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Would yo swap your old model for a new one?

By The Drum | Administrator

July 19, 2004 | 9 min read

An old model army?

For a New Model

If marketing is a playground then advertising has, traditionally, been the big schoolyard bully that pushes its smaller friends around. However, as times have become tougher and clients demand accountability and increased cost-effectiveness, the smaller kids have started to push back. With marketing directors becoming more focused on where their money is going, is the traditional ad agency structure in danger?

There is a school of thought that believes the traditional ad agency, with its full-time staff consisting of business development executives, account handlers, creative teams, production staff and so on may not be adaptable to the marketplace of tomorrow (some might even say today) and that the future will be dominated by smaller, more strategic agencies, who buy in different skill sets as and when they require them for a campaign. These agencies will work with specialists in each discipline, whether it be advertising, design, new media or PR.

Edinburgh’s Talented is an agency already working in this way. Managing director Ian Dommett says: “I spent a lot of time in the 1990s justifying fees to clients. They were paying for a lot of people who didn’t actually work on their account – my new business guy, three or four creative teams they never met, and so on. I thought, what if the clients only paid for the staff they actually worked with?

“Also, the majority of creatives I worked with were white 25-year-old males, and a lot of clients want to communicate to a far wider audience than just white 25-year-old males. How many clients can honestly say that the creative teams in their traditional agency match the life experiences of their target audiences? At Talented we have worked on a number of projects with people who are suited to the target audience.

“The other thing was that, when I was working in ad agencies, I could never tell a client that the right strategy was PR or new media, because they would walk out the door. Now, if the right route is PR, I can tell them PR. Working on the army account, we can have an ad man and a PR guy sitting at the same table.”

Andy Parsley, of Green Lion Insights and Solutions, spent a number of years in top London agencies, including BNP DDB, before starting his own strategic agency. Parsley compares the evolution of the advertising agency to the changes that took place in the Hollywood studio system in the 1930s, with roster staff giving way to independent specialists being hired for specific projects. He remarks: “If you look at Hollywood, in the 1930s they had the studio system. Everyone involved in making the films – the writers, the directors, the cameramen – was employed by the studios. Eventually, you got specialist cameramen who would shoot a particular type of scene. There wasn’t enough work at the studio all year round so they became freelance. After a while the studios stopped hiring all these people as staff and started hiring on a more specialist basis.

“To an extent, you can already see this in advertising. For example, you will rarely see an agency hiring a staff photographer any more. I think at the moment agencies have a core team who handle the troughs of an agency’s business, but then freelancers are hired to help deal with the peaks of activity. I think in future there will be a new kind of agency that perhaps has a handful of people working as account handlers, managing the client relationships, who will assemble a specialist team depending on who the client is. They will say, ‘We’re not going to give you this team just because we happen to employ them. We are going to create a team especially for you that consists of people that have a wealth of experience in your industry sector.’ And none of these people will work full-time for the agency.”

In addition to being able to offer media-neutral (as well as discipline-neutral) marketing campaigns and specially constructed teams, the smaller agencies offer another advantage: lower overheads. Ash Gupta of the Gupta Partnership says: “Niche agencies can ride the bumps. They are a guerrilla force. They don’t have those huge overheads that larger traditional agencies have. If a big agency loses an account it has to start thinking about making redundancies but if a niche player loses one it’s a case of ‘beans today, jam tomorrow.’”

This flexibility, as well as the ability to offer whichever marketing route is best suited to a client, may just tip the scales in favour of specialist agencies in the future. The marketing playground could be set for a change.

Against a New Model

The ad industry has had its fair share of bumpy rides over the past ten years, and now it seems it could be at a crossroads as large blue chip clients increasingly take their work (and money) out of the country. So what lies in store for the future of the traditionally structured ad agency in Scotland and where do they see themselves in ten years’ time?

John Denholm, chief executive of The Leith Agency, believes that there is always going to be a demand for larger agencies such as The Leith, which can fully service larger blue chip clients. But there needs to be consistency in the thought process behind the campaign, comments Denholm: “Clients and agencies need to be able to sit down at the same table and not have the agencies some way down the food chain, not just producing the ads, but actually thinking things out on a strategic level so that we don’t get ill-thought-out and ill-conceived adverts. To make a campaign work there has to be a great level of strategic thinking and planning around it, but at the same time there needs to be cohesion when it comes to the creative aspect too. Otherwise, you lose the essence of the brand when you start farming the creative work out, and you lose cohesion too.”

David Reid, MD of 1576, agrees that there will always be a place in the market for the large agency – although at the same time the smaller agency, built on a less traditional model, also has its place within the industry. He says: “Clients like to have a sense of choice when it comes to who they are working with and, admittedly, there are larger campaigns that probably won’t be done by the smaller agency, but there definitely is a place for both. Can you have consistency by bringing in freelancers every time you have a new job to do? Inevitably, there will be some sort of consolidation in the industry, as there are just too many agencies at the moment. I think the changes will come with the type of work that the agencies are doing for clients. For example, here at Barkers we have a brand strategy section that we can offer clients.”

As for the future of advertising, Denholm is sceptical of the present media buying system and believes that there will need to be a great change in the way the media independents work: “I think that the media end of things will change once more. I don’t think that it will be taken back into the agency as such but, at the same time, there will need to be some sort of change occurring. At the moment too many clients have been short-changed by the media independents. They have blinded the clients with presentations and not really thought about what the client needs. There is currently a lack of grown-up media planning. Ad agencies, therefore, have to recapture this aspect of media planning to some extent and look at it as a proper function. I don’t think it will be taken fully back into the agency, but the creative process in planning should go back to agencies.”

“The future for the ad industry is a really interesting argument,” comments Chris Wallace, MD of advertising at Barkers. “For me, the basis of the argument deals with the responsiveness of the client and also how the agency responds to what the client actually needs. I might be thought of as an old and grumpy man but the term full service agency to me means media buying has definitely changed over the past few years. A couple of years ago I would have said that the answer would be to become a small and nimble organisation, bringing in the creative work as and when you needed it. But I do not think that this is the case any longer. Now the key is to really listen to what the client wants and at the same time let everyone in the company have some sort of creative input into the task.”

Family’s MD Ian Wright believes that the key to the future success of the ad industry is based on the people who work within the industry and on how they react to changes. He says: “In Scotland we have some very talented people who could hold their own in any agency, however we need to find ways of attracting new people to Scotland, so that our clients can receive the best, most up to date thinking.

“Agencies, in the collective sense, need to find ways to demonstrate and provide the evidence to clients that we are one of the few types of business that can genuinely make a difference to a client organiasation, whether it be awareness, perception or commercial performance. More consolidation - it's the Darwin principle. And from consolidation will come interest from Scotland as well as outwith Scotland which will help the great agencies move on to bigger and better things. So there might not be a definitive answer as to where the industry will be in ten years’ time, but the future for all looks bright and the outlook positive. And you can’t say fairer than that.

What are your thoughts on this subject? E-mail us with your views on the future structure of advertising agencies to katy.archer@carnyx.com.

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