Now that I mentioned that I fake it on occasion, I will freely admit that I'm no big expert on the world of advertising before starting this post. Still, years of work experience have made it one of the American industries I follow most closely.
When Digitas (my old employer) was acquired by Publicis Group, I lamented the loss of independence (admittedly in the face of Publicis and Digitas touting the notion that such independence would continue). But I am a realist; I know that "holding companies" of multiple ad agencies are the wave, and almost no agency can really survive outside the system. So I was struck yesterday by the timing and the confluence of two separate profiles on the Business Pages - a profile of Miles Nadal of MDC Partners in the Times, and a profile of Steve Blamer of Creston in the Wall Street Journal (link requires registration).
Creston and MDC are newer ad agency holding companies, MDC out of Canada and Creston out of London. They are both offering new models for financing their purchases, basically built around taking partial stakes in their partner agencies and letting them work as a loose confederation. But what struck me was the hook for the MDC piece - the fact that a recent acquisition and merger of two agencies was leading to their closure. And that, on a related note, Blamer's decision to start Crestion came out of the merger of Draft and Foote Cone Belding (FCB) within the Interpublic Group, which displaced him as head of FCB in favor of the head of Draft (its founder, Howard Draft).
I freely admit I'm not a big fan of the holding companies. At Digitas, we had a pretty good vantage for watching the big monstrosities struggle with problems that were kind of obvious when large beaurocracies are combined in a rather haphazard manner - agencies overlapping in responsibilities and competing with each other; a lack of clear focus; an inability to respond quickly to changing conditions. The rise of internet marketing has changed advertising almost completely, and the big companies have been scrambling while smaller agencies - like Digitas, and Avenue A (which became an amalgamation of Avenue A and Razorfish after the "dotcom implosion" in 2000) made real progress in internet marketing by being faster and nimbler and less saddled with huge beaurocracies. As the Digitas and Avenue As have grown, though, they've faced considerable growing pains, plus the shark-like ineterests of the major players... in some ways, this is no-win.
It's worth noting though that many of the online lessons have been learned - and it turns out that like other pie-in-the-sky promises, internet advertising has turned out to be more knowable and less world changing than some of its promise. Just as "online shopping" turns out to be more like catalog shopping on speed, web advertising turns out to look a lot like TV advertising, just in a far more tailored, niche kind of way (something that cable and satellite has effectively done to TV anyway). And agencies solved a lot of their high tech problems the way they had with other things (like Media Buying, Direct Advertising, Medical Advertising, and Customer Research)... they bought their way into solutions.
I have no doubt that everyone means well in this discussion of letting hghly creative have free reign and a measure of independence. But practicality suggests that consolidation in the ad business cannot be that far off; it's simply going to be poor business to keep so many duplicate agencies with similar functions and approaches going. And sooner rather than later, I expect someone is going to bite the bullet on the uneasy truce that currently exists between traditional (print and TV) and online advertising and bring functions and teams together. Indeed the Publicis merger is a guide for just that - since GM's traditional agency is Leo Burnett (already a Publicis company) that combined very nicely with Digitas (and leaves open how the other big Digitas client, American Express, feels about having it's lead agency - Ogilvy - in one holding company, with Digitas now in another).
This isn't about being pessimistic about the prospects for friends still at DTAS; they are smart, talented people and they'll be fine. But I'm convinced that the coming ad consolidation won't be pretty, and when it's done, the face of Marketing will have changed, significantly. In some ways that's all to the good - as much as the mix of online and traditional advertising has been working in interesting ways, I think people feel overwhelmed by a lot of marketing, and are tuning out a vast number of messages, and not just ones they have no interest in, but ones that could be meaningful. Current thinking in marketing is that "clutter" is just something you have to rise above - but soon "getting rid of it" is going to be too hard to ignore. Again, a lot of this is guesswork for me - and really, what do I know? But for many major cities - where creative and technical folks toil for major marketers - consolidation could really tip their economies over the edge. Is all I'm saying. But then you already know I'm an Economic Cassandra like that.
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