CEO of MyAdbox, Andrew Baker, challenges ad agencies to think differently. If they don’t, he says, ‘they’re doomed.’
‘The COVID-19 recession’ is already on Wikipedia 1. The Great Shutdown as it is now known, has put every corner of the world in a tailspin. There’s no going back - all we can do is focus on what we can control. Changes are inevitable - some will cut deep, others will open up new opportunities.
What normally happens when bad times hit the advertising industry is multiple rounds of agency staff cuts in gloomy board rooms. CEO of IPG, Michael Roth, neatly characterizes the advertising industry’s attitude to the current crisis – “We are, of course, doing what we can to minimize the impact on our people to the greatest degree possible. But as you have already seen at some of our agencies, and will regrettably see again, in order to align costs with the new revenue reality, staff reductions will be unavoidable in the face of the pressures most every business is facing.”2
Open question to Mr Roth: When you say you’re doing what you can to ‘minimize the impact’ – are you and your exec team thinking laterally? Slicing staff numbers is the obvious, easy way out. Yes, it has immediate financial upside - but it’s equally damaging for a whole lot of reasons – not the least of which is its detrimental effect on agency culture moving forward, potentially devastating future consequences of lost talent, significant impact on client relationships, increased pressures on the staff ‘survivors’ – take your pick. At the end of the round of staff sackings, what have you changed about your business Mr Roth? How is it better than before?
Recently, Sir Martin Sorrell took square aim at ‘the big six’ – WPP, Omnicom, IPG, Publicis, Havas and Dentsu for being too big and lacking focus. “The six holding companies are really in deep doo-doo, because they can’t get away from their analogue businesses. If you’re an analogue business, you have to reposition yourself rapidly. You have to blow things up.”3 Sorrell is talking about thinking differently about the problems agencies face right now. “If you don’t change your organization, it’s going to change for you – it’s going to be out of your hands.” Change is all around us and is impacting our lives in different ways – think Netflix, Amazon, Uber, Google, TikTok. The means of service delivery is new with personalized online experience and subscription signup prevalent.
You would think Ad agencies would be more progressive and open to change too, but strangely they have a certain inertia. Inefficient ‘analogue’ ad agencies need to restructure their thinking and embrace the exciting new technology that is now out there that can make them more competitive and save money. In particular, they need to examine their archaic campaign production practices. Head count in production studios is crippling for agencies – with Traffic Managers, Studio heads and a cascading series of ‘Designer/Mac Op’ roles adding up to a hefty bottom line that gets passed onto clients. Apart from the dollar costs, there are the huge time inefficiencies in rolling campaigns out manually. The duplication of artwork, Chinese Whispers around what’s within and outside brand guidelines and the sheer volume of screen time dedicated to the nuts and bolts of ad production is the epitome of inefficiency. The reality is that with smart tech that is out there right now, Ad agency studios are doomed. What’s making matters even more difficult for the old way of working is the plethora of new channels that are surfacing. Not just online, but in terms of on-demand tv and programmatic marketing channels. The content beast is growing fast and is hungry. Traditional production simply can’t keep up.
Sorrell believes that the COVID-19 crisis will sort the weak from the strong in a Darwinian like selection process. It’s not an if. It’s a when. So the time to think laterally is now. Agencies that use tech to roll campaigns out rather than production people can pass savings on to their clients to invest in more creativity and media (shifting the production revenue to a different line item on the balance sheet). Thinking ahead… imagine being at the end of a creative pitch and telling the potential client that if they go with your agency and your campaign, they’ll get more creative options and more media exposure for way less than anyone else you’re pitching against?
There are other ways to swing the bottom line if you’re open to new ideas - and for ad agencies that are agile and receptive to these new ideas, this upside down reality we’re now facing could end up being one of the most positive experiences ever. Stop sacking half your agency people and use tech to drive more value to your clients and win more business.