Agencies in Transition

In July 1998, when the first edition of Aurora was launched,Pakistani ad agencies were in a state of flux. The traditionalfull-service agency was under stress. The ‘one client, oneagency’ rule had been broken, with clients opting to splittheir accounts according to their brands, thereby redefiningthe agency’s preeminent role as one of ‘brand custodianship’.

It was also a time when seeking affiliations with globalnetworks became the gateway to securing global accounts andaccessing global learnings. Today’s younger agency personnelwill find it difficult to imagine both the importance and impact ofglobal affiliations in a world where the internet did not exist andwhere the opportunities for global exposure were limited mainlyto attending regional and international advertising conferences,prospects only afforded to the lucky few. (In this context, theimpact of AdAsia 89 must be measured). This period portendedtowards the end of agency leadership, with multinationalclients taking the lead in shaping the direction of strategy forPakistan’s ad agencies. More significantly, globalisation sawthe entry of media buying houses and the disruption of the15% agency commission (the basis of every agency’s revenuemodel) as media placement migrated to newly establishedmedia agencies.

Then, the internet happened and technology upended allthe rules. It took some time for the full effects to take hold. Newmedia became the new buzzword and agencies struggledto set up digital divisions, only to see that function migrate tospecialised digital agencies. Catapulted into a client-driven era ofspecialisation, agencies sought to reinvent themselves, and thefull-service (360-degree) agency was declared dead. But thenspecialisation became too disruptive, with clients struggling tomanage multiple service partners, and the full-service agencywas revived under the somewhat unsatisfactory nomenclature of‘hybrid’ agencies.

In the face of the technological advancements drivingdigital media, ad agencies had to reconcile themselves torelinquishing their media placement capabilities as wellas their digital ambitions. They became what we now call‘creative agencies’ – a function that remains under constanterosion by media, digital and OOH agencies, and evenmore fundamentally by the tech agencies. The next majorinflection point for creative agencies will now take shape inthe AI domain.

Looked at from the vantage point of the last 27 years,agencies remain very much in transition – that is perhapsthe one constant reflected in Aurora’s coverage. Today, newagencies are emerging (for example, Alt Story and ViralEdge) based on new revenue models, project-based hiringand promising more agility, better ideas and better results.That the ‘traditional’ agencies continue to survive is a tributeto their tenacity and their ability to adopt and adapt, butthe question is, for how long? ‘Creator marketing’ – wherebrands pay social media celebrities to promote their brands– is paving the way for specialist ‘creator agencies’ to furtheramplify the reach of social media influencers. Such newdevelopments, along with the entry of AI into the equation,portend to another grand realignment of the marketingcommunications function. The fundamentals of brandbuilding will remain the same, but the skills and the servicesto deliver on this will require a radical overhaul of how the adagencies themselves function.

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