Advertising Agencies--2028, Conclusions

Here, at long last, are the conclusions to the multi-part series on the future of advertising agencies. The delay in posting was due in part to my being very busy but also the avalanche of mail that I received from readers across the globe.


So, to sum up where my panel members and I have wound up, we find:


1) Virtually everyone whom I spoke or e-mailed with agrees that ad agencies, as we now know them, are not long for the marketing world. The only dissenters were no surprise. They were ad agency functionaries between the ages of 47-57 who were worried about their own hides and claimed that they and their shops were good for another five-ten years. Some will definitely make it. Interestingly, not a single CEO or former agency chief felt that "business as usual" could last much longer.


2) Across the board, a large cross- section of respondents felt that most small to mid-sized agencies will morph into something else. Many used "consultancies" as the likely word although a few cynical types conjured up some exotic names for the new entity. Four were brutally candid and said that on a Friday afternoon an agency will close and then a new smaller LLC will emerge on Monday morning with the same key players but with a new name and same client list.


3) All who mentioned the publicly traded mega-shops hinted or said outright that they would break up over the next several years (Isn't several a great word. It can mean three or 13! A forecaster's dream).


4) Where will the bright young people go? Not to shops, that seems certain. The FAANG's will be where the big ideas are bubbling up in both marketing and media. Facebook, Apple, Amazon, Netflix and Google can buy the best talent and will do so. Graduates of the elite schools will gravitate there.


5) I personally was surprised that only a handful of people mentioned the role of Big Data over the next decade. Those who did said it will cut the need for conventional advertising, agencies, and marketing people at many companies.


6) No one, to my strong surprise, mentioned the impact of The Internet of Things. As things get even more connected, prices will drop and squeeze low margin producers. Again, advertising must suffer in that scenario.

Separately, a small market broadcaster weighed in as did an agency chief also in a sub 180 ranked DMA--"small market TV and radio still work here. The problem is that it delivers the older demographic well. Just as is true of the rest of the country our 15-34 year olds love Netflix, ignore commercials while they use another device and listen to music but not much outside of their cars. So, conventional media will hang on a bit longer in our neck of the woods."

A friend whom I first met some 44 years ago, had some comments for me that I feel it is important to share with you. Were we to field a team of media all-stars for the last 50 years, this fellow’s planning skills would make him center fielder. He was and is that good. Here goes:

“Over the many years I have toiled in the fields of media, I have been shockingly aware of our inability, as a group, to not only forecast important shifts in the marketplace but to react to the changes once they happen.

Back in the 1950s and 60s we were mesmerized by broadcast TV.  Sight, sound and motion.  Surely nothing could beat this amazing new technology.  When cable TV entered the fray we were slow to respond and pretty much ignored the presence of this “narrowcasting” upstart.  Do you remember the 7% solution?  That was where agencies would assign 7% of the media dollars assigned to TV spending to cable networks because cable networks at that time had garnered 7% of the total TV viewing.  Not the most inspired creative thinking.  We were slow to respond to the intrusion of VCRs and DVDs and video games – all of which were cutting into SOA viewing TV.  We were slow to respond to online advertising opportunities.  Surely this was just another flash in the pan media option.  More recently we have been slow to respond to the F.A.A.N.G. group that now controls media usage.  Think back 10 years.  How many of you media people were involved with Facebook or Netflix or Google?

Given that historical trend line I think we in media have no idea what is coming in the next decade.  We haven’t a clue what the next Bill Gates or Steve Jobs or Mark Zuckerberg are cooking up in their dorm rooms or garages.  And that’s OK.  What we in media need to figure out is how we can be more receptive to these new media ideas that are being introduced to us on a weekly basis.  We can’t sit on the side lines and tell these new media options, “we’ve got to wait and see how this is received by the public.”  Instead, try jumping into the freezing water with them.  Don’t always play it safe.  It is the brand new ideas that let you reach the trendsetters, the out-of-the-box thinkers, the thought leaders, the people in this world who make waves and make change.  Over the next ten years find ways to say “YES!” to new concepts and avoid the “not yet” or “prove it” kind of responses.  By always waiting for the safe, tried-and-true idea we will always be following the competition and never being the breakthrough leader in the category.

I do think that over the next 10 years media will be in constant flux.  And the area where I think change is going to come is in a reduced dependence on programmatic buying.  Certainly that will always be a key part of any media buy.  Every major advertiser since the end of WWII has recognized the importance and value of looking hard at the CPM numbers.  But looking at “efficiency” and only efficiency is really a short-sighted idea.  In a programmatic world we would all drive Kias and shop for furniture at IKEA.  There would be no place for a Mercedes Benz car or an Ethan Allen sofa.  There would be no value given to quality of the product, a beautiful design or break-through technology.  Consumers don’t buy in a programmatic way so why should we as business decision-makers buy in a programmatic way?  All websites, all TV programming, all print products are not created equal.  Just like in buying a car, people react in different ways to various options.  And how we as consumers respond to Medium A versus Medium B is just as important as how we respond to Transportation Option A versus Transportation Option B.

As media consultants we need to become smarter and wiser about how to find those media properties that work hardest for the advertiser.  That will require more research, more reading, more observing, more talking to people.  That is what our job is going to require moving forward.  The media agencies that are able to determine these kinds of information that can augment the lowest cost/cheapest price/most efficient kind of media thinking are the media agencies that will prosper.  We have pushed the efficiency needle as far as possible.  Now we need to start moving the “impact” needle, the “awareness” needle, the “how does my advertising help my sales” needle in that direction.”

Some people have written to me that this lengthy series was too downbeat. I do not think so. Things are changing and fast. You need to adapt, keep learning or get out of the way. As I first wrote in a memo way back in 1978, “the future has not been cancelled.”

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