We had a great company Christmas party last evening and it has been a very good year. I am grateful and very proud of the people that we have, everyone is carefully hand picked, not only every one of them is smart, creative and passionate for what they the do and strive for excellence. The Indian food and musicians were great too. I think we should play live music ourselves next year. Should start practicing now.
The big three autos may get a government bailout, their agencies will not. But serious headwinds and oxygen masks are down for many. This is a very gloomy Christmas for our friends who work on the advertising agencies side. We need to think of ways to support these people.
Omnicom is preparing for massive layoffs, talking about 3,500+ of its 70,000 workers getting pink slips and I believe it already started this week. BBDO (An Omnicom agency with Chrysler business) is expected to be hardest hit. BBDO Detroit already laid off 145 people last month. Their client Chrylser is even cutting the CMO’s job. Deborah Wahl Meyer, CMO and VP, will leave the company, effective immediately, and her position is permanently eliminated.
For JWT's, their once vibrant Chicago office is now a shadow of its past. A few years ago this is a booming office as the largest office in the largest global agency network - 800 people and well over $100 million in billings. Top clients including Kraft Foods and Miller Brewing. This place once rivaled Leo Burnett and DDB as one of Chicago’s shinning stars in advertising.
For WPP, consider 10% of all WPP’s revenues are from Ford, and although Ford is in better shape than the other two, that’s like saying that the Andrea Doria is in better shape than the Titanic. Ford’s cost structure is not much better than the other two but better management. The 10% probably translates into a 5% cut.
What about Havas? Havas' core agency RSCG is dealing with client defections at the agency's key London office. Euro RSCG accounts for 62% of the €1.5 billion ($2.16 billion) annual revenue of Havas. They will probably be merging many of their smaller offices. The plan is to improve coordination, as well as the quality of online ads. Internet spend is the only part of the ad world where spending is holding up best is how they see it.
This may be the perfect storm for big agencies to find ways to transform themselves. Big is a bad word these days. It is fine if the holding company is big because they provide capital efficiency and other benefits, but scale on the agency unit level is bad. It works against an entrepreneurial culture that is badly needed and the system and structure makes them slow to adapt to a fast changing world. These advertising awards culture is motivating agencies the wrong way. JWT/Wunderman is one of the largest and naturally the most challenging. Wonder if we can ever teach these elephants to dance? Or if they could just walk a little faster that would help. Plus most creative people are polluted by all these advertising awards. Need rehab.
The need for ‘newness”, “coolness” and ‘youthfulness” (more attitude than age) in agencies are important. These young (or young a heart) people who are coming up in the industry are so naturally cross-platform savvy ad all the digital culture is part of their everyday lives. You can’t train any 45 year old ad planner about this new culture. Even though they talk about it, they really don’t know what they are talking about. Talent is the no. 1 factor and barrier for ad agencies like the JWT of the world to transform themselves.
The future of the industry will consists of three types of player 1/ digital innovator 2/ advertising factory 3/ media procurement. I wrote a post on this last year which was a very popular one “Ad Agency's Disruptive Future? Can the Old Dogs Survive It? This is an exciting time for small-to mid-size agencies. Imagine what Leo Burnett and David Ogilvy would do if they are starting their agencies as young men today. Big is out.
