Has Covid-19 taken ad agencies back to where they started – in-house media handmaidens

Research firm Forrester is predicting that US agencies will lose 52,000 jobs through 2021, 35,167 in 2020 and 16,758 in 2021 to be precise.

Creative agencies will be hit hardest (down 14%) with digital and media agencies down seven per cent.

Pretty grim but better than some estimates. The numbers are likely to be similar in the UK and elsewhere, assuming Forrester is right. Forrester also reckons industry employment will stabilise after 2021 but not recover its pre-Covid levels. Some people will join in-house agencies but most will leave the industry or go freelance (‘gig’ in modern parlance.)

Creative ad agencies have had a pretty good run over the years but it looks as though it’s coming to an end. Some will continue to prosper (James Murphy and David Golding’s New Commercial Arts in the UK for example, already boasting Halifax after just a couple of weeks in business) but they probably won’t be the big holding company owned Madison Avenue type behemoths.

Some of these have, in effect, thrown in the towel already; trying to re-invent themselves (with varying degrees of conviction) as tech consultancies.

But some advertisers still need great creative ideas although more and more of them are only too willing to hide behind the supposed certainties of digital: “guaranteed impact” although quite who they’re impacting (bots and the like) is debatable.

Sir Martin Sorrell, now ensconced at S4 Capital, bought more creative agencies in his time at WPP than anyone in history (JWT, Grey, Ogilvy, Y&R and possibly hundreds more) but he’s now written them off too, referring to a “burning storm” as Covid-19 accelerates the rush to digital.

So where are the big ideas coming from (assuming they’re still needed)? Sorrell’s MediaMonks are very good at what they do (well-produced online “content”) but S4 likes to see itself as a tech company, in part because they’re more highly rated in financial circles than ad agencies. He will see in-housing as an opportunity rather than a threat.

New Commercial Arts seems to have swept the Halifax off its feet originally by answering a “customer journey” brief. This has to be the kind of new-style full service agencies need to offer if they’re going to survive. But not many have the wit or resources.

Creative ad agencies began life as in-house studios at print media owners, producing the ads companies needed to market themselves. Then some bright sparks decided they could go it alone (J. Walter Thompson himself being the early trailblazer.)

Substitute digital for print and maybe the wheel has turned full circle.

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About Stephen Foster

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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.