Reflections on an Ad Industry at War With Itself

The civil war within the advertising industry developed quietly and incrementally but has been no less devastating over the past two decadesAlthough advertisers have been scrutinizing and pushing to reduce agency fees since at least 1990 initially there was no sense of industry crisis amp8212 media and creative agencies continued to have surplus resources up to 2005 At that time agencies could handle downsizings along with their TV radio and print responsibilities This was familiar territory for them they knew what they had to do and they had the expertise and the resources to do itAfter 2005 though fee reductions continued but there was no more fat to cut Agency downsizings began to eliminate muscle Unfortunately this coincided with the advent of digital and social marketing amp8212 a stepchange in complexity that neither clients nor agencies have mastered There39s been a lot of quotfake it until you make itquot thinking going on but no one seems to be quotmaking itquotBefore digital and social chief marketing officers CMOs and their agencies of record AORs had a confident view about their brands39 media spend media mix and creative requirements With the onset digital and social the marketing world fragmented and whatever unity of purpose or knowhow that previously existed went out the windowThe first casualty was the AOR relationship quotWe need bestinclass agencies by media disciplinequot went the client argument quotnot one integrated agency with mediocre skillsquot Agency rosters were expanded significantly and client marketing organizations grew and fragmented to provide oversight of their highly diverse portfolio of agencies The center of power shifted from agency to client as individual agency voices were diluted and muted Clients reveled in their newfound power to create scopes of work and divide them among agency vendorsAgencies competed with one another for slices of the reducedfee pie ensuring that their professional advice on media and creative matters once listened to and respected was now largely ignored quotWe39ll do the strategiesquot their clients announced quotYour job is to executequot What they gave their agencies to execute was a long list of requirements across all media types amp8212 bloated statements of work SOWs for reduced fees Agencies accepted the SOWs and the fee levels without protest they needed to keep every client they hadThus began the current era of client appeasement rather than intellectual rearmingBrand growth remained stagnant after 2008 so clients accelerated their efforts to lower costs and increase quality by increasing the frequency of agency reviews Procurement previously involved in agency feesetting began to run these reviews thus increasing their power and prestige at the expense of marketing Procurement went further by disintermediating production and promoting the development of inhouse agencies for programmatic media digital and social creative amp8212 shifting work away from outside agencies and into their own companyWhat we now have are a list of troubling issuesEnfeebled agencies with understaffed underpaid resourcesPassive agencies that cope rather than leadSOWs plagued by excess work and complexityContinued confusion about what spend levels media mixes and creative SOWs will deliver resultsEroding credibility of CMOs agencies and holding companiesFragmented marketing organizations that their CMOs can39t controlOnly procurement flush with costreduction success retains its stature and confidence in corporate cultures that celebrate increases in nearterm shareholder value rather than longterm successes in commercial marketsHolding companies individual agencies industry associations CMOs and procurement compete and criticize one another in the face of marketing spend levels and strategies that as yet do not deliver improved brand growth Lurking in the background are Accenture Interactive Deloitte Digital and a host of consulting firms focused on problemsolving that see client confusion as the basis for their future client development programsWho39s in charge of finding a way to cut through the fog and generate increased revenue from customers Is it the CMOs Agency CEOs Agency office heads Agency client heads Other executives No oneThe industry is too busy fighting with itself to mobilize for this important task amp8212 fighting to exhaustion amp8212 and faking it without making itPhoto credit Peter Vey The New Yorker The Cartoon Bank With permissionClick the social buttons to share this story with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

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Reflections on an Ad Industry at War With Itself

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Michael Farmer

We Are the Outliers - By Jack Myers

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Reflections on an Ad Industry at War With Itself

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