Existential Threats To Agencies (& Why They Need To Focus On The Advertising)

Existential Threats To Agencies (& Why They Need To Focus On The Advertising)

In the first of a four-part series aimed at threats and opportunities for agencies, regular B&T columnist, Robert Strothfeldt from Strothfeldt Consulting (pictured below), argues that, too often, advertising agencies want to provide every service bar advertising…

After 30 plus years in and around the advertising business it is not surprising to have seen some radical changes. “Disruption” is the term used to describe the impact of technology – wiping out some industries and creating others.


The advertising industry is not immune to disruption and it has resulted in four existential threats to agencies (both creative and media). Advertising will always go on, but will the “service” be provided by agencies, or will it be dissected and absorbed by other service businesses?

The four threats are:

  • Identity
  • Credibility
  • Competition
  • Remuneration Structure.

Though addressed separately, they are interlinked.

1 Identity: There is debate about when the first advertising agency started. Some say William Taylor in 1786, others RF White and Son 1800 (both in London) – both placed ads created by clients in newspapers. In 1869 Francis Ayer opened the first full service agency in Philadelphia. Up until Ayer started, the industry was made up of advertising agents. They bought newspaper space for as little as possible and sold it to clients for as much as possible. (Sound familiar?). Francis Ayer added copy writing and graphic design to the media buying. Up until then media agents (media) and graphic designers (creative) were separate businesses.

And nearly 150 years later, we are back to the future with media and creative now two separate businesses. (Same holding company is about as close as they get). For the best part of 200 years, advertising agencies have planned and bought media and created and produced ads. Obviously these processes have become more far more sophisticated. And disciplines such as direct marketing, sales promotions, PR, etc. were added to the mix so advertising broadened and communications was coined to cover all above and below the line disciplines (market research is in there too).

In the past few years in particular, there has been an identity crisis in advertising. It seems we want to provide every service but advertising. There is no doubting the world has changed and mainstream media in no longer the only game in town. But it is still the number one medium to reach large numbers of consumers and hence a mandatory element of the advertising mix of any B2C mass market business. (It takes the biggest chunk of the budget, but receives the least attention.)

No business or industry can stand still as the environment around them rapidly changes. So it is only logical that with the advances in technology and fragmenting media landscape, both creative and media agencies must adapt and add new services. But there should be two considerations:

  • Are the new areas/service relevant to our core business?
  • Do we have the people, information and equipment to offer these services? (Not just offer, but to do so properly)

Innovation labs are a fairly recent “must have”. Some agencies have become totally besotted by technology, seeing it as the answer rather than a tool. There is no doubting that having a car’s panels “pulse” in tune with the driver’s heart beat is a very clever piece of technology. But is this what a client looks for in an agency? I know it was a joint client/agency initiative, but you wouldn’t see PwC involved in such projects. The advertising industry in Australia is not Silicon Valley, which is where one would expect this to be developed. And what did it prove? That driving a Lexus makes your heart beat faster – why? Because of the performance. Not only does it take several deductive steps to reach this conclusion, it does nothing to change the perception of Lexus – great car, but boring and driven by old farts. And most people would think the panels are pulsating faster because the old fart at the wheel is having a heart attack. Adding to the ludicrousness, Lexus stated:

  • A one-time collaboration (Maybe the technology can be used in other areas, but advertising/communications is not likely to be one of them)
  • Won’t go on sale (Emergency vehicles wouldn’t be pleased with the competition)
  • Demonstrates the connection between driver and car. (At a time when there are enormous resources being put into breaking this connection with driverless cars)

Businesses invest heavily in R&D. Agencies have neither the skills nor the money to be a second client R&D department. If agency innovation increases the effectiveness of their core business (through performance, cost or even a new area not previously considered) then it passes the relevance test. Otherwise it is money that could be better spent servicing clients. (The old adage still hold true – creative/ideas wins clients and service, or lack of it, loses clients.)

Just recently a major industry publication ran a feature on attribution. A “high level discussion of top industry professionals” and 10 key lessons to come out of these discussions. The same question can be asked – what the hell is an ad agency doing dicking around with this?

Anyone in advertising or marketing would have heard some variant of the quote: “Half the money I spend on advertising is wasted, the trouble is I don’t know which half.” It was made by John Wannamaker (1838 – 1922). I am not sure what year he said this, but as he fell off the perch way back in 1922, it has been around for a long, long time.

The term attribution is new. But the maths is not. It is a form of multi-variate analysis such as factor analysis, driver analysis – there are a number of techniques that could be used. Having started my career as a mathematician (BSc Pure and Statistical Maths), I know how incredibly complex this is because the number of variables involved in human behaviour are immense. (Some would say too many to consider). It is not something that a one-size-fits-all algorithm can solve. In fact, a PDF for each scenario is required i.e. No two scenarios are the same and hence a PDF, or equation, would have to be derived, then be programmed to produce an algorithm for each and every case. As the most of you would rather stick pins in your eyes than read me bang on about high level maths, let’s just say that a person who works in data and IT has no more chance of correctly doing attribution modelling than a paramedic has of being turned into a transplant surgeon with a bit of on the job training.

At least attribution has a high degree of relevance. The question is one of competency – do creative and/or media agencies have the required training, skills and equipment?

If unqualified people play around with attribution the odds of f …ing  it up are high. And since clients have been screwing our fees down for the past 30 years, you may just be giving some clown in the procurement department a reason to cut the ad budget even further.

The same reason agencies should not be involved in the nuts and bolts of attribution, apply to big data. Even more so as businesses such as advisory, the Big 4 (who started as Chartered Accountants), have far greater access to client data due to the nature of services such as Audit and Taxation.

Carat is an example of a media agency focusing on their core business. Their mission statement is: “Redefining the value of media through our command of convergence.”

From the late 90s, when the internet moved into the public realm, it was recognised that convergence was the future of media. None of this “digital media” versus “non-digital” or “traditional/legacy” media crap –consumers move seamlessly between the two.

Media (and creative) agencies have had to keep pace with the rapidly changing media landscape, but ultimately they are still media specialists. Compare this with some of the other major media players who are talking about diversifying their services into areas such as big data and content – it still astounds me how the latter, such an incredibly broad term, has grown into a specialist industry. (And no, Carat are not paying me to give them a plug.)

Splitting media and creative made sense when first mooted, but the result is the most basic of all equations in our business doesn’t really apply anymore:

Advertising = Media + Message

There has been a shift to try and bring creative and media back closer together, but even so they essentially still remain as two separate businesses in a world where integration is a pre-requisite to survival.

Instead of both working together in manner where the end result is greater than the sum of the parts, each is looking to find their own place in a digital world.

Both media and creative agencies should focus on what has always been the role of advertising – persuasion. Persuasion at each of the many touch points with consumers.

A big change today is that agencies need to offer an integrated persuasion service (As opposed to being above or below the line specialists). And this is much more than a series of mutually exclusive silos. Again it is another sum of the parts solution – all working together. The desired ultimate outcome is still the same – long-term profitable sales. Hence, how does persuasion help best achieve this result? (In its role as the fourth of the 4Ps, which still apply.)

When businesses think of persuasion, they should be thinking of advertising agencies. Not only for the messages, but also for the most impactful and cost effective way to distribute these messages to their target markets.

Next time – Credibility.

Please login with linkedin to comment

Designworks inskin media Jack Matthews YouTube

Latest News

Archibald Williams Wins NBA Digital, Activation & Fan Engagement Accounts For APAC
  • Media

Archibald Williams Wins NBA Digital, Activation & Fan Engagement Accounts For APAC

Independent brand and digital agency, Archibald Williams (AW) has been appointed to lead the NBA account across the APAC region. The NBA is one of the most prestigious sporting leagues in the world and basketball is one of the fastest-growing sports in Australia. Effective immediately, AW said it was “excited” to work across all digital, […]

QMS Champions Creativity As First Most Contagious APAC 2023 Sponsor
  • Advertising

QMS Champions Creativity As First Most Contagious APAC 2023 Sponsor

Leading digital outdoor company QMS has announced it is the first-ever inaugural partner for Most Contagious APAC, the landmark London event by creative and strategic intelligence company Contagious, which will be showcased in Australia on Tuesday, 12 December in Sydney and Wednesday, 13 December in Melbourne. Most Contagious is an event that delivers key advertising […]

OMG’s Annalect First To Get Meta’s Advanced Analytics
  • Technology

OMG’s Annalect First To Get Meta’s Advanced Analytics

Omnicom’s data and analytics division Annalect has partnered with Meta, giving it access to Advanced Analytics (AA) – one of Meta’s privacy-focused measurement solutions – to provide Omnicom’s clients with future-proof, next-level measurement. Omnicom is the first holding company to have access to AA. AA allows advertisers to combine their first-party data with Meta’s ads […]

AKQA Launches Eco-Conscious AI DIY Assistant Encouraging People To Gift More Sustainably
  • Technology

AKQA Launches Eco-Conscious AI DIY Assistant Encouraging People To Gift More Sustainably

WPP’s AKQA has launched Fixmas.gift, an environmentally conscious AI-powered DIY assistant, affectionately known as Fixie, for a one-stop solution for all things repair. Fixmas.gift hosts an array of guides and inspiration to empower people to prolong the lives of their belongings or purchase pre-owned items that need a little love and care. Fixie can: Help […]

Marc Collister: AI & Automation Set To Revolutionise Creativity In 2024
  • Opinion

Marc Collister: AI & Automation Set To Revolutionise Creativity In 2024

Marc Collister (pictured) of P2 Content Creators spills the beans on his 2024 predictions drawing from two decades of experience in the advertising, film and television industry. I’m certain it will come as no surprise that in 2024, we can expect our industry to move at breakneck speed again. With even more rapid shifts in […]


by B&T Magazine

B&T Magazine
Zeno Group Australia Bolsters Client Offerings With An Expanded Creative Services Portfolio & New Senior Leader
  • Marketing

Zeno Group Australia Bolsters Client Offerings With An Expanded Creative Services Portfolio & New Senior Leader

Zeno Australia has announced expanded creative design capabilities and the appointment of Jim Michell (lead image) to its senior leadership team. The new moves support strong growth in the region. Zeno Australia’s clients, including Abano Healthcare, Motorola and Yorkshire Tea, can now tap into a suite of creative design services to augment the agency’s work […]

Assembled Media Inks TikTok Creator Campaign for BIC
  • Campaigns

Assembled Media Inks TikTok Creator Campaign for BIC

Assembled Media, is drawing upon the creative power of TikTok Creator Marketplace to help generate unique, impactful content for iconic stationery brand, BIC. The social activation campaign titled ‘A Pen for Every Side of You’ promotes the flexibility of BIC’s 4 Colours pen and is active nationwide on the BIC Stationery TikTok account. The campaign […]

Big data and analytics visualization technology with scientist analyzing information structure on screen with machine learning to extract predictions for business, finance, internet of things
  • Media

IAB Launches Fourth Module In Its Marketing Measurement Innovation Series

IAB Australia has launched ‘Evolution in Market Mix Modelling’, the fourth module in its Marketing Measurement Innovation Series, which has been developed by IAB Australia’s Ad Effectiveness Council. The module explores what is driving the increased use of MMM and how the technique is evolving with advances in computing power and machine learning to provide […]

Aerial view of a coal fired power station with large cooling towers emitting co2 into the atmosphere. With its lights already turned on the power station is illuminated in moody twilight.
  • Media

Scope3 Expands Carbon Measurement Capabilities To Include DOOH Advertising

Scope3, the collaborative sustainability platform leading the decarbonisation of media and advertising,  announced the addition of digital out-of-home (DOOH) to its emissions measurement. With DOOH ad spending predicted to grow from $17B in 2023 to nearly $24B by 2028, measuring this channel brings us one step closer to understanding the total impact of digital advertising […]

January 14, 2023 - New York, New York, USA: 2023 NRF Big Show press conference with Composition 2024 NRF Singapore.    Photo by Ian Wagreich / © Ian Wagreich Photography
  • Marketing

Now Open For Registration – NRF 2024: Retail’s Big Show Asia Pacific

NRF 2024: Retail’s Big Show Asia Pacific, is now open for online registrations for the main conference. Jointly organized by the National Retail Federation and Comexposium, Retail’s Big Show Asia Pacific will take place from 11 – 13 June, 2024 at the Sands Expo and Convention Centre in Singapore and is expected to draw thousands […]