The agency business is melting down. We’ve seen this before; nevertheless, it is disruptive and there are real people suffering behind the statistics.
Derek Thompson of The Atlantic notes:
For the first time on record, the number of advertising-specific jobs in the U.S. is declining in the middle of an economic expansion, according to government data. The number of jobs at ad agencies fell by about 5,000 last year, on net, while employment in media-buying agencies—firms that tend to focus on advertising strategy rather than designing or filming commercials—hasn’t grown since 2013.
The mysterious decline can be explained by two developments, most prominently technology’s invasion of the ad sector and the phenomenon of more corporations trying to emulate outside media companies in-house, which leaves less work for traditional ad firms.
To make matters worse, the value of the average creative-account win has declined, falling by about 40 percent between 2016 and 2017.
When Wexley School of Girls decided to close down, it turned more than a few heads. The decline in revenue is widespread and the shift to less rewarding work is being felt in agencies big and small.
Hope Springs Eternal
Yet, the ad makers persist. Creative people are notorious for finding a way.
Rei Inamoto, former creative chief of AKQA, and founder of business innovation firm Inamoto & Co, believes there are some viable answers to the problem. Writing in Adweek, he suggests slimming down agency layers, for one.
The CEO of one of our clients told us recently: “My agency brought nine vp’s to a meeting. We no longer work with that agency.” Next time you go to a client meeting, ask why you really need more than five people.
There is no question that poor business practices and a culture of bloated egos and even fatter budgets have led agencies to this cul-de-sac of pain. Agencies owners and managers have some intense soul searching to do. But will they accept responsibility for the problem, or shuffle the blame on to others?
And once the soul is searched, will ad makers become more like the quants? Or will ad makers point out that data is only as good as those who know what to do with it?
I know many in the agency business are used to serving the client’s interests at all costs. But what if the cost is now much too high for that passive approach?
Agencies are losing business left and right. Why not fight back? There’s little to lose when you’re already reeling. Why not rely on the agency’s core strengths and find a way to outmaneuver the data sloths and in-house teams? Why not spark a new creative revolution?