Move over Don Draper – Ad Agencies Must evolve to survive…and prosper again

The Challenge

Just as the fascination with all things Mad Men is at its height, advertising agencies themselves are undergoing a period of great change.

The show, which follows a New York ad agency as it struggles to adapt to the television age and survive in rapidly-changing 1960s society, has many parallels with what ad agencies are going through now in our fast-moving digital age. This is a challenging and disconcerting time for ad agencies and their survival depends on their ability to embrace new media and adapt to a consumer-driven market.

In this fragile economy, many companies no longer have the budgets to throw at big-name ‘multinationals’. A business model based on creating a witty concept and buying media space to disseminate it no longer ensures that the message is heard. Consumers are so overwhelmed by an abundance of information on myriad platforms that agencies must purposefully engage with their target market, whether it be through their cell phones, iPads, or traditional print media. The traditional ad agency thrived on its ability to produce ideas; but ideas are no longer enough. Edward Boches, of marketing blog Creativity Unbound, sums up the challenge perfectly: “we can no longer buy attention”.

Evolve in order to survive

Hybrid agencies – combining strategy, advertising, media, digital, social, PR, and analytics elements – are popping up all over the place. Many established ad agencies are also doing their best to transform their business models as quickly as they can into something similar. However, though the concept of the hybrid agency is attractive, not many typical ad agencies can implement it – you need to re-engineer the whole business, hire new people, and engage with your clients in a whole new way, all of which becomes a difficult and costly process.

Many ad agencies also lack a real understanding of social media – and the low-cost, low-overhead, analytics-driven viral approach that it entails. This is where hybrid agencies, that is, a traditional ideas agency with the ability to effectively utilize social media, enjoy a distinct advantage.

“We created a new model for how ad agencies can access and utilize new business development insights, realizing that a gap exists in the availability of actionable information” said Cheryl Burgess, Managing Partner, Blue Focus Marketing. This realization led to creating and packaging a suite of three ad agency new business reports in a convenient, downloadable digital format. Written for new business directors and agency executives, these new business reports provide an arsenal of insights, tools and actionable advice.

Edward Boches also predicts that “Applications, utility and platforms will trump messages as an agency’s most important creative output” – an understanding of technology, and the capability to implement it, is key. This means that traditional agencies already need to constantly turn to outside help, meaning that integration is lacking.

The entire ad agency model was built on a high margin, high-overhead, thought leadership model. Though clients still appreciate creativity as much as always, they also need to be able to be confident of a return on their investment through the use of metrics and measurements as consumers play an ever more important role and commentators and critics. Ad agencies’ survival will depend on their ability to use their creativity to embrace new media – social, interactive, consumer-driven – to hit an ever more quickly moving target.

Alex Romanovich

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2 thoughts on “Move over Don Draper – Ad Agencies Must evolve to survive…and prosper again

  1. Very good perspective. But the multilicity of players is NOT matching with the number of clients in the Market place to create a viable business model. This bubble in interesting to watch!

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