It’s not been a good time for the giants. D’Arcy was wound up. Bates has disappeared into WPP Group, which has also bought Grey. Lowe has taken some mighty hits and, along with FCB, is not helped by the embattled state of Interpublic Group as it comes to terms with the unwelcome news of investigation by the Securities and Exchange Commission. The battle for control of Havas has not made life easier for Euro RSCG. The fraud case in the US has dented the reputation of Ogilvy.
More power is passing into the hands of the media agencies and in the US there is a perceptible shift of big budgets away from the agency staples of network television and magazines into branded content and programme sponsorship. In the big pie chart that is total marcoms, direct marketing and online relentlessly grow in share.
All the while, independent agencies are gaining share, a trend particularly noticeable in the UK. A look at the new business league table will show just how rapidly they are climbing into the top 30. Recently, a greater number of agencies are also being launched.
A survey of marketing directors and agency heads carried out last year by Agency Assessments showed that only four per cent of clients believe international agencies offer better all-round service than local operations. More alarmingly, only 25 per cent of agency chief executives and chairmen think so too. This is seriously worrying when half of them work for international agencies.
Is all this one-way traffic? Are the giants doomed?
I don’t think so, for three reasons. First, international clients need them for their global brands – for the networks, the experience and the quality of the world citizens that populate these agencies. Secondly, ambitious agency people broaden their horizons by working on the regional or global stage; the UK is a classy and sophisticated market, but it accounts for only a little over four per cent of world ad spend. Finally, they do some fantastic advertising. Agreed, not all of the award-winning campaigns, but a high proportion of them. International agencies also do well in effectiveness awards around the world.
So, given strong client demand, high-quality professionals and great output, why is there a problem? I put it down to a negative attitude – a lack of confidence, if you like. I have seen countless credential presentations over the years, but how often have I have heard a newly assembled management team talking about their agency (the London end of a global chain) as a “new agency”, when it’s been around for 50 years or more? Too often. Why is so much effort expended reinventing the wheel, when the aggregate experience of a network encompasses just about every conceivable challenge a client is likely to face?
The network agencies need to make efficiency and great service their main priorities, thus avoiding the poor reputation seen in our survey. International agencies are probably too polite about their local representatives. They should take every opportunity to talk up their resource and their strengths.
International agencies have developed some truly differentiating qualities. They have access to vital research and trend analysis. They can predict what is going to happen in one market based on their experience in another. They also have the financial resources to attract the best talent and the brands on which to let them loose.
Do we truly expect the Procter & Gambles, Unilevers, Nestlés and Microsofts of the world to be put to flight and shown a clean pair of heels by local manufacturers? No – and the agencies that work for them should take heed.
Global agencies need to make more of their ability to help clients manage across the world and across the budget – not least by working far more aggressively with their media sister-ships. They need to market the banded pack and put strategy, creative and media back together again. The pricing weapon is there to be used. Would clients be able to resist a substantial financial inducement to buy services through joined-at-the-hip creative and media agencies? Or by integrating the creative offer with sponsorship, direct marketing, promotions, content, internet and so on?
We are back to the old debate: ad agencies – investment or cost? If I were running a network or a big subsidiary within one, I would emphasise the cost benefit of entrusting substantial investment – and the management of that investment – to my agency. This has nothing to do with holding companies doing account management: they are there to manage the business.
International agencies have been bred to service client requirements – and to do it on a scale few non- network agencies can aspire to. v