This news came just two weeks after Jonathan Mildenhall, the creative chief inside Coca-Cola, observed at an IPA event: "Coke had to take creativity in the widest sense back from the agencies. It couldn’t belong only to the hairy elites of agency creative departments."
Meanwhile, the Association of National Advertisers in the US has reported that 60% of clients are using in-house capabilities, up from 42% five years ago. Worse still, 56% of those clients have moved in-house the projects that were previously handled by agencies, including creative strategy.
Little wonder that the industry bodies of the IPA, ISBA and The Marketing Society have banded together to "hack the future of better client agency relationships." Good luck to them. Either they will find ways to patch up the status quo or recognise that, all around them, the temperature has changed.
Back when IBM almost collapsed in the 90’s, pundits called it boiled frog syndrome. You put a live wriggler in a beaker of cold water and gradually heat it up. By the time it realises the danger, leaping out is no longer an option. IBM was smart enough soon enough to realise that its future lay not in hardware but the software of people, smart ones who could bill out at $1,000 per hour.
Likewise, advertising needs to answer a few basic questions to guarantee its mojo’s still working after the corporate Viagra of mergers and acquisitions has worn off. Sure, shareholders can be placated for a few quarters with the promise of "economies of scale" realised by mega-deals like the Omnicom-Publicis love-in. Then what? More client income lost through inevitably lower levels of service.
Hang on, was digital talent and technology not supposed to shore up the foundations of the big networks? Not the way most digital agencies were integrated - or rather given inferior accommodation at the end of a long corridor. For those who, two decades ago, believed that direct marketing heralded just such a disruption to standard operating procedure, the pattern appears all too familiar.
As industry guru Andy Law of Fearlessly Frank commented on his blog recently: "To avoid being a niche, or footnote, or nothing, ad agencies must make fundamental, not incremental change. The simple absorption of digital into pre-Internet Adland (and vice versa) is the poorest form of innovation imaginable. Heck, it’s not even innovation; it’s the basic integration of two systems, neither of which are now cut out for the milestone change events coming round the corner."
A question of value
The fundamental question for agencies, then, must be where they add value today. Is it still creativity? A creative director who must remain nameless recently bemoaned that he has less to spend on creative teams than the finance and estate management department. Indeed, most clients would be astounded to discover the low proportion of creatives to account handlers and planners on the average agency payroll.
Increasingly, many creatives are finding jobs within the media agencies and production companies that command a higher share of available client budget. With bigger spend comes respect. Others, as noted above, are moving directly onto the client side. While an intrepid few are starting up "micro-agencies" making ideas that can start anywhere, from PR to digital to advertising. It’s like punk in the age of super groups.
So, beyond being an insurance policy a client can tear up when a campaign fails, and a great place to get trained up in the advertising basics, what is the agency for these days?
And "servicing clients" is not the correct answer. That’s what the sex industry in Soho used to say. Now the place has been taken over by cake shops.