Frank’s big five: the ad biz revolution

In the many years that I’ve worked in advertising, I’ve witnessed major changes that have affected the business of running an agency. Most don’t have one specific tipping point, but are ongoing trends that have helped shaped Canadian agencies and how they operate. Here are the big ones.

In the many years that I’ve worked in advertising, I’ve witnessed major changes that have affected the business of running an agency. Most don’t have one specific tipping point, but are ongoing trends that have helped shaped Canadian agencies and how they operate. Here are the big ones.

The procurement squeeze
New business is more procurement-driven. While this isn’t a Canada-only issue, it has become a major factor in awarding contracts here in the past two to three years. Procurement isn’t all bad, but some procurement processes within pharmaceutical and other multinational industries fail to recognize that agencies are also in the business of making profit. Desperate agencies undervalue their services, and position themselves as suppliers rather than marketing partners. Agencies are then driven to streamline their businesses and search out the lowest cost supplier. This is not a sustainable model. 
Procurement’s increasing role in the selection of agencies, as well as influencing media planning and buying, has led some clients’ to partner with the lowest bidder, not necessarily with the agency who proposed the best solution to their problem.

The talent crunch
Challenged by the bottom line, Canadian agencies fail to offer rewarding careers and salaries, so the talent leaves Canada, or our industry, in pursuit of a bigger paycheque and better opportunities. Finding, compensating, growing and keeping talent is one of the biggest challenges. Twenty years ago if you were smart and creative you wanted to work at an agency, but now there are so many other opportunities, like Google. Today’s talent is more sophisticated and possess a broader skill set. 
Some Canadian agencies are making efforts to develop recruitment programs by partnering with schools and industry organizations, sponsoring competitions such as Canada’s Top Ad Executive or using in-house talent officers. DDB Canada has a national director of talent management. However, the majority of Canadian agencies aren’t very inventive or aggressive; they lazily recruit from within our industry’s existing talent pool and fail to look elsewhere. 

The awards addiction

While award shows do celebrate creativity, there are too many and they’ve lost credibility. They’ve become a drug for creatives focused on building their books. Certain agencies are more concerned with selling their clients the most creative ad, versus an ad that will generate the most results. Besides the CASSIES, CMAs, and strategy’s AOY competition, there aren’t many Canadian shows that celebrate effectiveness. Award shows have become a business unto themselves, which has led to the business of agencies developing phony ads. Like the One Club, more organizations need to make it tougher to get fake ads into competitions and punish and publicize those who try.

The global lottery
Some may argue global brand alignment better leverages product positioning and global brand strength, but it hurts Canadian agencies. Each time a recession strikes, centralization ensues. The resulting market shrinkage and the client shift to major markets has changed the way agencies operate, with less big brands for Canadian agencies to work on. Recent centralization casualties in Canada include Quaker, Pepsi, Knorr, BMW and Dell.
Global brand alignment can also be a two-edged sword in Canada. An agency can have an account realigned and shifted to a competitor through no fault of its own. Other agencies inevitably benefit from the shift in business. DDB, as an example, has picked up and lost business this way, as have all the other multinational agencies in Canada.

The agency identity crisis
Today’s markets are now conversations. Jeff Jarvis, author of What Would Google Do? says, “customers are now in charge, the mass market is dead, and being replaced by the mass of niches.” The Google age in which we live has changed everything, including the way Canadian agencies operate and the services and solutions we provide. Nowadays an entire idea can live and evolve online, and instead of hiring talent from post-secondary ad programs, there is no limitation to our recruitment programs.
To move forward, today’s agencies need to rebuild their reputations and establish a point of difference for their brand. Over the next 20 years, our industry will experience even more change, and the rate at which these changes occur will continue to increase as well.
The operating model for the majority of today’s advertising agencies is the Model T. It works and it gets you there, but it’s not fast enough for today’s world. For Canadian advertising agencies to survive they must be resilient to change and evolve.

Jump to:

Ken Wong: 20-year review – The marketer’s view

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