George Parker: Is the Exxon Valdez of Advertising About to Hit the Rocks?
In the last week, the bad news about the current state of BDA’s (Big Dumb Agencies,) keeps getting worse. Publicis announced Q2 2009 earnings, saying that the recession, which started in 2007, was “unexpectedly steep,” and the company was facing “increasingly extreme” market corrections. Net income was down nearly 14%, and they are also in the bag to General Motors for $15 million. Over at Omnicom net income was down nearly 25% and they are talking about a further round of layoffs on top of the 3,500 people they’ve axed in the last few months. It’s the same dismal picture at Interpublic and WPP, with no end in sight.
While all this shit has been hitting the fan, I’ve been doing a series of posts on my blog, AdScam, about an upcoming number of layoffs at Ogilvy’s New York Office which are expected to happen in the next week or so. The posts have drawn over sixty comments so far, some of which are particular to Ogilvy’s current unfortunate condition, but many of which are about how truly fucked up agencies in general have become.
In my writing, I’ve made no secret of the fact that I believe we are at a watershed moment in the advertising business. Yes, the advent of “New Media” is a major contributing factor, and has definitely changed the way many clients are communicating with prospective customers. But learning to cope with new forms of communication and media is something agencies have overcome in the past, and in many cases actually benefited from. No, I believe that the true seismic change which has taken place in the business over the last thirty years is what I call its “Conglomeration.” Meaning that every major agency, with the single exception of Wieden+Kennedy, belongs to one of the four major holding groups, all of which are publicly traded, and are therefore primarily concerned about making their balance sheets and quarterly results look good to shareholders and the douchenozzles on Wall Street.
This is becoming increasingly difficult as clients realize that “New Media” now offers them less expensive ways to communicate with consumers, and they don’t have to pay big fees to their traditional agencies to achieve quantifiable results. Perhaps the most ominous cloud on the horizon for BDA’s is the news last week that the 8,000 pound gorilla of retail, Wal-Mart, is asking its suppliers to kick in as much as a third of their ad budgets to Wal-Mart’s own ad program. In the case of P&G, for example, this would be well over $1 billion dollars. Which in turn means P&G’s ad agencies would lose a third of their billings and fees. Multiply this by the enormous number of package goods companies who rely on Wal-Mart for a significant percentage of their sales and BDA’s are about to enter uncharted and painful territory.
George Parker is the perpetrator of adscam.typepad.com, without doubt, one of the most foul and annoying, piss & vinegar ad blogs on the planet. His new book, The Ubiquitous Persuaders, has just been published by Amazon and is currently setting the ether ablaze. He will continue to relentlessly promote the crap out of it until you are forced to stab yourself in the eyes with knitting needles.