director's post without another job to go to. His deputy, Jonathan Burley, stepped up to take over the role.
The exit four months later of Bruce Haines, the group chairman, was a less polite affair, after exchanges between Haines and Tom Bernardin, the Burnett global boss, about the London office's future management line-up.
The traumas were no less apparent at JWT, where a series of account losses culminated in the ousting of the executive creative director, Nick Bell, and his replacement by Bartle Bogle Hegarty's Russell Ramsey. It was even worse at JWT's stablemate, United London, whose limping display exhausted the patience of Sir Martin Sorrell's WPP, which merged it into Grey.
Not that it was all bad news for Sorrell, who paid a reported £30 million for a 49.9 per cent stake in CHI & Partners, much to the chagrin of the Havas chairman, Vincent Bollore, who had been courting the agency for almost a year. WPP's OgilvyOne added to the cheer by netting the £50 million British Gas direct marketing business. (Only Rapier's capture of Lloyds TSB's £40 million consolidated DM account came close to matching it.)
Meanwhile, in the world of media owners, 2007 was the year that social networking sites took off as commercial entities. Most of the buzz was around Facebook, which invested in building a commercial team. But Bebo also sank money into its own advertising models. Google continued to dominate in the search marketing space, and also moved into the online display market with its selling of ad space on the YouTube platform.
Signs of optimism in traditional media broke with commercial TV enjoying a better year than in 2006. There were also indications that ITV's fortunes were improving, and multi-channel TV revenue continued to grow. A review of the CRR trading system was announced by Ofcom, but that isn't expected to conclude ahead of next year's trading season.
The sad prospect of a break-up of Emap, one of the UK's most successful cross-media companies, loomed over the second half of 2007, with bids being invited for its radio, consumer magazines and business-to-business arms.
This year also saw a number of emerging trends. Everybody agrees media and creative must be hand-in-glove, and a number of agencies, most notably CHI & Partners and Hurrell and Dawson, even committed themselves to investing in a media product, so, although the full-service model might not be on the way back, there's still a growing trend towards more integrated offerings.
What about the issue of production decoupling? Forty per cent of ISBA members now bypass agencies and manage their pre-print and press activities directly. The high attendance at an ISBA meeting in May suggests a growing eagerness to extend such direct control - and its cost savings - into TV production and even into online and mobile marketing. With cash-strapped production companies eager for work wherever they can get it, such clients aren't going to be short of help.
However, amid all the soul-seaching about the future, the knighthood bestowed on John Hegarty for services to advertising was a welcome morale-booster. The BBH chairman and worldwide creative director has long been a perceptive ambassador for the industry. The events of 2007 showed it could do with a few more just like him.
This article was first published on campaignlive.co.uk
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