Rome is Burning
Jules Ehrhardt
484

I like this a lot Jules. There’s a further tension buried in this crisis (and to be very clear, I agree with almost everything you shared). That is the challenge of owning relationships. In three broad buckets, generalising to make points, my contention is this…

  1. The big (advertising) networks have been very good at building and owning client relationships. JWT and Unilever is 150 years or something crazy. Ogilvy and IBM go back half a century. GE and BBDO the same. But it’s getting harder for them as clients get younger and smarter and more technically / digitally literate. Clients do this faster than they can. They’re losing out to the management consultancies here both in terms of seniority / client exposure, and comparative fee value. The former because client’s “advertising” budgets used to dominate marketing spends, mostly as they included media buys; the latter as the ‘big idea’ has become commoditized, disseminated and fragmented across channels. So these guys need help where they don’t think they need it. And radical transformation of a big advertising network under public ownership is unlikely, I would suggest.
  2. What (advertising) agencies call ‘digital’ agencies have (mostly) grown up and grown big by commoditizing their own services to some degree. And on the whole they’re not as good at senior level relationships as the ad networks. They haven’t had as much practice, and theyre run by different people. Global digital agencies remain significantly smaller than the ‘advertising’ networks, but they also do a lot of advertising work as they focus most obviously on design (taking a campaign idea and making it work in digital channels) and development (they may not talk about it too much they still need to build stuff). Where these kinds of agencies have been challenged is in swimming upstream into client businesses at the leadership level. There are exceptions of course — Ajaz / AKQA’s relationship with Nike, R/GA’s with Beats, Possible’s with Microsoft. But mostly, these ‘digital’ services are bought at a more junior level by big clients. That’s why your whole piece on product is something all those groups should listen to. And why most big ‘digital’ agencies — or more contemporary creative businesses of all kinds — also need something they don’t think they need. Which is ‘proper’ and effective, grown-up consulting and relationship-building capability. On the whole, they don’t want that because they think it’s “what big old ad agencies do”, and they’re staunch about how they’re different.
  3. The consulting firms…hmmm. Of course they’re huge, they have money to buy things (well documented elsewhere) that look shiny and sexy and new, and they quite literally own client relationships at the leadership level. But there’s a clash of cultures and operating models that mean this ‘integration’ looks clumsy at best, more often than not. For every piece like this…http://www.campaignasia.com/article/how-mckinsey-is-moving-into-the-creative-scene/427383 there’s a story like Fjord / Accenture, where the founders left pre-earn-out, screaming from the building, to get back into a more creative environment. They took over a WPP business and are turning it into this: http://hydration.biz. What the consulting firms need is also a radical transformation, but they have challenges too. Firstly from a recruitment standpoint — the very people they need to help lead that kind of transformation would (and have) run away from the environment these firms have perpetuated over decades. Great grads no longer queue up for spots on the McKinsey program, or at Goldman Sachs for that matter. And secondly, they haven’t yet understood that this is a cultural problem as much as an operating one, and that just cannot be bought. So much so that BCG have set up an entirely ‘independent’ offering to try and counter exactly that challenge: https://www.bcgdv.com

So if you skipped the bullets, here’s a view that aligns nicely with yours.

In the future there are only going to be two kinds of agencies. One will be run by machines: everything in agency-land that can be automated, will be. Huge implications for many of the biggest names in the industry, and for all the holding groups that own them. The others, all of which will be smaller on most measures, will be run by people. They’ll make the things that machines can’t — the ideas and the products. People, aided by technology. And that will mean fewer, better, more senior relationships creating those ideas and products, held by fewer, better, and frankly different-looking agencies.

That’s why we did this:

Loved your piece. Thanks Jules.

Toby

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