The advertising industry finds itself – yet again – at a crossroads, a confluence, a decision-point, a junction. 

Attention is needed.  Assessment is necessary and action is required. After all, it’s been nearly 10 years since the industry was last stumbling headlong toward extinction.

will this be the future of ad agenciesAre there many reasons for concern? – Yes.  Are there always reasons for concern? – Yes! It’s most interesting how the “expert class” repeatedly presumes cataclysm at the first sign of economic Darwinism. Chicken Little would be proud.

Remember, not that many years ago, the Internet spelled doom for the industry.  Still around – amazing. Before that, TV. Radio… and the advertising industry survived.

Assuming clients will continue to sell products and services, there is a reason to believe that agencies will survive this most recent report of their demise.

Agencies HAVE Changed.

That said, there are indications that change is needed to stem the tide of marginalization. Agencies have expanded, purchased, and partnered their way into every market, category and discipline.  They have leveraged advancements in technology to become as connected globally as their predecessors were in one office tower only a decade earlier.  And have scoured the market for the best and brightest to set to work advancing their client’s brands and products.

Evidently, not everyone has been impressed (IBM Report PDF) by the results of this effort.

The end of advertising as we know it

Traditional advertising players – broadcasters, distributors and advertising agencies – will need innovative new approaches to respond to major industry shifts underway.

What is most intriguing about this point-of-view is that it assumes the clients will sit and wait on the ad agency and their partners to innovate our way into the future.

There is no question that the future of advertising will look radically different from its past. The push for control of attention, creativity, measurements and inventory will reshape the advertising value chain and shift the balance of power. For both incumbent and new players, it is imperative to plan for multiple consumer futures, craft agile strategies and build new capabilities before advertising as we know it disappears.

Shocking! I know! The industry will have to “craft agile strategies!” in light of this “shifting balance of power.” This is amazing to hear in 2010.  Particularly from IBM who is serviced by the industries most influential agencies. After all, didn’t the industry spend the past few decades consolidating to deliver on the opportunity of integrated services, or was it convergent communication, or media-neutral communication, or whatever other iteration of the same to better measure and influence consumers. If agencies were delivering on their service promise, then churn would not be at unprecedented levels and clients would not be seeking the same service object as a decade earlier – FROM YET ANOTHER AD AGENCY.

So, where’s the rub?  Change is coming. And some agencies won’t make the change… See Cliff Freeman, Lipman, KSL, and on and on as proof. Not to mention the late greats DMB&B, WRG, …

Fingers of fault can be pointed in every direction, but what can an agency do to deliver on the promise of change and better consumer insight?

Options For Change.

One choice might be to do – nothing.  As one CEO of a prominent agency network advised, “it’s not going to happen in my lifetime, so I’m better off spending my time on matters where I can have an impact.”

This pessimistic view might work for him and his pre-packaged retirement, but, as an industry, ignoring the issues is not a viable option.

If you are confident that agencies are on the case and see these views as a “Chicken Little” prophecy, consider one advertiser’s recent action. They terminated their agency relationships claiming the agency model to be irreparably broken. Then proceeded to underwrite the organization of its new agency – only to see that model stumble and fall. And now have folded the whole mess into yet another ad agency.

This is an extreme but not an isolated example of how client dissatisfaction has embodied itself in unprecedented levels of client churn.

Some would argue that client’s share much of the blame in these dysfunctional relationships.  But these same clients –criticized by agencies – have increased the role and expenditures for their management consultants year-over-year. Perhaps as an industry we need to consider why?

Anyone can satisfy and make money off of the handful of great clients. A great agency effectively services and profits from all of their client relationships.

Perhaps A New Role is Needed.

Before dismissing the end of advertising as we know it, the example of another industry’s response to similar service pressures may be worth considering. The role of the general contractor in construction resembles the traditional advertising agencies role as general contractors of business communication.

future of advertising

The future of advertising?

The construction industry responded to client demand for improved quality, professionalism, integrated and unbiased service management by creating an entirely new industry services category – Construction Management.

Construction management firms are staffed by experienced and credentialed industry professionals who deliver unbiased results to the client. The functions of Construction management typically include the following:

  1. Specifying project objectives and plans including delineation of scope, budgeting, scheduling, setting performance requirements, and selecting project participants.
  2. Maximizing the resource efficiency through procurement of labor, materials and equipment.
  3. Implementing various operations through proper coordination and control of planning, design, estimating, contracting and construction in the entire process.
  4. Developing effective communications and mechanisms for resolving conflicts.

The old general contractors role could not deliver this sort of results. Those who did not adapt have been marginalized. Agencies that continue to attempt to deliver services as general contractors have had their fate cast. Responding will require you to revisit your brand, organizational model, processes, fee structure and staffing protocols.

After a decade of unfulfilled promises of better creative, more integration, social media and consumer insight and tracking, clients are showing signs of an aggressive search for “Communication Managers.” Unbiased. Results driven.

Time is of the essence; a recent study reported that those in the “advertising” profession rank just ahead of Used Car Salespeople in esteem. But neither that nor the changing consumer will end advertising as we know it.