The Drum spoke to Andy Carolan, chairman of Tangible to hear his views on the 'very tough' problems facing the advertising industry in Scotland.
How do you view the Scottish advertising industry at the moment?
I hope I’m not being overly dramatic when I say that hopefully the Scottish industry survives in some way or form because everything I’m hearing right now is that it's proving very, very tough for everyone. If you look at some of the real big clients which have had the largest advertising budgets within Scotland over the last five or ten years, almost all have now been taken away. There are now some huge clients which are not around anymore, for example McEwan’s, which doesn’t spend any money anymore, clients like Kwik Fit, RBS and HBOS have all moved to London... the list goes on and on and on and on. And if you look at the amount of spend that has gone out of the Scottish advertising industry, it’s looking as though it’s going to continue to be pretty tough. So the question is what can Scotland do to put the breaks on this and turn things around?
One of the things we’re doing is talking up integrated marketing, but for Tangible to be the only big fish in an increasingly small pond is not a good place for anyone to be. We need some healthy competition up here and we’re only going to get that through having more big clients spending their cash within the industry.
How does Cello view Scotland?
Our businesses up here are not only getting a lot of market share within Scotland, we’re also getting a lot of market share from beyond. We have some pretty big clients down south. But as far as Cello is concerned, we have the pre-eminent brand in Scotland with The Leith Agency, we’ve got Tangible, we’ve got Blonde, we’ve got Stripe and MRUK so we’re pretty well sorted in terms of covering the main sectors that we compete within. My concern is more emotional than based on what Cello is thinking about. How many young people are coming into this industry now? If agencies can’t afford to take people on, where are we going to be not so long from now?
Are things getting worse, then? And what do you suggest to do to turn this around?
In the short term, yes. I don’t think that the prognosis for the Scottish advertising industry is particularly good for the next year or two, partly based on what indications are for the economy and partly based on the fact that I hear that a lot of agencies are really, really struggling right now. Pulling out of that situation is very tough, even when the industry is going ok. But when the whole market is under pressure, it takes a superhuman feat to pull yourself out of it. On the other hand, we could be saying that this is absolutely great for us as we, Tangible, are sitting here in a very strong position. We are a growing business which is making record profits, but equally you have to have a long-term view.
What is the best thing that Scotland can do?
One thing we should never be saying is that because we’re Scottish, and a client is Scottish, they should keep their work here. The fact is, if you’re no good, you’re no good. My point of view is that, in the long term, we have go to continue to see young people and new ideas coming through within Scotland or it will be a self fulfilling prophecy.
What recommendations would you give to your smaller rivals within the industry?
I’d hope that they ‘stiffen their resolve’ and hopefully they will be able to trade their way through the tough times that we’re seeing right now and support the trade bodies, like the Marketing Society, which is trying to do something for the Scottish market generally and above-all – get lucky!
Are too many businesses just looking out for themselves?
That is a fact of life. When you have a market that is growing, it’s less noticeable. People will look after themselves, but when you’ve got a downturn, and we’re in the biggest downturn we’ve ever seen, that’s when self interest becomes more apparent, but equally I can’t blame anyone for being self interested right now. Desperate times call for desperate measures.
Could consolidation happen in Scotland? Do you see that as a possibility?
Definitely. It’s the logical flow in any market - you’ve got too many people chasing too little business and not everyone is going to survive. People will either, by choice or by necessity, find themselves looking for partners to work with. Others go beyond that and, rather than having an arms length relationship, end up joining up. I know Family has just ended its joint venture with Storm ID, but I think there will be more like that to come along.
One of the hurdles facing such a deal is that these companies have more directors working at them now and are very ‘top heavy’...
That’s true at the smaller end of the advertising industry, it’s almost a cottage industry and a lot of these businesses, like it or not, were probably set up with good intentions but ultimately become lifestyle businesses where the self interest of the people who are running them is so evident. Why would they want to make themselves redundant? That is again part of the long term problem because where are the young people coming through to revitalise the industry?
Looking to London with more satellite offices, is that an answer?
If you look at the history of Scottish businesses trying to expand into London, it is not a good story. Every single one has struggled in one way or another, some quite dramatically. Not going that far back, that was one of the reasons for Faulds’ demise, trying to expand into London. It picked up the wrong partners and cost them dear. There’s a huge market on our doorstep, but history doesn’t suggest that it’s going to have a lot of success. If you’re doing it out of a feeling of desperation, or you do it in a defensive way as opposed to doing it on an upward growth trajectory and you want to keep it going, then you’re doing it for the wrong reasons.