Several Advertising Photographers sent me this article in Fast Company on the future of advertising (here). The story opens with a scene from a digital boot camp for agency veterans (average age 38) where hard-core immersion in the chaos digital technology has wrought takes place. I’m a little surprised by this and by the age of the participants, because I figured, if anyone had a grip on the opportunities of this groundswell it was the chameleons of the advertising world. But, the article goes on to tell us how the practice of advertising has “sat virtually unchanged for the last half-century” and that it appears to be next in line (news then music) to be destroyed by digital technology.

What’s got all these agencies in a tailspin?

“their clients’ ultimate fantasy — the ability to customize a specific message to a specific person at a specific moment — is within their grasp”

“while there have never been more ways to reach consumers, it’s never been harder to connect with consumers”

“sites such as Engadget and Yelp can make or break a product”

“With clients in a tailspin, the very role of agencies is in question”

“Producing an ad doesn’t have to be an expensive multiperson affair these days, given that commercial-quality high-definition video can now be shot on cameras that cost less than $2,000”

So, the agencies have begun to splinter into smaller specialist agencies (Kraft has assembled a growing Rolodex of 70 new specialist partners), most notable was Alex Bogusky leaving CPB this year. With digital many agencies wrongly assumed they were simply dealing with another medium, but were in fact facing a creative revolution.

Like news and music, much of what’s wrong with the agencies can be traced to the bloat from the fat and happy days of the 80’s and 90’s. Many firms rely on a 15% commission from the clients media spend and to drive that spend up the 30-second spot still anchors the creative. Clay Shirky doles out some tough love for agencies with his insight that “complex societies collapse because, when some stress comes, those societies have become too inflexible to respond.” Societies like the Romans and the lowland Mayans fell because further reductions became too uncomfortable for those in power. “Collapse is simply the last remaining method of simplification,” writes Shirky. “When the ecosystem stops rewarding complexity,” he writes, “it is the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future.”

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28 Comments

  1. What all this is telling us is everybody wants everything done for less. This idea will only work if everything can be reduced in cost by 60%. Cost of Living, homes, lifestyles, utilities, cameras, food, beer…everything. Too much capitalism going on right now, so life is unbalanced. Until we figure that out, things will continue to collapse. Some people will make shit-ton of money while others just survive and some will hurt.

    • @bob scott, I disagree this is an amazing time to embrace your knowledge and think outside the box and create a business that will bring more money in for being something that no one can find anywhere else. Reach out to high school kids who know what is current!!

      • @Suzanne Sease, I am embracing Suz. Everyone working for me is young and hungry. I learn from them and they learn from me… I’m reacting to the article. And stop using the “outside the box”.. that is old too. woof!

        • @bob scott, actually I know a lot of young photographers that are not giving their work away but demanding great fees- several of my clients are having their best year yet. Casey Templeton who was featured on here with the promo we did has tripled last years income. I have found the older photographers who don’t embrace the new world are the ones who are hungry and giving it away only one day to sleep in a box! because they aren’t thinking outside it!

    • @Bruce DeBoer, I agree with you on Boches. I’ve been following his Twitter stream and blog for a while now. He’s out there on the game field exploring new ways to make it all work.

  2. This is an important article. We all know that the ground has been shifting, but many think that it will all return to normal once the economy rebounds.

    Not this time.

    Anyone that says they know where media and marketing is going is wrong. The experts are the ones that admit they don’t know.

    Does that make me an expert?

    • @Mark Harmel, My approach to this has been to read the panic, dial it back, and pay attention to human nature. The basics of advertising don’t change all that much but the digital – as the article shows – has atomized the media delivery. It really is exciting if you let go of old creative culture; easier said than done of course. The fact that agency leaders don’t know about Twitter is oxymoronic, don’t you think?

      • @Bruce DeBoer, This is a whole new world of advertising and embrace it and you can ride the wave.

  3. Good post. Chameleons as we are, the fact is now we are living in a different world. Agencies like Saatchi & Saatchi and McCann Ericson are practically dinosaurs. They don’t own the media anymore, the people do. Sojournposse creative director is an adwoman. Two years ago she re-trained again in video production with a bunch of 18-19 year-olds in London. The kids don’t use DVD anymore, only drives. When you tell them a new subject, instead of finding books they ask if they search it on Google or YouTube. They are absolutely comfortable having multiple screens up on the Macs and pick up technology so fast. However, one thing remains unchanged – the need for opinion leadership. Even though they can express themselves freely online, they still want to look up to a role model. Ad agencies, or whatever they call themselves these days, have to adapt to this new way of communicating but still be ahead of the flock to set the creative standard high.

      • @Suzanne Sease, sure hit us up on email or twitter @sojourposseF8

  4. The fast company articile was an eye opener. Either we embrace it and try to make it work and flourish in the new economy or find something else to do.
    It is a new world-don’t look back-

  5. Saying tools will diminish agencies is like Home Depot diminishing plumbers. Obviously there will be smaller and more nimble companies that find niches, but I think that is more of the inter-personal nature of creative work, rather than a change in technology. Just because you own or know the tools does not mean you will produce great work, because without great ideas the tools remain lifeless.

    On a financial viewpoint, reduced commissions and pay levels is a first step of deflation (or dis-inflation). This is an unfortunate reality of the slow growth of the current (global) economy. Obviously many people will bow out rather than accept lower pay levels, but I still think those who are left will be able to pick up where things were, and not be forced into permanent lower pay situations.

    I don’t see the big agencies disappearing either. When there is a ton of money on the line, big clients will go for track record over avante garde. While I have sold my shares of InterPublic Group at a hefty profit, I don’t see them, Omnicom, nor Publicis doing worse moving forward. The big agencies will continue to attract most of the big clients, and pull in most of the big revenues.

  6. Three things that will prevent digital from overtaking traditional advertising –

    1) “Skip This Ad”

    2) “Unsubscribe”

    3) “Do not notify me of third-party deals and specials”

  7. Great article…good discussions. That said, there always seems to be two camps. Apocalyptic and Opportunistic. Wonder which will survive? :)

    @ Bruce – I like the way you think. Rob and all the folks here always have some good perspective…that said, always search out multiple viewpoints. I think of the folks who only watch one news channel – I hear the same argument all the time on the same subjects…Never hurts to grow a little!

    @ Sojournposse – Very smart going to the young folks. The 18-30 crowd are driving the media these days. There are so many new avenues now that the amount of opportunity IS GROWING. Although the channels don’t always have long life spans, I’d predict that there will be 3-4 major channels that survive the 2010’s and become the new veins for opportunity. I am finishing up a video workshop project for my wife’s fitness business and at the end of our discussions on channels we wanted to get it out on we are producing 4 types of media for purchase DVD, BluRay, Online Viewing and Downloadable Video for portables. Change and progress = opportunities to grow!

    Cheers,
    Rick

  8. My husband, Jeb Tilly, works for Crispin Porter and I thought he’d have an opinion on the above:

    “At least from where I sit, it appears the client drives the TV buy, not the agency. We push a lot of digital work that they wont fund because they’re so hung up on TV. And rightly so — at a retail business like XXXXX sales spike exponentially when a good spot runs. And drop off exponentially when they’re off-air.

    Seems to me there’s a bit of a misunderstanding somewhere in this about what “advertising” is. Advertising is fundamentally about generating ideas, not about media channels or commissions. So while the agency model may be in peril (debatable) just like the music distribution or news models, the value of music, news and creativity is un assailable in my opinion.

    The question then is just how do we make money. And that’s different to me from “death of advertising” hyperbole. ”

    (I think he’s one smart mo-fo.)

  9. Some things never seem to change (the homogeneity in this business).
    Bob Scott started out on a good foot, but apparently got side tracked.

    The problems we face today are not restricted to this industry. There has been a race to the bottom for some time in this country. Real wages have been flat for decades. The American Middle Class has been under attack for the same time frame. The economy is fractured – no longer whole. Te disparity in wealth in this country is at record heights. There are at least two economies in this countries. The wealthy economy at the top, and the rest. What the lower end does (consumption) helps drive the upper end economy. But that is less true from the top down to the middle and lower. Little is “trickling down” from the top.

    Our consumer economy prospers on consumption. People with less income generally consume less. Low demand = less jobs. Offshore production = less jobs. Corporations produce goods offshore using out sourced labor, then mark up production with huge profits. Less money circulates locally due to outsourced jobs = less consumption.

    Less US jobs create high supply for those positions = more competition, lower fees. With a high supply of creative artists and a quickly changing playing field (culture & technology) is there a (long term – career) Return on Investment?

    What is the mindscape today? People are distracted by more media and consumer choices than ever before. Many people consciously try to limit this onslaught of media. The supply of media and distractions are greater than ever. Is demand up. The laws of supply and demand will affect price. Lower prices (high supply & competition) will affect Return on Investment.

    Of course the hopefuls and those selling their goods and services will point out the few that have been successful. Or specific individually successful projects. But this does not provide a clear picture or understanding of the industry. Does it portray a successful career over decades?

    Before digital technology became common many creative artist in various industries had a much larger middle class of professionals. Like everything else in our economy, the top has gotten smaller the bottom larger and the middle has been routed . The advertising industry is feeling the same now.

    The big question is risk. There is a term in business: “Opportunity Cost”.
    Do these industries represent a good “Return on Investment “with regard to “opportunity cost”?

    • @Bob, Right, rising above the chatter, and not simply adding to it, that’s great advertising.

  10. The thing that I found most interesting was the move towards a crowd sourcing (fancy name for freelancing) model – see Victors & Spoils, who just got the Harley account. As creatives, we are the masters of the freelance world, it’s where we have always been – independent photographers, studio groups (ie Westside in Toronto), production houses, etc. I think there’s going to be some very interesting business models that take advantage of this in the next few years. As Ashley pointed out above, the real question is how do we make money with the new ideas being generated by our clients?

    • @Nick Burchell, “crowd sourcing (fancy name for freelancing) model” – That’s a new twist.

      I’ve always thought of “crowd sourcing” is a fancy name for:

      – royalty free
      – free
      – creating on ‘spec’: again -less than- free
      – work for hire
      – losing resources (time & money).
      – low balling
      – lowering the market

      I suspect the ad agency may feel the same.
      What is to stop clients from outsourcing work out of the country, at rates too low for westerners to compete?

  11. OK – I’m being very specific to Victor & Spoils here. And yes, it’s a crowd sourcing / freelance model. And yes, they are going out of country (I don’t have an issue with that – photographers have been moving across borders since the beginning of our industry – don’t be such a protectionist). But I don’t agree with your feeling that it is necessarily a “lowering of the market”. Depends who does it and how they operate. Have you seen who’s running Victor & Spoils? I don’t think these guys are going to be creating crap. The point is, Observe, Learn, Adapt.

    The world and the ad industry is changing, but life is always changing, it just is/seems faster now. We have to adapt and figure how to make what we do as creators appeal to what the agencies and clients need as buyers, simple as that. If that means we need to start becoming production houses, offering stills, video, interactive design, social media capabilities etc, so be it. It’s the ad industry, it’s always been a game and we have to decide if we want to play.

    • @Nick Burchell,

      Nick , You don’t seem to be looking at the large picture.
      By going out of country – I mean going to places like China where they will shoot a job for a fraction of what it costs to produce here. Product photography is already done that way. This is very much like other labor which has been outsourced to Chinese workers (slaves), for wages like $200./month, 15 hour days, six days a week, no overtime, no health regs, etc. Can you compete with $200./month salary?

      “The point is, Observe, Learn, Adapt.”
      No, the point is : return on investment?
      Read post 10.

      • @Bob, I am very much looking at the big picture. Agencies aren’t the only ones who can outsource, so can photographers – many already do, for retouching, design, programming etc.
        I really suck at explaining myself in writing, particularly on forums, and seeing as I don’t know who you are (no link, no full name), I think I’m going to go back to doing something useful, prepping for a portfolio show and estimate presentation tomorrow.
        Keep shooting.

        • @Nick Burchell,

          Nick, forget the messenger. Validate or counter the message.
          Reality exists, regardless of the identity of the poster. If the truth does not get posted, is it any less the truth?

          When the entire media product you produce can be sourced outside the country for a fraction of your estimate, why/when will a client or agency use your services?

          Is this a business or hobby?


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