Much chatter in adland about the way the declining fortunes of FMCG – or consumer products – companies are impacting agencies. Procter & Gamble and Unilever are cutting back advertising and the number of agencies they use although they still spend some $7bn a year.
The likes of Kraft Heinz are driving harder bargains with their zero-based budgeting, now being introduced at Unilever.
But brands seem more important than ever although, increasingly they’re service brands. Nike and Adidas aren’t of course although they’re often pitched in the same way: as products that make your life more agreeable/say something about your lifestyle rather than offering a product benefit. Are all those people queueing up for the latest iPhone buying a phone or a lifestyle?
Google, Adobe and Amazon are all consistent and, often, excellent advertisers but advertising is not central to their business in the way it is to P&G or, sometimes anyway, Kraft Heinz.
General Mills-owned Yoplait is trying to turn the clock back with this campaign from 72andSunny New York, with that hardy standby ooh-la-la. It may just work.
In the wider market two things have happened. One is the fragmentation of media which makes it hard to create a big impact with most new brand campaigns as the money is scattered hither and thither. More significant is that people don’t always shop in shops any more. When you shop online you look at the (unavoidable) customer reviews as you search and they’re likely to have much more impact than the last ad campaign you saw.
No wonder creative agencies are going through one of their regular spells of navel-gazing – maybe these happen more regularly in fallow August – as they are, to a real extent, being marginalised.
For a while it seemed as though media agencies had taken over the driver’s seat: employing thousands of people; making good money despite clients trying to drive fees down, claiming the high ground on strategy and even boasting of their superior content creation abilities.
But they’re now under more pressure than creative agencies in many ways as clients wise up to off-contract revenue, many of their functions are taken over by automation and their basic function – to spend as much of the client’s money as profitably as they can – is challenged.
Zero-based budgeting is something most agencies on most clients need to come to terms with. But the logical consequence of this – zero-based strategy and creativity – is mostly ignored, as that’s not what most agencies (creative, media and otherwise) are designed to do. It means project work and, to be commercially viable, that has to be at a high price. The consultants seem to manage it.
That’s the big challenge facing the agency establishment as client income becomes a roller coaster.