Production companies vs ad agencies
It’s a pity there are still so many border disputes within our industry at a time of such change and challenge to its very business models and existence, writes Bob Wootton. Plus: the men-children running Silicon Valley and adland's generational change...
The silly season is upon us. A few of things to ponder as you tuck into your crevettes and rosé on La Croisette, or wherever you might be vacationing, then.
Producers vs agencies
The spat between the independent commercial production companies and ad agencies grumbles on.
In essence, the prodcos are concerned that agencies are pitching their own production arms against independent production companies.
As both pitcher and umpire, this gives agencies the visibility to ensure that they win on price (and perhaps plagiarise any tasty IP that pitching independents might venture too).
It certainly doesn’t sound fair, but then much in business isn’t these days.
But what can be done? You can’t mandate advertising agencies not to have the ability to produce advertising materials themselves.
Our industry’s worthies could doubtless lock horns and spin wheels for months on some ‘best practice’ - which could even go as far as to stipulate that interested parties should not oversee beauty parades.
But this would pass the agency’s job back either to a reluctant client or yet another consultant or third party.
And that’s assuming things are anywhere like transparent enough, probably very foolish.
There’s a long tradition of many of the best directors cutting their teeth on commercials. They’ll seek to remain independent so they can balance their commercial and other activities, like movies.
Meanwhile, enlightened advertisers know when it is worthwhile, or even imperative, to engage such talent.
Imagine if directors were formally aligned to agency groups (and not merely used to working with some more than others as is often the case)!
So there’s clearly a role for the independent production company. As with many fields of endeavour, the question is whether it’s still a commercially viable one.
The temperature of debate is increased by a parallel ongoing investigation into the practice in the US, by the department of Justice, no less, though this seems to be coming from the clients’ and transparency perspectives first.
It’s a pity that there are still so many border disputes within our industry at a time of such change and challenge to its very business models and existence.
Lord of the Flies
A few weeks ago, Facebook was fined £500k by the Information Commissioner’s Office - the maximum fine it can impose - for failing to protect people’s data and not being transparent about how it was used by others. To wit, Cambridge Analytica, a story first surfaced by The Observer.
The company makes some £2m profit every hour and doubtless dismissed this fifteen minutes’ profit as a minor cost of doing business.
Zuck also got away lightly at his recent hearing before the US Senate Judiciary, Commerce and Energy Committees in April as the craven politicians on the podium were preoccupied with getting airtime despite their being utterly befuddled by the subject in hand.
Last week Facebook’s share price showed the biggest single-day fall in US stock market history, conveniently blaming a slowing of user growth and usership since Europe’s inception of its General Data Protection Regulation, or GDPR.
Twitter’s stock also plunged by a quarter in a fortnight. Meanwhile, Apple beat analysts’ expectations of sales and profits and surged ahead to become the first trillion-dollar company. ($1tn = one million million, or $1012).
Prompted by these moves, The Sunday Times business section carried an excellent feature which called out a few truths.
“Silicon Valley was made by children...
“Ad funded social media companies, hamstrung by their own immaturity, an expected avalanche of regulation and changing macroeconomic winds, are in for a much rougher ride than they have had in their short lives.
“A lot of these companies have not grown up and grown out of their more adolescent behaviour patterns.
And, perhaps most damningly, “For years people have blithely handed the keys to their personal lives to the likes of Facebook, Google and Twitter – companies crafted by young men who, when tested, have time and again shown themselves to be man-children incapable or unwilling to handle the responsibility their creations require."
The ad industry is waist deep in this mire because it funds pretty much the whole shooting match.
We’ve never had a great reputation, but as more people realise that we are behind all of this with our ‘clever’ targeting, that reputation will decline further. Just when we need friends most.
And Mars has clearly had enough of jam tomorrow...
Last October, five media agency leaders departed their posts within a week. Campaign’s Gideon Spanier recently followed up about generation change in (media) agencies.
Now Campaign reports another flurry of leaders leaving, albeit from creative agencies this time.
This resurfaced the misgivings I’ve been harbouring. The successors, a couple of whom have already moved on yet again, were new blood but they had also been trained, reared and mentored by the departing old guard.
TV trading is a microcosm but a case in point. Most people close to it admit that there are only a couple of handfuls of people who can do it at the top level and most of them are handcuffed, making them costly to dislodge.
Woe betide the HR implications, but given all the talk of “seismic change” and “inflection points”, should we not have jumped a generation? Or would that put the industry in the hands of the ‘fearless’ (for which read foolhardy or blinkered) millennial cohort?
In times like these, it’s a good idea to consider what advertiser customers might want (and then having called for it, whether they will actually buy it, of course).
...which takes us neatly to
Three interesting launches: Martin Sorrel’s S4 Capital’s first major statement in the form of its acquisition of Amsterdam-based Media Monks (who’d bet against him?); Wake The Bear; and Solo Union.
Each promises its own digression from incumbent business models which are showing such signs of stress. Once again, it will be the clients who decide which fly or die - if indeed they even give much of a hoot...
Happy holidays, all.
Bob Wootton is the principal of Deconstruction