:: adgruntie :: Advertising by the numbers

+ Aussie advertising agencies need self-promotion. Or so states this article. But there are a lot of points brought up that make me wonder if perhaps all advertising agencies might need to consider the same things.

Many agency executives say their industry is in crisis. And it is a crisis that has been created by new rivals such as management and marketing consultants, a constant squeeze on revenue and profits, and the dwindling importance of traditional advertising in most companies' marketing plans.

"The big difference between the business of advertising and the advertising business is that the former is dynamic, changing and has evolved in recent years, while the latter hasn't," said Paul Gardner, chairman of ad agency Grey Worldwide.

"What the ad industry needs to do is get back an identity and reassert itself in a changing dynamic without trying to hold on to what has been lost."

At the same time, direct mail, online and mobile-phone marketing, public relations and other marketing has continued to grow, reducing ad agencies' revenue.

"Remuneration has changed dramatically since the old commission days," said Lionel Hunt, chairman and executive creative director of Lowe Hunt. "That has put agencies under enormous pressure.

"At the same time, clients have diversified their marketing budgets. They are not so obsessed with traditional media advertising."

Many agencies have responded to the less advertising-centric environment by moving into new areas.

John Singleton's STW Communications Group, which spans more than 60 marketing-services firms, generates 31 per cent of its net profit from non-advertising work, up from 24 per cent in December 2001. STW chief executive Russell Tate said that proportion would continue to rise.

But for many agencies, leaping into direct mail or public relations has been a financial disaster. Worse, it has failed to stop marketers from ignoring ad agencies' "one-stop shopping" business models and hiring specialist companies to handle specialised marketing tasks.

Large agencies face other problems: clients continue to turn to consultants for strategic marketing advice and rivals such as production companies and, in some cases, media companies are stealing work.

A larger question is why aren't these "one-stop shopping" models working? Is it pay rates? Is it resources? Is it a lack of "getting it"? At one time, this idea was huge. Now it seems that everyone is all over the place, with media, planning, etc all going to consultants and niched shops. And even on the creative level, it seems there's been a surgence of clients going to "hot shops" for projects rather than having their agency of record handle the project. What does it all mean? Are the agencies missing something besides profits?

And, I suppose, another question would be "would self-promotion make an iota of difference to this issue"? Unless ad agencies start talking numbers, I can't see their self-promotion doing them any good. Besides, don't most agencies use case-studies when pitching for an account? Isn't that the same sort of thing?

In a sort of related article, James Strong, chairman of Woolworths and Insurance Australia Group, feels that CEOs have let their role as chief brand manager slide. Because of lack of involvement in their coroproate marketing and advertising strategies, they are missing out on opportunities.

Australian companies "lacked flair" and had become "too rational" with their advertising campaigns and broader marketing communications, Strong told the Herald.

"Chief executives are not really involved in advertising the way they used to be," he says. "Everyone is pushed to believe it's more about the big strategic moves and advertising is almost an adjunct.

"Communications is one of the most important and creative things you do - I've always found it interesting and fundamental to what a business is doing to be involved in advertising."

Strong's comments come as debate rages globally about the extent to which marketing has lost power within organisations because of the complexities in measuring return on investment. The difficulties arise from isolating the influence of advertising on revenue and profitability from other activities such as pricing, product quality and distribution.

Strong says chief executives are "being told" to sideline advertising, though he is not convinced they believe it should be.

"You're supposed to get all the fundamental things right, which is true - but what a wonderful opportunity to talk about who you are and how you are doing, and to reflect some flair in your advertising," he says. "[Advertising] has become more analytical and literal these days. It really says something about them [chief executives] and who they are."

Which is funny because a good half or so of advertising isn't quite so analyitcal. Creating concepts for campaigns, design, even creative briefs shouldn't be so scientific that they follow some specific format. It's like asking for a chart of how to create an ad, so you can go through and make sure you've ticked each item off the list. Certain aspects of advertising are not linear, and to expect that it would be is just proof that someone isn't "getting it".

Of course, there's always talk about what people are doing or aren't doing in advertising. And if the clients are to blame, the agencies, or whoever. Will we ever get it perfect? Doubtful. But we can keep trying.