Small to midsize ad agencies should take note of how the big agencies have reconfigured themselves to take advantage of the changing advertising landscape and make some changes of their own.
If you thought the big advertising agencies like Omnicom, the WPP Group, Interpublic (IPG), and Publicis are going the way of the dinosaur, you would be sadly mistaken. The demise of the big agencies has been widely perceived but is far from reality.
Big agencies have felt the wrath of the great recession just like agencies of all sizes. Like us all, they have also watched the disappearance of 15% media commissions and dramatic shifts in marketing budgets to digital and the rabid rise in popularity of social media. They didn’t bury their heads in the sand or rest on their laurels, big agencies have been busy preparing and plotting throughout the recession, not just to remain as a necessity but to gain even more market share.
In a recent Bloomberg Business Week article, “Don Draper’s Revenge”, staff writer, Felix Gillette, shares the advantages larger agencies are having over their smaller counterparts. This should be a wakeup call to all of the small to midsize advertising agencies and creative shops.
“The big guys with their lumbering overseers at the holding companies are not only dumb, they are also as good as dead. It all sounds great, at least to the Technorati. The only problem is, it’s not remotely true.” Felix Gillette
Here are some of the highlights from Felix’s article:
- In October, the Big Four advertising agency holding companies—Omnicom, the WPP Group, Interpublic (IPG), and Publicis reported their quarterly earnings. Across the board, revenues were up.
- Looking at decade-long period trends, there is little evidence of the big agencies decline.
- All of the Big Four are hiring, prompting columnist Jim Edwards to write a recent post on BNET with the headline: “Help Wanted: Madison Avenue Is Hiring Like Crazy and Bonuses Are on the Rise.”
- During 2009, the Big Four combined brought in $16.71 billion in revenue in the U.S., according to Advertising Age, more than double the $8 billion spent on digital display advertising in U.S. in the same year, across all companies.
- The global holding companies continue to tinker with the mix of services in their portfolios and aren’t shy about using their resources to acquire little artist colonies to plug holes in their offerings.
- In addition to stockpiling talent such as search engine optimizers, social media strategists, and Web developers, the big 4 are adding creative digital talent. “We’re adding guys that come from some of these small background places. They come here to paint on a bigger canvas,” says David Lubars, chairman and chief creative officer of Omnicom’s (OMC) BBDO North America.
- All of the big agencies are working on multiple fronts to integrate their technology teams more deeply into every aspect of the creative process.
Felix writes, “In the darkest moments of 2009, with ad budgets withering away amid the global recession, the age-old despair of the creatives was at fever pitch and the din of the futurists at a near-deafening roar. But as the global ad market continues to thaw, the descendants of Madison Avenue not only are alive but are looking as well positioned as anybody to capitalize on the digital market moving forward.”
Read Felix Gillette’s article “Don Draper’s Revenge”