Monday, January 05, 2009

One Or More Agencies Will Go Under. But Which Ones?

Little surprise in the news that WPP is to axe thousands of staff, and we've already discussed our fears that many of us could lose our jobs.

But is it possible that entire Agencies could disappear?

In the Guardian today, Lucy Barrett writes that in 2009 "there is a real chance that we will see the collapse of some famous agencies."

I suppose if famous retailing names can disappear from the High Street, there is no reason to believe that well-known firms in our own industry are immune, and we should expect that one or more Agencies will go under.

But which ones?

I don't know the answer to that. The person who might is Lorna Tilbian of Numis Securities. She is the City's most respected media analyst, having covered the sector for 22 years.

Obviously for City investors, it is crucial to know which firms might go bust. Lower profits are painful, but they can bounce back. A dead body can't.

Alas I have lost the link - perhaps someone could point me in the right direction - but Ms Tilbian had a great piece of analysis on this, which as a Creative I found hugely thrilling.

She found that Agencies which declined or went bust were ones which had stopped winning awards.

Okay, at first sight, I know that sounds unbelievable.

But think about it.

Awards are an indicator of good work. Not the only one, and by no means a perfect one, but an indicator nonetheless.

And in advertising, as in every other industry, producing a quality product is the surest path to success.

Of course there are many other factors that can bring an Agency down - such as financial mismanagement - but poor product will eventually lead to business failure, just as it did for Woolworths, MFI, and the American auto industry.

Remember, it's not me, a Creative, making a self-serving argument here. It's Lorna Tilbian, the City's most respected media analyst, suggesting a set of data (awards results) that hard-headed number-crunchers should use to determine which companies to invest in.

So hold your heads up high, my brothers & sisters, and let's remember that it's us, the Creatives, who have the power to get our Agencies through this recession.

67 comments:

Anonymous said...

...so all these layoffs...shouldn't they be good news for the freelance crowd?

Anonymous said...

Hey freelance crowd! Good news! There are now three times as many of you as before, chasing nowhere near three times as much work!

Anonymous said...

Our agency have already said that this year they will be limiting award entries to just the two big ones of D&AD & Cannes.

There are now so many it's proving a waste of money when you add up the entry, tables, books, duplicate awards, certificates. And is not always a reflection of the very best work, if something that picks up at one of Eurobest, Creative Circle, The Big awards or LIA but not at D&AD, Cannes or One Show is it really a sign of great work? I know as a creative it looks good having any award for each year but if it's a Shark, really who cares?

I'm sure other agencies will follow a similar rule and maybe we'll also see the end of some pointless award companies as well ad agencies?

Jam said...

Bravo, Creatives! Let's hope your briefs are well written. And your clients are well managed. And your ideas are well produced. And your phones are answered properly. And your office is clean...

Anonymous said...

hmdg

Anca said...

Considering James' observation,
I think it's a little bit narrow to think that Creatives will save the agencies. I'd say creative minds will save the agencies, regardless of the label they wear. You can be a creative planner or strategist. Since Simon was talking about Faris not long ago, he's a very good example of creative mind and he's a strategist. I believe in agencies that don't use radical delineations when it comes to establishing responsibilities. I like CP+B's rule: everyone is responsible for everything that the agency produces.

Anonymous said...

i reckon
CST
hooper galton

Anonymous said...

Jam.

Let's hope.

Would make a nice change, eh?

Anonymous said...

I like Anca's new picture.

Anonymous said...

"Bravo, Creatives! Let's hope your briefs are well written. And your clients are well managed. . ."

If only.

And while we're at it, 'researcher' eh? The one truly stinking cesspit of useless crap I've encountered in the industry. I'd cut those salaries and costs off the payroll straight away.

Anonymous said...

could there soon be a lot more office space coming up in a certain corner of Canary Wharf, and this time it won't be a bank going under?

Anonymous said...

makes sense. awards are an indicator of creative vitality.

i reckon one or more of the WPP agencies are in greatest danger. Y&R, JWT, and Ogilvy are largely indistinguishable from one another here in the USA.

Anonymous said...

Ogilvy?


Ogilvy!

Anonymous said...

publicis?

isn't a recession just the corporate world's answer to natural selection.. the cream should rise to the top and the crap should go (i guess that applies to both companies and individuals?)

dan dan the pancake man said...

I've heard that Lowe wil be the first if they don't win their next pitch. and tbwa are up the creak

Anonymous said...

I think speculating on which companies will go bust is highly distasteful and not to be encouraged

but for my money i'll have £20 on Lowe, and £10 E/W Leo Burnett

Anonymous said...

12:40 wrote, "if it's a Shark, really who cares?"

see the cheap, plastic piece of shit they handed out year. i asked the organiser if i could exchange the award for a refund of the entry fee. they laughed, & thought i was joking. i wasn't.

Anonymous said...

Kind of blows your theory as they have done some alright work that's won some awards, but Lowe has been heading for the big ad graveyard for about 5 years now.

If your theory is correct though surly the bankers curse will rub off on their city boy neighbours over at Ogilvy who have long been 'sthitt' (which strangely is the word verification password Scamp is just asking me to put in...must be a sign?)

Anonymous said...

Bye bye St Luke's.

Anonymous said...

Ogilvy. Y&R. Publicis. Lowe. JWT. Leos.

All dinosaurs and we all know what happened to them.

Anca said...

In terms of awards, I don’t think it’s so much a Cannes-D&AD vs. BIG&co. war as it is an IPA vs. Cannes-D&AD-BIG-etc. one.

Anonymous said...

my agency and all the other shitty little pointless agencies like them

Anonymous said...

CDP
St Lukes
Leagas Delaney
TBWA
Mustoes
Red Brick Road

In that order, starting mid March.

You have been told.

Anonymous said...

dan the pancake man. is that the same tbwa that's just been named global agency of the year again? Can't see them letting their London office disappear

Michael Winner said...

calm down dear its only a recession

Dion Hughes said...

scamp, i hope you can uncover that piece of analysis. regarding the theory, though... while i wish it was about doing quality work, period, i suspect it's more complex than that. quality work costs money - often not the client's. i know of at least one large agency that did really well in the shows this year, partly by picking the work ahead of time and spending a small fortune polishing it for show entries (ie retouching etc). that takes some big, high-margin clients elsewhere on the roster.

EGO said...

I'm 26, actually i'm working at Y&R.
If you have other news about it, but positive, please tell me before I accept a work as electrodomestic doors to doors salesman. Thanks.

Anonymous said...

Evens:Lowe
5/4: St. Lukes
7/2:TBWA
4/1:Ogilvy
9/2:Hooper Galton
5/1:Publicis
7/1:Grey
9/1:Euro RSCG
300/1: Fallon

If This Is A Blog Then What's Christmas said...

I don't know much, but I'd be surprised if the networks would lose their London offices entirely. They're a big part of winning international pitches, so even a downscaled version would be preferable to complete closure. Then again, this all depends on the strength of each network; Lowe could go under, but others might be amalgamated into another strand of the holding company to kill (resuscitate) two birds with one stone. Could Saatchi's merge with Fallon or Publicis? Could DDB take on TBWA?

Gosh, how exciting...

Anonymous said...

@ 6pm

Thanks for that. Except CDP has been kaput for ages already, and TBWA, as a key outpost of TBWA name and therefore Omnicom (albeit a shit one right now),won't be allowed to fold.

Anonymous said...

Here's a thought:

Been freelancing for a while, ever since the IPG agency I was with went through revolving-door global management.

In early 08, my non-advertising 'friends' couldn't understand why ad agencies were always in bad shape.

What amazes me is, banks are supposed to be THE money experts. Yet even THEY are at risk.

Difference is, quite a few of them are getting a lifeline.

Reckon the governments would bail out ad agencies?

Jam said...

2:46: Aww, you're just jealous 'cos they let me have a go on TGI :)

If a 2009 industry bunfight makes the best re-examine their methods (albeit under coercion) while eliminating shops that were wasting their clients' money, it should be a good thing in the long run.

If, however, it sends agencies scrambling for pathetic, gimmicky New Business 'philosophies' to pimp, we might have problems.

Anonymous said...

If the theory that great or even just slightly good work will make a success of an agency how the hell have DLKW kept going and even winning new business?

Looks like they're singing and dancing all the way to the bank.

Anonymous said...

It's funny seeing some of the names banded about on here but does really prove the point.

Surely CDP went years ago, didn't they, and who's seen or heard of anything from the likes of Legas, Hooper Galton or Mustoes for years.

And the only reason we all know Ogilvy still exists is the fact they like to keep us all informed by gracing Turkey of the week.

My point is who will even notice if these places go?

Anonymous said...

"She found that Agencies which declined or went bust were ones which had stopped winning awards."

After telling my friend about your blog, I read her article and she didn't seem to make the connection between agencies closing down and winning awards.

My understanding is:

1. bad times = even famous agencies closing down.
2. bad times lead to people being retrenched.
3. tough times could see less good work being done.
4. D&AD will probably see fewer pencils.

Sorry, Scamp,I didn't see the link between agencies future being affected by awards.

Don't get me wrong, I am in favour of awards.

In fact, in Trottie's blog, I mentioned how disappointed I am that my exMDs, exCDs and exADs who have opened own shops haven't been producing anything outstanding.

Scamp said...

Okay, well let's talk concrete examples.

When did CDP begin its downward spiral? Was it during the period it was doing great work, or afterwards? I think we all know it was afterwards.

And what about the Agencies that have closed down or merged in recent years? Was Bates doing great work? Was DMB&B?

It's very simple. If your product is great, you won't go bust (exception: financial mismanagement).

Why in our industry we don't understand this connection, I don't know. Why so many people think that making shitty product is the 'safe' strategy, I don't know.

Anonymous said...

Scamp - Lowes totally disproves your point.

In fact, I've been trying to figure out for years why they keep shedding accounts....

Anonymous said...

Truth be told Ogilvy has had a strong year...
http://uk.youtube.com/watch?v=lBHzXAu3VFU
http://uk.youtube.com/watch?v=87nDEUscky8
While OgilvyOne has been top of the new business league for most of it.

Dave Trott said...

Scamp.
We've finally found something about awards we agree on.
Whether or not awards go to ads that sell product, they are great for agency morale.
They also raise agency profile which is great for getting on pitch radar.
Remember D&AD's original motto?
"Stimulation not congratulation"

Anonymous said...

I feel sorry for anybody, regardless of agency, who loses their job this year. It's going to be tough.

Anonymous said...

I think Lowe will merge with McCanns or be swallowed up by Lowe Worldwide. The real shame about Lowe is that its downfall has nothing to do with the economy, it's all down to a really, really bad management team. [censored] is a complete narcissist. [censored] has the people skills of Napalm. Oh and there's some accountant bloke. [more bits censored, goodness you're keeping me busy on this one] Let's resign all our accounts because we can't be bothered to fight for them. Hey, why not fight for them for the people who work their nuts off, and don't get a massive bonus like you do?! They probably will blame the economy though. [and a bit more censorship at the end, to round things off]

Anonymous said...

10.58

lowe will merge with mccann?

yeah, and bbh might merge with abbott mead.

Anonymous said...

10.58

Shame you were so censored mate - after all those years of wondering, it looked like I was going to find out the reason.

But no, not quite....

makes sense though - that is the most likely explanation. it certainly wasn't the work.

Anonymous said...

That new Virgin ad? You're having a laugh aren't you?

And honestly, regardless of whose winning awards, what work actually deserves it? Not much is my increasing jaded view. I don't know if creatives have forgotten how to write ads, account people forgotten how to sell them or clients just aren't buying but something is seriously amiss. And when was the last time BBH did anything good? It was a pretty long time ago I think.

Scamp said...

12.49 - you described yourself as jaded, and I think you're right. Maybe 2008 was not the bestest year ever, but in the last 3 or 4 years our industry has produced Gorilla, Balls, Noitulove, Skoda 'Cake'... and that's just in TV, and just off the top of my head.

And I've got to represent my homies here - BBH has surely done good work more recently than "a long time ago", as you put it.

But let's not make this about BBH.

It IS an interesting question as to whether great old ads seem better than great current ads. I think sometimes they do. Especially if they have resonance from one's own childhood, or first days in the industry.

Once you allow for that distortion of perspective, I think one concludes that the work is not in fact getting worse. Nor are policemen getting younger.

Anonymous said...

Who will get the Lowe cd role? Who would want it. And who should TBWA get in? Not Mr Morris I trust

Anonymous said...

I reckon campaign must have a good Lowe's story this week.

Anonymous said...

12.49

Jaded? I think you're almost gangrenous mate.

The Virgin ad, while not mould-breaking, granted, is bloody good. Really well observed, nicely written and beautifully cast and the use of 'Relax' is pretty inspired. Kicks BA right in the balls too.

Anonymous said...

Notice she said that the agencies that went into decline or went bust are the ones who had stopped winning awards. She didn't say that the agencies who survived were all ones winning awards.

When an agency is sinking, they don't have the extra money kicking around to make all the award entries. So of course most agencies on the cusp of going tits up will have a decline in the number of awards they are winning, even if they are still producing great work. Meanwhile, a lot of agencies are still producing crap work and striving.

(Just another way of looking at the data.)

Anonymous said...

5.38 most of your facts are wrong i'm afraid.

faris said...

lack of liquidity in short term credit market = companies without robust monthly cash flows that need to pay staff being unable = said companies going into administration = said companies either being bought be bigger competitors or being disolved = means less brands in said category = less clients = less agencies.

Anonymous said...

Hallo Scamp,

Bit insensitive of me to bring this up, perhaps, but I think it makes a point.

Trott's blog mentioned how he and Brignull (I think) once stood in front of 2 campaigns at an awards judging session.

Trott thought one campaign was excellent and the other crap.
Brignull agreed.

Only after 10 minutes did they know the campaign Trott liked, Brignull hated (and vice versa).

It's not that people don't agree great products (advertising) help keep companies afloat.

It's just that people don't always agree what a great product/ad is.

In my placement days, I flogged my book all across London.
What BBH loved, Saatchis hated.
What Saatchis loved, AMV hated.

That was a long time ago, but I don't think life and opinions have changed that much.

Thanks.

Anonymous said...

Scamp - you said:

Maybe 2008 was not the bestest year ever, but in the last 3 or 4 years our industry has produced Gorilla, Balls, Noitulove, Skoda 'Cake'... and that's just in TV, and just off the top of my head.

Ok there's 4 ads that were ok. Shall we start listing the other 300 that were rip offs, copies or downright rubbish?? And coincidentally, some of the copies and rip-offs won awards.

Anonymous said...

awards success is an indicator of other things...

1.the cash to enter awards. i can't see agencies forking out 180,000 quid each on awards entries this year. if they do, they're probably successful.

2.the cash to entertain campaign. which, as anyone who's been to lunch with them, leads to a pick of the week at least and a few few favorable write ups.

3. clients that aren't affected by the recession and therefore are still eager to produce award winning work over work that has a short term sales fix.

these are all factors and it's not just about winning awards scamp. look at it with your business head rather than just spouting like you'd expect a creative to.

Scamp said...

I agree that people don't always agree.

But your example only works because of the low numbers - 2 people, disagreeing on 1 ad.

What if an Agency (like CDP in its heyday) wins 100 awards in a year? Sure, any 2 people could debate any 1 of those awards. But once you get into these high numbers, you have to admit that the likelihood is they were doing quality work.

And once that 100 shrinks to 70 the next year, then 40 then 20 then none... it's far more sensible to conclude that their work is getting worse than to say "oh well, people disagree about what should win awards anyway."

Scamp said...

10.31 - I agree those are factors. However. Every agency in the Top 30 entertains Campaign. Every agency in the Top 30 pays to enter all the work they like into awards. And every Agency in the Top 30 has recession-affected Clients. Therefore, I don't see how the factors you list can explain the vast differential in awards success between the most successful and the least successful agencies.

rhayter said...

I reckon Lowe will vanish. But if the management were given 12 months to turn it round, the new ECD's job would be a great one. Re-mould the creative department any way you want, cutting out the dead wood and bringing in some hot new talent. It's got to be worth a go, hasn't it?

Anonymous said...

One thing I think we can all be pretty confident of is that there will be a "flight to quality" as is being predicted in many service sectors. Nervous clients will want to work with those agencies who have a track record of success. Expect AMV and BBH to flourish.

I doubt any big agency will disappear as they are largely owned by holding companies and, within their vast portfolios, they will either have regions or different businesses ( research, digital and direct) that will fair better in these more challenging times. These businesses will prop up the ailing ad agencies.

Lowe will not disappear. It might not be doing so well in London but it is thriving globally and still producing great work on unilever. IPG would be mad to merge it as the cultural conflict would lead to massive client fall out which they can ill afford

Rather than focussing on the "disappearing acts", I think the more interesting question is who are the people who are going to be launching interesting new agencies. Recessions offer the ideal environment for start ups - frustrated senior talent, cheap commercial property, cheap people and clients on the move looking to work with the very best people at the best price.

Exciting times for the good and the brave..........

rhayter said...

Anon 1146: Sorry, I specifically meant Lowe London.

Anonymous said...

At the end of the day, if you cut everyone else, you're left with the creatives. Great creative directors with management knowledge can handle one or two clients if everything was scaled back. Also, most creatives did their strategies before there were planners. So they're essentially the engine. Next in line of importance is accounts, following closely, as well as the financial folks who run everything.

As for awards - it's true. Beyond a portfolio, it is the only indicator we have of talent and quality. Otherwise, any blowhard can determine what is 'good and effective work.'

Anonymous said...

11.46. I think you're exactly right. Lowe will not vanish. London is currently reaping the rewards of bad and incompetent management and dreadful senior management hires, and New York is just recovering from its years of the same. But its South American offices have performed well - specifically building better and better relationships with Unilever (doing great work in the process) and in Madrid the office there is really strong. Even smaller outposts like Stockholm are really solid. London will recover - but it will be different from the office we currently know.

However - I do disagree on one point. I wouldn't rule out IPG merging it with something. They have a track record of doing exactly that. First at the end of the nineties they forced Lowe and Ammirati together. Bad move, diluted Lowes culture badly and generally failed. Did they learn? Of course not. A few years later, wondering why Lowe wasn't the creative powerhouse it was - they did it again in the States and slapped Lowe Lintas together with Bozell. Trouble was the creative management was far stronger at Bozell than it was at Lowe (Tony Granger anyone?) - so after the dust settled did the creative leaders from Bozell come to power in the newly merged entity? Er, no, course not.

Watch this space - I smell another merger - after all, we're in a recession and it certainly saves on the real estate.

Anonymous said...

Hallo Scamp,

This follows-up yor reply to my Trott/Brignull discussion post.
Sure people disagree.
But don't opinions change over time? And sometimes as a result of peer pressure.
Campaign's Private View sometimes slams new campaigns, giving reasons why the reviewer thinks it's a lot of rubbish.
Then the same piece of work goes on to win big at award shows.
Why's that?
Thanks.
- Robin

Scamp said...

Yes, opinions can change over time. Happens in every field. Van Gogh never sold a painting in his lifetime - everyone thought he was lame. Fight Club didn't do that well at the box office - nowadays everyone reveres it.

But these are exceptions. That's why they're so notable.

Most good ads are liked by most people. There's nothing wrong with aggregating opinions as a methodology - in fact it's highly accurate. Great example in Malcolm Gladwell's Blink Chapter One.

Anonymous said...

The exceptions are what superior talent and agencies is for.

The rest of the high medicority, as mentioned in blink, can be handled by the majority high level of medicority agencoes.

Anonymous said...

scamp-10:41 AM

in response, the problems start when your awards entry budgets are small, you can only enter half the amount of ads into half the amount of awards. therefore you could be creating tons of award winning work and not be winning awards for it.

some agencies that are successful financially and creatively aren't perceived as such as a result of a lack of awards. so where i agree that quality of product is essential, i don't agree that awards denote quality of product.

i can list more work that should have got an award than i can remember work that did.

Anonymous said...

ultimately awards only attract new clients, it doesn't mean your gonna keep them. If your work isnt effective they are gonna bugger off. Shop is a good example, they had good clients, it was well run, produced great award winning work but they still managed to go down the pan. So i don't believe awards are the be all and end all.

Anonymous said...

It's the integrated agencies that do well in times like this. Has anyone noticed a certain smugness in those "joint agency" meetings?

My money is on some of the start ups of the last few years folding into established agencies.