EDITORIAL: Paying too great a price for creatives

Agencies are reluctant to think the unthinkable. While many of

their clients have not shrunk from making tough calls and other

"creative" industries have restructured for changing times, advertising

has stubbornly stuck to inefficient old ways.



Now the extent of their detachment from reality has been dramatically

exposed in Willott Kingston Smith's latest annual survey of the

financial performance of marketing services companies (page 26). While

profits per head at creative agencies have dropped 10 per cent to just

£5,986, the equivalent figure for their media counterparts is a

healthy £13,489.



In mitigation, it must be said that many creative agencies have profits

syphoned off by US parents and have to supply the glitz clients expect

from their ideas people but not their media dealmakers. Media agencies

don't have the problem of managing creatives whose working patterns are

far from conformist and whose output has always been difficult to price

realistically.



And therein lies the fundamental flaw in the structure of creative

agencies.



A stonking advertising idea may take four minutes or four weeks to

evolve.



Yet the time spent has no bearing on what the client pays or the size of

the agency's monthly wage bill. Contrast this with related sectors.



Channel 4, arguably the UK's most successful broadcaster, doesn't employ

a single programme maker, relying instead on specialist commissioning

editors.



Taking creatives off the agency payroll may be the issue that the

downturn transforms from the unthinkable to the thinkable.



That this hasn't yet happened is because clients have not yet made life

sufficiently painful. But if the most pessimistic predictions of the

length of the recession prove true, this kind of major restructuring

will be unavoidable. Agencies with foresight already know this but how

many will have the courage to act? The last major industry restructure

which gave birth to the media independents was largely a client-driven

initiative.



The same will probably be true of any future one.



The logic of agencies operating with just an executive creative director

and a small group of "commissioning" creative heads working with

freelance teams looks increasingly compelling. So too is the formation

of creative "collectives" operating from shared offices with a manager

to look after their members' business affairs.



Never has the time been more apposite for agencies to seize the future

and mould it to their advantage. Only hidebound thinking and fixed

mindsets prevent it.



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