For small to mid-size ad agencies, it’s time to address the cost of creating advertising in terms of time and money.
All our clients want to know is this – Can your agency solve my problems quickly and at less cost?
Advertising agencies aren’t changing of their own accord, they are being changed. We’ve seen digital technology bring about fundamental change to the news industry, then the music industry. Now seismic change is being forced upon the advertising industry.
Ad industry downsized. There are nearly 120,822 advertising and marketing services companies in the US. We have an over supplied market and receding demand. This is an industry that has already laid off over 160,000 people because of the bloat, the wrong kinds of people and too much inefficiency. Not to mention that we are in the worst economic periods since the great depression and it is far from over.
The same problems that led to he agricultural revolution and the industrial revolution are now plaguing the ad industry in this digital revolution.
John Winsor is currently the CEO of Victors & Spoils, the world’s first creative (ad) agency built on crowd sourcing principles and former VP/Executive Director of Strategy and Innovation at Crispin, Porter + Bogusky. John addressed the future of advertising agency compensation head on in a recent article written for his blog, John Winsor: Views from the CEO of Victors & Spoils about the future of marketing and product design.
Personally having discussions with dozens of CMOs of Fortune 500 companies John addresses their greatest frustration, the cost of creating advertising – both time and money.
“Businesses act based on the way they are compensated. And, the majority of agencies are compensated by selling their people’s time. Compensation is based on the number of FTE’s or full-time employees working on a piece of business. In the age of collaboration the FTE model is broken. The fact is that many agencies make more money when they put more people, or say they do, onto a piece of business. Likewise, it’s more profitable to take more time to do something. If a project should take a month there’s no disincentive for most agencies to drag it out longer.
If advertising industry is to thrive in the age of collaboration we must address the root of the problem, the way we are compensated for our work. If we don’t many companies won’t survive the current economic transformation that’s underway.”
John encourages agencies to come together to fix the problem and proactively transform our industry before it is changed without us.
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