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Friday, December 20, 2013

The Abdication of Advertising Agencies?

Like many of you, I spend a fair amount of time reading marketing case studies and company success stories. Recently, I began to notice one trend in the summaries. It is quite simply the relatively narrow role that advertising is playing in most of the marketing triumphs. How can this be? Here is my theory:

When I started in the business back in the early 1970’s, advertising and marketing were often used interchangeably. That was wrong, of course, but advertising was such a dominant part of the entire marketing mix that it is understandable how it happened. Many of the senior people in advertising in that era were the best of the best. A surprising number were from Ivy League or NESCAC schools and they were bright, well read and well connected.

As the 80’s came along and Wall Street surged, the bright young men and women from the best schools stopped going in to advertising. A number went into finance and made staggering amounts of money very quickly. I dare you to look at recent graduates of the top schools in America. Find out how many have gone into advertising. The number approaches zero these days. Along with this brain drain came the end of the 15% commission in advertising. It seems with every passing year that clients increasingly turn the screws on their agency. With the agency’s dominant asset being talent, how do you recruit young talent when Wall Street beckons with huge salaries? The crowd that provided strategic talent for a few generations on Madison Avenue are now on Wall Street or tucked away in Silicon Valley.

So, a great deal of the marketing know-how, if you will, is now client side and not at agencies. An old friend who is currently on the corporate side told me an illustrative story recently. His boss, an erudite marketing pro from far overseas, was visiting my friend in the states. When his agency found out about the global chieftain’s visit, they begged for a meeting under the pretext of a “really big idea.” The big idea turned out to be a storyboard for a TV spot. The international marketer was polite and attentive when they showed the proposed commercial but started to lose it when they called the session without a clue about a business strategy that backed up the spot. My friend kept his job but will keep this agency and perhaps his future agency far away from the global marketing director.

Another wrote to me saying that his company has moved to more promotion in their mix and are finding it extremely profitable and, to their great joy, far more predictable than advertising. He was so thrilled with the performance that he wanted to throw a dinner for the graphic artists who put together the promotional packages and coupons plus the two young agency analysts who tracked redemption and helped pick support markets. To his shock, their agency chief said, “Why do you want to spend time with those guys? They are not talented.” He did it anyway and said sales continue to go up and his TV advertising continues to decline as a percentage of his total spending.

Agencies always tell clients that they want to be “a partner and not a vendor.” Well, vendors present spots and ads and partners lay out a strategy. Yet the Catch-22 is how do you provide strategic leadership when you cannot afford to hire authentic counselors?

There is no likely solution in the immediate future. Big players will likely work with a team of marketing communications companies covering internet, mobile and conventional advertising and have some staffers on board who can orchestrate harmony among the parties. Yet the important functions of keeping tabs on trends and staying close to popular culture will likely come from the research team on the client side. These days clients tend to think of the marketing arena as their platform for creating connections. Agencies, especially those that are mid-sized, still want to sell ad campaigns.

So, many say that advertising agencies have abdicated their role. I disagree. To me, the game has changed and advertising is playing less and less of a role in integrated marketing communications. Many agencies have chosen not to or cannot afford to keep up with the changing times.

Over the last few months Media Realism is now delivering 55% of its audience from outside the United States. I wish all of you across the world a very Merry Christmas and a great 2014.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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