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The advertising crisis from the 80s to today.

A digression to understand where the depreciation of the role of creative and creative industry has started. To understand how we got here, and how “the Industry” could rebuild itself.

Who is more than 25 years old and works in the creative field knows exactly what I’m talking about, while those who are younger will escape the true meaning of the title.
But it is not his fault, he simply did not work in the early ’00, and met some old mentor who told him how was the trade of the graphic / art in the 80s / 90s.

Once upon a time, there was the “Creative”

At the time the creatives counted: Art director, senior graphic designer, surrounded by an aura of mystery, and respected by the customers, who entrusted him on the nail budget conspicuous (certainly enough to stay in percentages but do not digress).

What Women Want is a film that photographs well the 90s mood

Postcard from the “good times”

It was the years 80–90s: advertising and advertising were in fashion, and even in the province companies invested a lot in brochures, photo shoots, posters.

“The economy was growing, and with it the budgets.”

There was a competition to grab the best agencies, the best creative, starting right from the beauty of the work done, with a strong word of mouth.
The sales and customer search component (represented by the Accounts) was marginal in the business of an agency: quality was what mattered and the agent was one who earned well and shuttled between client and agency, an interchangeable role. It was rarely the owner.

The prices were so high — for today’s parameters — to be able to cover the agency costs with the percentage; indexing them with the cost of money then it turns out that they were really high.
The profession of the creative could be profitable even in smaller cities
and certainly it was worth doing, although it was clearly more risky and stressful than a normal clerical trade at the time. This is the photograph of the “sector” when everything was fine.


The beginning of the end: the competition of small studies!

As for any fashionable or trendy profession, after an initial pioneering phase, followed by the growth phase in which a relatively small number of professionals work there… with the notoriety…
The mass arrives.

Mass understood as the large number of new advertising agencies, graphic studies that opened in the ’90s, founded by professionals who came out of the groups and tried their luck on their own.

More competition: the result was a rapid increase in available supply and a slow but inexorable decline in prices.

On the other hand, if you are a small rampant studio and you have to compete with the center’s emblazoned agencies — in a historical phase with prices that allow it — try to approach quality and reduce prices.
And if you can not get same quality, lower the prices again.

Increasing competition gradually lowered prices, from the stellar figures of previous decades to still high tariffs.
And we are still at the beginning of the 90s. A little later another wave would have affected the Sector.


Revolution: the Computer Graphic and the internet

We are now half past 90s. Which in hindsight were “The fantastic 90s years”, only that at the time you did noticed. :-)
Years of dizzying growth of the processing powers of the processors, which will allow a relatively capillary diffusion of Personal Computers.

At the time the technical gap between the Macintosh and PC was bigger.

At the time the PCs were still a lot of backwards compared to the Macintosh — used for years in desktop publishing — but this has already started a whole generation of teenagers the existence of computer graphics, and the possibility of making a career.

Schools of professional graphics were opened soon, with a new “popular” approach and not — as had happened so far — of the untraceable elite institutions.
The result was that of producing a large number of new graduates, aspiring graphic designers, from the very early 00s, of which very few would have found employment in the sector.

Meanwhile, in the industry, competition continued and the margins of the agencies continued to decline, but the sector still held.
In addition, the Internet, the novelty of the late 90s, caused a lot of invoicing to the agencies able to realise the first, buggy and pioneering company websites.


The beginning of the crisis: dot com bubble and precariousness

We arrive in the early 00s, which the “beginning of the crisis” years.
Between 2001 and the following months the dot com bubble burst, or start-ups and technology companies more or less related to the internet business started to fail: it was a first generation of improvised activities, built on the hype, overvalued and over-financed.

In the end, Apple, Amazon, Paypal and a few others remained standing.
Few companies came out intact from the dot com: Bezos on the left photo (Amazon), and Musk on the right, selling Paypal to ebay

The long wave of dot com was not only economic, but also at media and value level: for a few years to follow, the web and the technological realities were viewed with suspicion by the entrepreneurs of traditional companies.
The effect in industry was the failure of several web agencies and a return of budgets on the classic media. Budget that due to the price war were barely sufficient to cover agency costs!

Author’s note. In this period, which goes from about 2000 to 2008, the sector was characterised by budget stagnation, high competition and increasing contractual precariousness: the agencies to survive were able to exploit in a pioneering way the project work contracts and the fake VAT matches, effectively moving the costs of the crisis on workers in the sector.
Now this model applies to all sectors!

However, thanks to this “smart” operation and pulling the belt, things were not “so bad”: with the due attention it was still possible to make a business work in advertising graphics or on the web. Earning relatively little.


The real crisis (2008–2013)

Needless to say, the advertising industry was affected by the financial crisis that began in 2008.
Also in this case, a crisis originating from the bursting of a US bubble, that one of easy credit, of subprime mortgages wanted by Clinton onwards.

When poor families weren’t no longer able to repay loans, credit and real estate agencies have started to fail in chains, from Leman Brother down.

The employees who leave the bankrupt Lehman Brother (2008)

The effect of this crisis was even more pronounced than the “post-dot” crisis, because, although initially of a financial nature, in the following years it hit the real economy: tightening on loans to companies and on property mortgages, economic crisis , unemployment and austerity by governments.The end result was a decline in consumption, sales and consequently advertising budgets.

The effect of the crisis increased even more, because new competitors entered the market: printers and media owners tried to take customers directly and offer a complete “creativity” package + space or production

Edit: “Complete package” from their limited point of view, edit

The second post crisis (2013–2017)

Needless to say, the 2008 crisis left several victims in the field, with closed or heavily downsized agencies, together with a general decline in the average quality of the campaigns.

From 2013 onwards, the economy (with reference to Europe, from where I write) has not rebounded, but has remained flat, with slight theoretical growth, but in real life consumption has remained at stake.

In 2017 61% of total (measured) budget went to FB and Google!

And here comes another threat to advertisers: the effects on the budget of Social Networks.
Born in reality before, starting in 2004 (Facebook) and 2006 (Twitter), social media began to attract a substantial amount of advertising budget to their platforms.

It seemed like a good refreshing news, but it was soon discovered that, unlike traditional publishers, these platforms aim for direct management of advertisers.

Between the lines this means that there is no room for privileged prices reserved for agencies, or accord.

The role of creativity is actually diminished both by the reduced size of the smartphone and by the available formats, which frequently change at the discretion of social platforms.

Another bad news for the sector is the fashion of startups and the disruption that accompanies them.
Let me explain: I like the constructive and “Fordist” innovation of Musk, which (above all) in the USA gives work to a generation of very young ambitious Startuppers, but often, a consequence of startups is a wave of disruption that can hit and cancel whole productive industries.

Could the creative industry be avoided?
Of course not, let’s remember Murphy’s law!

And so here are born “websites-that-do-the-websites”.
These are platforms that allow you to create editorial and ecommerce websites, using graphic templates, and the customer can directly assemble something, even without knowing a line of code!

Over the years there has been progress, until you get to
The Grid (the only one I will mention), which uses AI algorithms to generate pages.

This novelty has hit more the area linked to web design than the agencies, but the fashion of automation and AI is coming in Advertising field, and could be a blow.

On the other hand, if it is the algorithm that offers you the next purchase, what are the slogans for? and a rich media banner? and a display billboard?

Today: 2018–2020

The present is increasingly difficult to understand and to frame in a description: from a certain point of view we could be in a post-Startup-phase, in the sense that — at least here in Europe — the hype unbridled towards startups seems to have fallen.
Not that you do not do more startups, but there are fewer newspaper articles, less beauty contests for ideas balzane… In short, there is more concreteness, less money, and an orientation towards technological startups.

And the world of advertising?
It seems to have become aware of the situation, the agencies now know that they have to experiment to find a new business model that is perhaps more disconnected from the publishing world (also, in a greater crisis).

They know that the good times are over when a captivating image and a nice slogan could “seduce the customer” and it was done. Now — thanks to the long crisis, there is a lot of attention on the results, on the numbers.

Numbers intended as sales — a parameter that has always existed — but also numbers like the thousand metrics that in advertising on digital media are available immediately even for the customer.

Edit. Metrics that are often consulted too early, before they have a statistical value.

Conclusion

This article is a historical excursus that does not want to propose recipes or solutions for the world of advertising (it will be the task of another article later).

Right now the industry — through the few industry associations such as the national Art Director clubs, and the European ADCE — is looking for solutions, questioning and experimenting also with methods borrowed from the startup world (as minodesign® does, using the BMP process).

Who knows that from the efforts and creativity of the same creative people, does not get the Eureka able to get the agencies out of the crisis, and get to a business finally more independent from the economic cycles and from flat consumerism itself!

Good reading

— — — — — -
Giovanni Minelli
minodesign®

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