By Ashoke Agarrwal
Time was when advertising agencies were both right-brained and left-brained. One would walk through an agency office and encounter both the joie de vivre of the creative impulse and the commercial nous of the media buyer.
And then, about two decades ago, agencies got lobotomised.
Now we have creative agencies who primarily work on a retainer and media agencies who earn their keep the old-fashioned way – through media commissions.
The reason behind this split was chiefly commercial. As competitive pressures in the consumer marketing world increased, the business model of fifteen per cent agency commission on ad spending that sustained the ancient glamorous advertising world collapsed. As a result, agency honchos needed to invent a new business model, and in their wisdom, they chose lobotomy.
They created sweatshops called media agencies that could sustain themselves on ever-falling media commissions. At the same time, they hoped that the creative-only agencies they fashioned would retain the mystique and the fat profits.
Two decades down the road, another upheaval is on the horizon.
The increasing dominance of digital and performance advertising is shifting the advertising landscape.
The 24×7 A-B testing world of digital and performance advertising blurs the lines between creative and media. The lightning-fast feedback loop calls for an agile, creative response. That is why most large media agencies have digital advertising divisions armed with creative people. Furthermore, many consumer marketers also need brand management to be part of the agile response loop. They, therefore, are opting to house the digital advertising wing in-house.
The dynamics of mass media advertising are also changing. In the heydays of mass media, advertising campaigns used to be seasonal. In India, we used to have two advertising seasons – summer and winter. So every year, ad agencies would roll out a campaign at the beginning of a season and sit back and collect commissions. A key factor driving the longevity of advertising campaigns was sky-high production budgets for television commercials. Shooting a TV commercial involved prima donna directors with inflated egos and budgets.
Today, advertising on what remains of mass media, is fast adapting to the fast-paced rhythms of digital advertising, with tactical considerations driving frequent shifts in mass-media advertising. Another factor driving the creative challenge is that brands are more proactive in launching new products, packaging and price variants. In addition, the emergence of CGI and changes in videography and post-production technology have crashed video production costs, further encouraging a more dynamic creative scenario in digital and mass media.
Changes afoot in media research are likely to bring the tight performance feedback loop that digital currently offers to mass media. As of now, the measurement of mass media exists only in silos. However, fully-integrated platforms will likely emerge over the next few years. These platforms will integrate the measurement of all kinds of media – TV, press, connected TV, social media, digital, e-commerce, OOH, radio and cinema – and brand lift – awareness, consideration and purchase.
Once the performance feedback loop of all media is tight, it will become natural for clients to seek an equally agile response loop necessitating a re-integration of the media and creative functions. The full-service agency would have come full circle.
Over the medium term, we will also see the emergence of a new kind of full-service agency. Over the next decade, AI will result in a paradigm shift in marketing communication.
I have written about this coming shift in two recent MxMIndia columns:
:: The Way Forward, dated Dec 22, 2022
:: AI, B2I, CI and Advertising, dated Nov 24, 2022
The full-service advertising agency of the coming decades will house, besides creative and media, a cutting-edge AI technology function. And this new-age full-service advertising agency will bring advertising back full circle where it will, once again, sit at the client’s high table of marketing and business strategists.