Fear and loathing on La Croisette: agency bosses tell all on budgets battle

It must be, right? Because during this week-long mass gathering of agencies, their current clients, and the clients they covet on the Côte d'Azur, amid all the hype and hyperbole around AI, creativity and sustainability, the topic of marketing budgets scarcely got a look in. Well, not in the official and agency-approved programming, at least.

Privately, however, creative agency bosses were much less discreet about how tough their lives have been during the first half of 2023. Off stage – and, we’re sad to inform you, largely off the record – they confided that while they’re more optimistic about how the remainder of this year will play out, business planning remains unpredictable at a time when clients are still feeling the pressures of inflation, diminished customer spending power and stretched supply chains.

“Any agency who tells you they've had a good year is lying,” one agency chief told The Drum bluntly. “Every tech company has stopped spending. There's some pockets of growth from luxury, but it's fucking tough. A friend told me to take a sabbatical until it's over.”

The unignorable presence of the tech giants, which continued to throw lavish though less publicized parties in Cannes than in years past despite collectively laying off tens of thousands of staffers this year, did not go unnoticed by agency bosses who have been on the receiving end of their decision-stalling.

“Everything is project-based now,” a prominent European agency network chief said. “The agency of record role is not what it was. Since Q1, everything is still taking so much longer to get signed off and clients, especially in the tech sector, don’t want to commit in the way they were once prepared to. It’s tough but I think it’s tough for everyone.”

Two commonly voiced complaints from creative agencies were around delays for decisions on pitches (the cost and energy of pitching itself remaining a thorny subject, but one we could devote an entirely separate article to) and the number of clients seeking to rerun old work rather than commission something new.

There was more cause for optimism around artificial intelligence, with just about every agency that had set up stall on the Croisette telling us clients were instigating conversations not just around its well-documented media buying potential, but also its creative capabilities.

As Mark Singer, the US chief marketing officer of Deloitte Digital put it, “a lot of interesting forces are coming together right now”. After a period of lockdown-fueled “hyper growth” for the digital sector in particular, momentum has naturally slowed, but Singer remains resolutely optimistic about what’s on the horizon.

“The economy is still a concern, so there’s nervousness about that, [but] with gen AI coming in, a lot of interesting things are happening at once. And I don't know, I think this is probably the most exciting time I've ever been in this business. Next to when the .com boom happened, but this will have such a more significant impact. I think when we talk a year and a half from now, two years from now, it's going to be a different conversation.”

In touting AI so much, agencies will have to guard against becoming turkeys voting for Christmas. If they relentlessly bang the drum to clients that there are efficiencies to be gained in the creative process, which was one of the prevailing mantras on the Cannes stages, it follows that clients will naturally begin to invite agencies to pass on those cost savings. And undercutting among agencies could begin to become problematic with so many agencies offering so many similar services.

“I think everybody worries about that,” Sir Martin Sorrell, executive chairman of Media.Monks parent S4 Capital, told The Drum. “When you talk about AI there are two reactions: one is wonder – it offers things that nothing else has offered – and the other is fear.”

As ever with Cannes Lions, the avariciousness of the setting itself was called into question by some delegates. That included Sorrell, an occasional Cannes critic but ever-present annual attendee, and the irony was not lost on him from his vantage point in the pop-up Le Monks Café.

“[Cannes] in June doesn’t really make sense. The cost is huge. There is gouging that goes on. There is a middle man or middle woman, friction in the system, and people playing off people’s insecurities. Someone was telling me at lunch time they’d been paid for two months $60,000 to arrange 10 meetings with clients."

Had the industry been able to predict the challenges they'd face in 2023, Sorrell suggested its major players would've approached this year's Cannes more circumspectly. “Cannes is planned over the course of a year. I think if you were planning it today, you’d get a different result.”

Under the cover of anonymity, one agency counterpart was more frank still about how they felt the Cannes carnival had become divorced from everyday life and economic reality.

“I’m quite shocked really at the juxtaposition between some of the excess and the expense, the amount of money being spent on what essentially is a trade show versus the audiences that we're trying to reach back at home,” they said.

“This summer many brands' customers are going to food banks. And yet, people think it's OK to come here and spend €100 on a bottle of wine and stay out until 3am. How can you go back home and say that you really get it, really understand where the audience is coming from? It's like the ultimate Partygate, exactly like the [UK] Tory party. One rule for us and one for the public.”

In their wrap-up piece on this year’s Cannes Lions, an editor from another parish borrowed from Florence & The Machine, one of the star turns at the Spotify Beach in Cannes, cheerily surmising that advertising’s dog days are over. Today, as agency heads trade the canapes for the canteen, the words of Soul II Soul will ring a little truer. Back to life. Back to reality.