George Parker: Do You Have A Clue As To Exactly What Business You’re In?

There is no doubt, the advertising agency business is in a state of flux, some would argue it is in a state of decline, I would be inclined to say it is on a slippery slope towards oblivion. But then again, I’ve always been prone to exaggeration, hyperbole and bullshit in general. However, anyone with a modicum of good sense and the price of a couple of pints realizes the traditional advertising agency model, as exemplified by the majority of BDA’s, is toast.

Oh yes, they all vociferously proclaim their new media, social networking, word of mouth, crowd sourcing, viral thingy capabilities, and how they are destined to be the “Agency of the Future,” but deep down inside, they resist true change, because their business model cannot be sustained without the life blood of the same-old, same-old, massively expensive branding campaigns through traditional media platforms. Yes, they will bolt on Facebook, Twitter and YouTube tchotchkes to prove that they get it, but in reality, they don’t.

I was recently re-reading some of the writings of Theodore Leavitt, who, in case you’ve forgotten, was the Harvard professor who wrote extensively on economics with an emphasis on marketing. What he wrote about companies many years ago could easily be applied to ad agencies today… “No one needs a quarter inch drill; they need a quarter inch hole.” I particularly like that because it reminds me of one of my favorite Howard Gossage saying regarding the money wasted on ad campaigns… “You don’t need a ten thousand dollar hammer to drive a ten cent thumb tack!” You see, everything is so fucking logical if you take the time to sit down, pour yourself a drink, fire up a fag (British for cigarette) and think about it for the time it takes to read this column.

Over fifty years ago, Levitt pointed out in the Harvard Business Review that the railroad industry fell out of favor in the middle of the twentieth century, because it thought its primary function was to use its rails to move people and goods around the country and that it could always rely on a constant stream of customers. With the growth of the airline industry the combined factors of speed and value decimated their business. Unlike rail systems in the rest of the world, they failed to adapt. The rest is history.

And so to my point… Today’s BDA’s (Big Dumb Agencies) are like yesterday’s railroads. The new, smaller and independent shops are constantly developing new business models, whether it involves creating and selling their intellectual property, agreeing to pay-for-performance compensation, or even putting their own money into the development of their own products and services, which they then promote and market themselves. As far as I know, no major agency has deviated from the traditional remuneration model. Yes, they may agree to work for peanuts for the chance to pick up a major account. They will probably also sell their first born and prostitute their wives for the chance to pick up the $200 million Acme Widget account. But at the end of the day, they’ll do the same old shit they’ve always done to service the account… Then be slack jawed with amazement when after a year the client buggers off and hopefully, decides it’s time to try a different kind of agency. Well, I can dream, can’t I?

George Parker is a guest columnist for psfk.com. He is the perpetrator of adscam.typepad.com, which is without doubt, one of the most foul and annoying, piss & vinegar ad blogs on the planet. He is the author of MadScam and his new book, The Ubiquitous Persuaders, which is currently setting the ether ablaze (and which you can order now on Amazon). He will continue to relentlessly promote the crap out of it until you are forced to stab yourself in the eyes with knitting needles.