Published in Nov-Dec 2021
The full-service agency model from the seventies seemed like the perfect one if you wanted to get into the advertising business. With a team of creative-minded individuals, a media guru and some people to take care of administrative and financial matters, you were ready to decode briefs and develop concepts that could be manifested in almost any media form available at the time. A tariff for individual services, along with a 15% commission on media spend, was an attractive revenue stream. The flag bearers of the agencies were always the creative departments, rendering quality work for clients while the media specialists – who brought in a large chunk of revenue – were tasked with developing TV-dominant plans and buying to maximise agency profits.
Rise of Media
Eventually, growing inflation and economic pressures required brands to cut costs and look closely at where their money was going. At this point, newly established independent buying services began to appear attractive – given the fact that they were investing in media specialists and offered better negotiation and buying power compared to traditional agencies. This left the traditional agencies with their original proposition of creativity – for which they were best known – to make money. Traditional agencies still owned the creative space until this point.
Creative Boutiques and Freelancers
Soon after, creative boutiques started to set up shop, offering exclusively creative services while outsourcing their media to the newly formed media houses. It was a race for creativity, but traditional agencies still had the upper hand, offering integrated marketing solutions from production through to execution – but at a higher cost. Traditional agencies seemed to stick to their initial creative offer, confident that simple brand building and marketing communication practices were here to stay. However, it was not too long before marketers began to realise that creative output came at a much lower cost from the boutique agencies, and began diversifying their selection of agencies. To make matters worse for traditional agencies, emerging freelancing practices showed marketers the creative potential of lone wolves and examples of their work were often quoted in meetings involving cost negotiations with traditional agencies.
Sceptical about digital in the beginning, traditional agencies carried on operating within the creative sphere until the industry evolved into a digital-first environment, where for the first time, advertising creativity was intertwined with digital technology and increasing chunks of a brand’s marketing mix were devoted to digital platforms. Agencies offering digital-exclusive services were at the forefront, and to ensure effectiveness, offered creative services adaptable to multiple media platforms – not just digital. Traditional agencies scrambled to adapt to the change and even global holding companies consolidated their digital and traditional agencies to form new agencies to maintain their ‘integrated’ offering. Despite this, the divide in digital and traditional agencies still exists as the latter continues to excel in traditional ATL services while those looking for dedicated digital services find greater benefit with digital agencies.
The crunch on traditional agencies has put pressure on the production houses, which have historically collaborated with ad agencies to produce TVCs. Under pressure from clients, ad agencies are in the habit of pressuring production companies to reduce costs while expecting consistent quality. When quality declined clients believed the agencies to be at fault. Some agencies tried in-house productions, but clients started approaching the production houses directly. In turn, several production houses began equipping themselves with creative capabilities in addition to top-notch production capabilities for TVCs and DVCs – providing marketers with campaign ideas and concepts effortlessly. This direct association between brands and production houses speeds up the video development process while cutting out the middle-man, leaving the traditional agencies scrambling yet again.
Everyone Offers Integrated Services
What was once regarded as the core offering of traditional agencies has now been taken over by various players. Marketers are always on the lookout for high-quality but cost-effective creative solutions, and given the fact that this is now accessible from a variety of platforms, they have diversified their agency pool: digital media from digital agencies, media planning and buying from media houses, ideas and concepts from production houses, traditional ad agencies and even media specialist companies. However, this diversification reduces efficiency, acting as a huge disconnect in an age where creating holistic brand experiences matters so much.
Getting Back in Action
The inclination of brands towards digital channels is not temporary – it is here to stay. Unless traditional agencies – already on the verge of irrelevance – do not build their capacity to offer excellence in various manifestations of creativity, they risk extinction. They will have to revolutionise their offerings to spearhead their business, and cannot risk losing creativity as their core offering in the way they lost their media buying function decades ago. Since everyone is offering creative services in one way or the other, the competition has increased as well. It won’t be long before brands move back towards one-window solutions to ensure that all their creative manifestations follow consistent and well-connected experiences. Equipped with the right and relevant tools, traditional agencies can regain their long lost glory and become the one-stop shop for all things creative they used to be.
Muhammad Ali Khan is Associate Director Creative & Strategy at Spectrum VMLY&R. He also teaches in the Media Sciences department at SZABIST-Karachi.
Published in Dawn, January 9th, 2022