Why agencies will become smaller but more creative as production moves out to specialists

Despite the advertising industry being highly creative it is also very conservative. The cause is the role ad agencies play – service providers to clients – hence they tend to be behind the curve on developments within the client community who, in turn, tend to behind the curve on macro developments in technology, society, economics, etc.

This reality is very evident today with the “decoupling” of ideas from implementation; a trend which is bound to have a massive impact on the structure of the industry in the near future. Further, it will force ad agency management to think very carefully about their core deliverable to clients and what non-core activities to ignore or jettison.

The writing on the wall is crystal clear if one steps back a little and thinks about tomorrow rather than today. There are several implications worthy of careful consideration.

Firstly the difference between ideas, execution and implementation. The best ad agencies have real creative talent bursting at the seams and the reason talented people join good ad agencies is to find an outlet for their creative muscle. I can’t see that changing too much over time. However there is a very clear distinction between execution and implementation. A good ad agency will want to polish and hone the execution but may not be too fussed about implementation because that shifts to a different place driven by tasks that tend to be more mechanical.

Second the evolution of implementation. In the last century the implementation bit of the process focused on print and TV, some radio, and was mainly domestic. Today we have multiple channels and platforms, creative work running internationally and, thanks to the internet, the ability to go global at the click of a mouse. Implementation has become massively complex in many cases and ad agencies just don’t have the resource, knowhow and technology to handle the job in hand. Therefore the implementation side of things is going elsewhere. This truth will simply become more and more the norm.

Thirdly it’s the age of the nerd. The internet has opened up a whole new sector in the advertising world and is basically a different side of the brain to conventional advertising. Running a colour DPS in the Sunday Times colour supplement was a fairly simple task to understand; provide finished artwork to Wapping on time and bingo your lovely ad appeared on the day booked. Who has tried getting a working website up and running recently? A PhD in computer science is necessary to even understand what the funny chap in the dark room is talking about. To make matters worse these nerdy types have also invented a glossary of terms that are meaningless to normal people. So many people trot out the new language now but I still can’t work out if it’s bullshit or not.

This is the equivalent of opening the bonnet on your Porsche 911 and staring at the engine mass; just close it again and take it to the nearest Porsche dealer.

This leads to the nerdy types having four fours in a game of poker, they can’t be beaten. They know which wire connects the widget to the gromit.

No conventional, creatively strong ad agency is going to embrace this space because it isn’t at the ideas end of the spectrum, it’s at the wiring and plumbing end. This has become very technical, very specialised, literally a new world. It also requires huge capital investment to equip an operation capable of delivering content globally in different languages to a range of media channels in differing formats. Ad agencies invest in human talent, the production partners invest in capital equipment.

This is what is driving the ‘decoupling’ of ideas from implementation. The growth of businesses dedicated to implementation is a correlation with the growth in technology. Companies such as Tag, Zone, Splash and Hogarth are experiencing a growth in their business as they take over more and more of the implementation. A big client such as Nationwide can appoint a hot shop as it has done with 18 Feet & Rising for the strategy and creative content (and, by the way, I think the TV work is some of the best in this category) and use one of the ‘production’ agencies to implement the volume work. Makes sense for all parties and is all about horses for courses.

Where this really begins to make huge sense is with multinational brands. In the old days their ad agency would open an office in each of the countries the brand was operating in. All of the creative work would be executed and implemented locally but this is often no longer required. It can all be done from a building in Clerkenwell or Soho. The upsides are very compelling; consistency, reduced costs, control, asset libraries, etc.

After polishing my crystal ball I predict that in, say, five years time ad agencies will have shrunk in size as they focus on their core skill base and the production agencies will grow as they absorb more and more of the implementation. It is the way the world is going. Interesting from a career point of view for a lot of people. This might sound dramatic but just think about how media has changed in the same way. The separation of media from creative began slowly in the 1980s, a little over 30 years ago, and it didn’t move in to the mega groupings until the late 90s. Now look at it; massive groups with immense firepower handling the bulk of the cash in advertising.

If I was thinking of starting a new ad agency today I would make sure it focused on ideas, staffed it accordingly and partnered a major, all singing all dancing production agency.

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About Paul Simons

Paul joined Cadbury-Schweppes in brand management and then moved to United Biscuits. He switched to advertising in his late 20s, at Cogent Elliott and then Gold Greenlees Trott. He founded Simons Palmer Denton Clemmow & Johnson in the late 80s, one of the leading creative agencies of the 90s. Simons Palmer then merged with TBWA to create a top ten agency. Paul then joined O&M as chairman & CEO of the UK group. After three years he left to create a new AIM-quoted advertising group Cagney Plc. He is now a consultant to a number of client companies. Paul also shares his thoughts on his blog. Visit Paul Simons Blog.

One comment

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    The first completely comprehensive and accurate statement on this issue I’ve seen. This is after reading many articles that partly cover the same ground as here and being involved in many industry ‘love-ins’ where the topic is lightly alluded to, but then brushed under the carpet for later attention; being “too tricky to tackle today, let’s leave it”. I wrote a piece about seven years ago (Don’t Shoot The Messenger) that agencies, once having lost control of their (output) product, would never get it back. This article is, I think, right on.