Five things you didn’t know about advertising agencies: 2000s (1)

1/ The 2000s, or ‘noughties’ as they were called, were a terrible decade for ad agencies. Advertising as an economic activity boomed like there was no tomorrow, with huge and happening companies like Microsoft and Google placing it at the centre of their efforts to expand out of pre-packaged software and search respectively. Now even Apple’s at it. But, in line with this, there appeared to be determination on the part of many people – clients, the new tech companies coming into the market and, in some cases, media owners, that ad agencies did not deserve to be a part of it.

2/ But how did this unfortunate state of affairs arise? As ever, the source of dispute was money. Ever since the unremarked and under-appreciated boys in the media department had gone their own way in the 1980s, the pressure had been on creative agencies to justify their fees and standard of living. Why should clients take them at their own worth when others, media agencies, direct marketers and the new digital specialists who were mushrooming with the rise of the internet, charged (or appeared to charge) much less?

3/ In parallel with this those few agencies who did seem to be making a go of it opted for the safer havens of one of the big marcoms companies, who still had cash to spend because the world’s bigger clients felt they needed their huge networks to operate effectively.

So in London Bartle Bogle Hegarty opted for selling 49 per cent to Publicis, Clenmow Hornby Inge for the same deal with WPP. In the US Chiat Day became part of Omnicom via a deal with TBWA and Crispin Porter + Bogusky decided to throw in its hand with Canada-based MDC Partners.

There didn’t seem room to become a real global contender, however brilliant you were, without someone else’s money to fall back on. And maybe there still isn’t. But it didn’t do much for ad agencies’ status in the world; the really big clients thought they’d better deal with Sir Martin Sorrrell at WPP or Maurice Levy at Publicis Groupe. And this made creative agencies, however good they were, something of a commodity: like an upmarket fashion concession in a department store.

4/ Then there was digital. It was much cheaper to advertise online than in traditional media, there were lots of individuals or small companies willing to do this cheaply (and often very well) and it wasn’t the end of the world for the client if the campaign didn’t work, because it cost so little. And this is still the case although vast numbers of these companies have been bought by the big marcoms groups (and they’re still on the prowl). WPP owns over 1,000 companies, most trading under their original brand names.

5/ So by the end of the 2000s we had a situation with clients firmly on top, the big marcoms outfits hanging in there because they were unavoidable for many big clients and the prospect of life in an agency ranking way below working on Wall Street or the City of London, for a political party or think tank or dreaming up environmental solutions to global warming.

But what happened? 2009 and the financial crisis, that’s what happened. And all of a sudden some agencies and/or individual admen are on the way up again. which we’ll look at in part two.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

One comment

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    I’m afraid that your references to BBH and CHI in your blogpost are wrong and you appear to have missed the point entirely. BBH sold 49% to Leo Burnett in 1998 (now owned by Publicis) and CHI did a similar deal with WPP in 2007 (again 49%). BBH didn’t sell 51% because they put an emphasis on retaining some independence. One would imagine that CHI felt the same. Therefore, BBH did not become part of a huge network. What the deal did do was provide on the ground local support, especially media buying, for BBH’s own global clients (as BBH operates a micro network model).