Monday, December 29

Advertising Pain: Agency Outlook For 2009


As goes mainstream media, ad agencies might follow.

For a little over a year, mainstream media and marketing has continued to tumble. In fact, according to AdAge, Wal-Mart Stores and McDonald's Corp. were the only two of Advertising Age/Bloomberg AdMarket 50 stocks to see gains.

The rest of the 48 marketer, media and agency stocks were all down in 2008, with most dropping double digits in value. Not surprisingly, McClatchy Co. fared the worst of all, down 91 percent.

As for ad agencies, they are struggling too. In October of 2008, AdAge reports agency employment fell to 182,400, a loss of 6,200 jobs from the business-cycle staffing peak. Combined market capitalization of the Big Four agency firms — Omnicom, WPP, Interpublic Group of Cos., Publicis Groupe — in December 2008 was $23.4 billion, not dramatically above the June 2007 market cap of WPP alone ($18.3 billion).

While some of it can easily be traced to the recession, not all of it is a byproduct of tough economic times. Advertising agencies and marketers seem to be struggling because fewer and fewer advertisements are capable of cutting through the clutter. Perhaps it's no coincidence that Wal-Mart won after capturing understated consumer sentiments with its "Save Money. Live Better." campaign.

Ad Agencies Will Have To Listen In 2009

While some pinpoint the problem to the advertising industry's relatively slow embrace of social media as suggested by a promotional video for Age of Conversation 2, another part of the equation is simpler still.

Remember the Matrix? In 1999, the Matrix took audiences by storm and won four Oscars, including Best Visual Effects. Four years later, audiences hadn't had enough, but were already saying that The Matrix Reloaded was a little too much of the same. By the time Revolutions hit theaters, the franchise had long jumped the shark.

The advertising industry has done exactly that. In the early 1990s, many agencies moved away from messaging to focus on Photoshop, Flash, and special effects. The new tools easily caught consumer attention. But by the end of the 1990s, it wasn't really enough.

So some agencies pushed harder with guerrilla marketing to generate buzz. But nowadays, buzz is not enough. Consumers want to relate, which is why a simple Wal-Mart ad can boost sales in a down season and give the company 17.3 percent year-to-date gain for 2008.

Listening to consumers isn't about social media. It's about relating to the audience, regardless of the media. It always has been. And only those agencies that remember that will see any hint of success in 2009.

4 comments:

Jack Payne on 12/29/08, 2:59 PM said...

Was surprised to see the McClatchy nose dive. 91% is pretty extreme.

I am also surprised to witness the ad agencies slow embrace (if any) of social networking tools. Everybody and their cousin is now using these. Why not the ad agencies?

All in all they deserve big losses. Whatever happened to simple jingle marketing? Doesn't this work any more? I must be old fashioned. I'm still waiting for the next, "C-a-l-l for Phillip M-o-r-r-i-s" ad.

Bonnie Parrish-Kell on 12/29/08, 8:11 PM said...

It's easy for many ad folks to get caught up in the latest whiz-bang tools (from Photoshop to social media) and forget the basics of marketing, advertising, etc. - focusing on the needs and motivations of the consumer and developing messages that bring products and consumers together.

Traditional ad agencies as well as marketing and PR firms don't want to give up "control" of the message - losing control is what scares them the most so it's no wonder why they are resistant at the very least to take on social media and engage in online conversations.

I agree with you, Jack. I'd love to see jingle marketing make a return. In today's attention-deficit society, that could be one of the most effective ways to have top-of-mind results. :)

web on 12/30/08, 4:14 AM said...

Advertising is the art of arresting the human intelligence just long enough to get money from it. We have many sources to get people know about our business and products. Per my experience i would prefer media advertising as effective source for it.

Rich on 12/30/08, 8:19 AM said...

@Jack

McClatchy is going the way of the Tribune, I'm sorry to say. As for agencies, there are in denial much like their slow embrace of Web sites in the late 1980s.

They are still looking at reach as a primary consideration in placing media buys, but don't consider that reach has become a little less important. (Networks have at least acknowledged it by considering how engaged fans are in a show). Besides, the reach they look at is unaccountable.

For example, people like to look at circulation to determine magazine buys, but very few consider how many people will see that one page where the advertisement is placed.

As for creative ... it used to be that most CDs were copywriters. Nowadays, most CDs are designers. Moving into social media requires less design and more writing. It also requires giving up a little presentation for purpose, which is something the majority of ad folks aren't interested in, even if it works.

Sure, jingles still work, depending on the client. But I have to admit that I haven't written one in some time.

@Bonnie

The simple truth is that the best advertising has always from from strategic thinking. Most people, including my ad people, just don't know it.

Tools are tools, and almost anyone can learn how to make them look slick and do tricks that dazzle. But in the end, messages without purpose lack.

The funny thing about the giving up control of the message discussion is that nobody ever had control. The best we can do is manage communication, meaning our own. :)

@Web

Advertising has "become" the art of arresting the human intelligence just long enough to get money from it. It's not supposed to be that. It's supposed to be about changing human behavior, even if that behavior is buying Comment over Ajax.

All my best,
Rich

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