The end of the Mad Men?

Advertising agencies have always exuded glamour and excitement. From Don Draper in Mad Men to more modern agencies they’ve combined mystery and the power to change how people think, act and buy. Take Ridley Scott’s 1984-themed Apple Mac launch ad, Saatchi’s 1979 “Labour isn’t working” campaign, widely seen as helping the Conservative party to win the election, or going further back, the WW1 “Your Country Needs You” recruitment poster.

All of these iconic campaigns demonstrate what advertising can do, particularly when it is turbocharged by the reach of linear television. This has led to ad agencies rising in importance to essentially command the biggest budgets and greatest influence on how brands market themselves.

However, things are changing – fast. Three interconnected factors are upsetting the status quo and causing industry titans such as WPP to issue profit warnings in the face of slowing revenues.

1          We live in a digital world
We used to spend the majority of our leisure time watching a limited number of terrestrial TV channels and reading newspapers and magazines. All of that has changed with the rise of the internet, which now takes a much higher share of our time, and has introduced new gatekeepers such as Google and Facebook into the mix. The adverts that people run online are different – they can’t be as disruptive as during a scheduled TV ad break, or as big budget. While major ad campaigns still run, they are more seasonal, such as around Christmas – and are seen as marketing events, rather than run of the mill campaigns.

2          Consumers want a personalised approach
The internet has also encouraged and enabled us to demand a more personalised experience. We don’t want to be subjected to irrelevant adverts for things we aren’t interested in – and analysing our browsing habits and demographics should give advertisers the ability to segment their audiences and target them in a more individual way. The cost to our privacy is an ongoing debate – as is how capable platforms are of really delivering a personalised approach. All of these adverts tend to be smaller, more focused and therefore lower budget – in some cases even using AI to analyse response rates and automatically tweak copy so that it best reaches target audiences. So less Mad Men, more Metal Mickey.

3          Content is king
Consumers are more suspicious of advertising, and want greater transparency from the brands that they deal with. This is driving a much greater reliance on content across the buying cycle, helping build relationships, and overcome objections on the way. This requires a different set of skills to big budget TV advertising – in fact it is more akin to the copywriting side of public relations, with more information and less overt selling.

All of these factors are shaking up the marketing hierarchy and putting the role of the traditional ad agency under threat. At the top end, consultants such as Accenture are entering the sector, buying up agencies and focusing on providing strategic business advice as well as execution. Digital-first agencies are jockeying for position, and a greater share of budget, backed up by their ability to offer transparency, value and accountability. Brands are even taking key activities in-house, with many companies now employing digital marketing specialists, or even, as in the case of Pepsi, in-house advertising studios.

So does this mean the end of the ad agency, and in particular large international networks? Not necessarily – in a fragmented world clients value talking to one trusted advisor, rather than having to juggle a series of relationships with overlapping agencies. However, to prevent that trusted advisor being a strategy consultancy or digital upstart, agencies need to reinvent themselves quickly, learn new skills and become more of a high-level partner. One way is to move up the value chain. Back in the advertising heyday of the 1980s, Saatchi and Saatchi bought analyst house Gartner. The plan backfired, with the company sold less than two years later at a loss. But the idea clearly had strategic promise. Perhaps now is the time for ad agencies to think big again if they want to retain their power for the long term?

Digital – is Don Draper worried?

Image via Wikipedia

As every marketing textbook will tell you there are five main promotional tools when it comes to reaching your customer – advertising, public relations, direct marketing, personal selling and sales promotion and all have distinct advantages (and pitfalls).

In the real world, outside the textbooks, a hierarchy has developed, certainly when it comes to big brands and their campaigns. Advertising is king, taking the largest share of budgets, driving the ideas and generally providing Mad Men-style glamour. PR has always been the poor relation, while direct mail and sales promotion have been relegated to the bottom of the list, seen as mechanical methods of distributing content. Salespeople rarely see themselves as a promotional tool so have headed off on their own outside marketing’s control.

As in many industries, the advent of the web disrupted this cosy status quo, but the model pretty much survived. Web and email were put into the direct marketing category and ad agencies continued to receive fat cheques for their work.

But there are now real signs that the world is changing – it isn’t a command and control model anymore. We’re not watching TV (or TV ads) as much (as a recent Deloitte report pointed out most people now have hard drive recorders) and new digital channels, like social media, are much more about conversations and content, not just slick one-way ideas. Adland is worried about losing control – bringing in PR people for their content skills, investing in swish digital agencies and generally reinventing themselves through new services. The question is – can they change fast enough or will savvy PR agencies step up to the mark? Time will tell, but if the PR industry fails to skill up it risks missing out on a once in a lifetime opportunity to lead integrated marketing campaigns.

Related articles

• Will PR Agencies Suffer the Campaign Mindset? (worob.com)
• Seven Ways Agencies Must Evolve in 2011 (adage.com)
• Havas Worldwide Takes Majority Stake in Social Technology Startup: Socialistic (prnewswire.com)