October 24, 2017

by Maarten Albarda

A couple of years ago, I asked the readers of this column “Would You Want To Be A Media Agency CEO In 2015?” 

The point was that the role of leading an agency, or a group of agencies, was not an easy job. And that is probably even truer today than it was in 2015.

A few years ago, we made fun of the intended marriage of Publicis and Omnicom, which eventually fell through because neither Paris nor New York was prepared to compromise about where the new headquarters was going to be and who was going to lead the newly formed company. We laughed at “Publicom” or “Omnicis.” Silly guys, for falling out over such petty challenges.

Fast-forward to today, when agencies and their holding company motherships have become damaged goods, with revenues and margins facing south, growth stagnant, their very existence threatened. There are rumors floating around that either Publicis, IPG or even the mighty WPP might be bought by Accenture or Bain.

A lot of the damage has been self-inflicted, as a result of holding companies focusing on short-term gains at the expense of long-term survival.

The head-first jump into programmatic and digital advertising made sense because marketers wanted to go there, and for valid reasons. Digital had and still has the promise of delivering targeted messages cost-effectively and directly to consumers, in a relevant environment. And if consumers want, they can buy from or engage with advertisers in response.

What did the agencies do? Seeing how the supply side was desperate for income, and their clients at the same time were pressuring for lower cost, they made the whole ecosystem about non-transparent cheap reach. They rigged the ecosystem so it delivered huge margins for the agencies and their tech middlemen.

Never mind that clever criminal syndicates figured out how to game the ad and publishing business to their advantage, and now we have a very broken digital ecosystem that throws elections, siphons off personal data, pits people against each other and annoys consumers to the point of installing ad blockers.

The industry now must clean up the mess of ads placed next to porn or jihadist content, or not appearing at all even though all your system safeguards say it did.
As a result, trust in advertising in general, and the once-trusted partnership between agencies and their clients, has all but evaporated.

It’s no wonder, then, that a lot of agency leaders who possess talent and a desire to progress their careers are calling it quits. In the U.K., we saw the departure of the CEOs of Starcom, Dentsu-Aegis, Havas and OMD — all in one week!

I work with large, marketing-driven organizations, almost all of whom have large numbers of former agency executives among their ranks. It used to be an almost impossible transfer: going from the “fun side” (agencies) to the “frumpy side” (advertisers). Few were taken seriously by either side, and even fewer made a successful transition.

Today we hear from recruiters that their phones are literally ringing nonstop with people eager to depart. The business pendulum is swinging toward the advertiser side because of marketing and advertising control, career options, innovation and — yes, fun. The agencies are now the frumpy ones.

Courtesy of mediapost

 

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