Are Big Agencies Really Dead?
Tags: Advertising, Adland, Agency, Marketing, Advertising Agency

Never meet your heroes.

I grew up reading Campaign every week. Dreaming of a life in advertising.

But then I worked in advertising and things changed.

Of course there were brilliant agencies. They were always the young, independents — those not constrained by bureaucracy.

…but they always got bought by the big guys.

My naiveté drove me to think that there must be a better way, a way of breaking this constant treadmill scooping the smaller agencies doing great work up and burying them in the big.

In order to understand this we need to understand the ancient history of the industry.

Agencies got big because there used to be an advantage.

Advertising before computers needed people. A lot of people. From copywriting to art direction through the army of account managers, you needed hundreds of people to get a decent sized campaign out. You also needed media buying power and that meant you had to be big.

Big agencies need big clients and big clients want big agencies.

Once you get big you tend to stay big. You need big clients to feed the monster so you set up teams to facilitate them. This creates more barriers to entry which are unassailable to anyone but the oligopoly. Accounts required size as a pre-requisite. They needed to know you’d serviced comparable accounts before and the procurement departments kept growing as a result.

Historical inertia is one hell of a thing to shake off.

Media became democratic (kind of)

Media is now owned by Google or Facebook. They’re the two biggest advertising companies on the planet and one unit of media with them costs the same to you or I as it does to anyone else. The economies of scale are lost.

Creativity and Bureaucracy aren’t mates.

As soon as you get big the work suffers. There are too many people involved in the decision tree. Too many people that can say no to the risk, to the innovation. The bigger you get the more beige the palette.

This is why the big acquire the small. They have to buy in their innovation as they slowly lose the ability to build it internally.

Money

All this scale means hierarchy and hierarchy means highly paid businesspeople making business decisions based on a P&L and share value. They become incentivised by quarterly performance and the money becomes more important than the work.

How when Sorrell’s pay is calculated in 5 year cycles based on share price can you argue that the work the strategy, the results will not suffer. He took home £70m that year while the middle class creatives trying to break into the industry were doing the rounds for expenses.

The money that clients are spending is paying for the expensive board and c-suite not on producing the work.

The showdown

The issues have been have been clear for years but there’s so much vested interest in the status quo nothing’s really changed. Yes when the ultimate dealmaker Sorrel left / was thrown out of WPP he set up S4C as a more agile, digitally focussed network. He was the one who pioneered a lot of the above so if even he noticed that there was something inherently wrong in the model its validation indeed.

I always had a huge amount of respect for Grey. From all the larger agencies they still produced excellent work. Per Pederson was Grey’s global Creative Chairman and head of their Global Creative Council. He’s one of the most awarded creatives in ad-land and kept the Grey relevant by re-inventing them as a group on an annual basis. He did well at this but he’s now left. This is from his new website:

A long career in advertising has taught me that change is the only constant. Never has this truth felt more relevant. The big reset button has been pushed. The world will forever be a different place, and it’s time to rethink everything we thought we knew. Time to reinvent who we want to be as people. Time to reinvent creativity. Time to break down the corporate structures that prevent the free flow of ideas. Time to reinvent what it means to be a creative agency. For me personally this means taking a big leap of faith from the familiar big global holding company networks to a brand new shape of creative network. I’m leaving Grey to join forces with the world’s most creative independent agencies. Together we are launching a new global creative network. Owned by creatives. Driven by creativity. With no expensive headquarter. No expensive C-suite. No complex processes producing meeting after meeting. No silos. Instead a brand new business model in the service of one thing only: Big ideas. Big media agnostic ideas that keeps giving across borders. Big Ideas that matter to people. Big ideas that live in the real world and not just as ads. Big ideas that makes a difference.This is a goodbye to the conformist and corporate thinking and a big welcome to the rule breakers and entrepreneurs that are driven by true passion. This is the dawn of a new and bright future for creative agencies working together across borders. This is a hello to the creative network of the future

Why did I read this to the soundtrack of The Doors — The End? Because it sounds like the end to a glorious industry.

Those who haven’t yet jumped ship needed was an excuse and they got a Covid-19 shaped one.

Cue rounds of redundancies, furloughs and pay cuts -the cracks are finally exposed.

Unfortunately I don’t think the other end of the spectrum is faired any better. The really small agencies have always had a tough time. They’re usually working long hours, wearing many hats and doing it because they love it. They’re often over reliant on a few key clients with a precarious business model at the best of times.

But is all of this enough to change behaviour? Everyone’s talking about the new normal but what’s the new model?

The new model

What are the requirements?

You don’t want:

to be too small or too big

to be too exposed to a particular sector

bureaucracy

to use expensive freelancers

the majority of income to go towards the work and the people doing it

You want:

some economies of scale where they still exist

to build culture

to be led by creativity, innovation and ROI for your partners

Yes it’s sad to see the end of an industry as we know it, but it’s also brilliant.

We, at Vitamin, have been preaching on about how big agencies are dead for years but it feels like the renaissance has finally arrived.

Jacob

Jacob Beckett| Founder| Vitamin London