There are lots of people out there who would love to sell us on the idea that advertising is dead. Don’t fall for it. Advertising is far from dead. As a matter of fact, as long as there is commerce, advertising will never die.
But Advertising is changing, and by this, I don’t mean the medium itself. What I am talking about is the Advertising infrastructure. The framework of the industry.
Ten years ago, the “big agency” model ruled the industry. The bigger, the better. Clients fell for the whole “size matters” proposition. The bigger the agency, the bigger the clients, the bigger the talent, the bigger the impact on their market. There was status involved too. Think “My agency is bigger than yours” or “my agency kicks your agency’s butt”.
To some extent, the same mentality still exists today, (habits are hard to break) but thanks to the growth of small-to-medium agencies and creative studios, thanks to the democratization of creative and collaborative tools, things are starting to change…
While it’s true that accounts in the 8+ figures require the kind of operational capability that often comes in numbers, it was always an iffy proposition. Consider the big agency model:
In order to service big accounts, you have to be big too. You need big digs. Big staff. Lots of overhead. Big accounts don’t ask you to work on big projects every month. Some months, you get your money’s worth. Other months, you’re twenty people overweight and they need to go.
The advertising world’s ugly little habit of hiring and then firing people en masse has been compounded over the years to allow it to become part of the culture. There’s an agency here in Greenville whose staff rotates ever six months. It’s kind of a joke, really. And it’s very sad… but the bigger the agency, the more common this practice tends to be.
It’s all about economics – I understand that – but you have to balance quality and quantity. The equation, in this and many other cases, is completely out of whack.
Let me just say this: A revolving door staffing policy is not conducive to building a brand – or producing consistently great work. Hiring is expensive. Firing is expensive. Training is expensive. Besides, it reeks of exploitation. As a matter of fact, it reminds me of every cheap-ass sales organization I’ve ever run into. The It’s all about numbers mentality is as myopic as it gets.
But we’ll get back to numbers in a bit.
What matters most is that this kind of model sucks for the clients. Instead of pairing them with account executives whose mission it is to help them make the right decisions, big agencies tend to hook them up with what essentially amounts to salespeople. If they can sell, they get to keep their jobs. If they don’t sell, they’re gone. They don’t matter all that much because there are three hundred more kids just like them waiting in the wings.
Before you take offense to that last paragraph, let me just say this: There are LOTS of great account executives out there… but if you’re one of them, you’re part of a very exclusive minority.
Anyway. I can say this because I’ve been the client. I was the client for over ten years, and it taught me everything agencies do wrong. Believe me when I tell you that watching how advertising agencies do business from the outside-in is a daily head-shaking exercise. Most advertising professionals have never been in the client’s shoes, so they have no idea. The disconnect there is one of the widest have ever encountered in any discipline and any industry.
This disconnect is a direct result of the Advertising world’s bulimic model when it comes to staffing. Connecting with your clients isn’t a crapshoot. It isn’t a numbers’ game. It’s a commitment, in the truest sense of the term. It’s a partnership.
See, when you just throw inexperienced kids at your clients (and I use the term “kids” loosely) you are devaluing your brand as an agency. You’re saying… our cool offices are more important than your project. Our status is more important than the results we can provide. We need to shave some digits in our budget, and this is where we chose to do it.
Trust me. You aren’t fooling anybody.
Every time you do this, the value of the services you provide drops a little. Your credibility as an agency begins to suffer. Your relationship with your clients fades and sours. One day, your clients cross a threshold when they realize that… wait a minute. This stuff is expensive, and it isn’t really doing much for us… so let’s just buy what we need, and just spend the rest of our budget on something more concrete. Or let’s just do a lot of it ourselves.
That’s how agencies that have ballooned up to 150 employees suddenly find themselves in the red.
In the end, it really is a numbers game: The cash flow has to be positive. But instead of rebuilding an agency the right way, by bringing in a core of superquality employees, by redirecting your focus to replicating the fantastic work and service of the good old days, when there were only 50 or 60 people in their offices, most agencies just fire a batch of people and replace them with the next truckload of warm bodies.
The way I see it, that’s kind of like trying to cure a heroin habit by buying your next kit from a different street corner.
The other lousy way, apparently, is to just cook the books and pretend everything is fine. (More on that later this week.)
It isn’t to say that the age of the big agency is over. There will probably always be a need for big agencies. Companies like GM and Microsoft and Walmart are probably too big for a twenty-person firm to handle, but most big firms won’t be around in fifteen years. One by one, most of them are going to start imploding. It’s a simple matter of economics. The tools are here now for smaller agencies and studios with far less overhead and a stronger focus on quality, talent and results to take over.
Call it natural selection. Call it evolution. Call it whatever you want. The world is changing, and the same-old crap that most businesses have been forced to settle for for the last twenty years is going to start to vanish fast.
It’s about damn time too.
Over the next few days and weeks, you’ll get a chance to hear more about the fall of the mighty Henderson Advertising. (Okay, maybe they were mighty only in South Carolina, but still.) There’s a lot to be learned from what led such a once-great advertising and marketing firm to crash and burn so spectacularly and painfully this week.
We’re talking about a terminal crash here.
We’re talking about one of the most well-known agencies in the South-East closing its doors as abruptly as the snap of a guillotine blade yesterday, pretty much without warning.
We’re talking about well over 100 people being put out of work overnight, and dozens of clients struggling to figure out what they’re going to do next.
Yes. Not a textile mill. Not a car parts factory. An advertising agency.
What happened to them could very well happen to every large agency in the country… and to some extent, it already is.
For now, my heart goes out to everyone who lost their jobs yesterday. Henderson going down the way it did just sucks.
The good news is this: If you have talent, if youre heart is in the right place, if you really want to help companies succeed, there’s a whole world of untapped opportunity for you out there. There’s life beyond the old “big agency” model.
And from where I’m standing, it’s pretty damn cool.
(We’ll be back tomorrow with more.)