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.
