Advertising: a massive industry in an unprecedented crisis
Since the first billboard went up in Times Square in 1882, Advertising has evolved into an industry worth over $560 billion worldwide, and forecasted to keep growing at a rate of 5% year-on-year.
And yet, the whole industry is going through a period of unprecedented crisis by which the main traditional players, advertising agencies, are losing touch with the reality of the high-speed shifting dynamics of the world we live in today.
It’s a perfect storm: Emerging technologies and channels appearing every year. New powerful players like Google, Facebook and Amazon reshaping the rules.
A New Generation of consumers
More importantly, the new generation of consumers demand more, tolerate less and hold more power than ever before.
As glamorous as they once seemed to be, Ad agencies are now getting pushed out of the game by the big tech players, small lean specialists, evolving consultancies with direct lines to the senior management of companies, and ironically, by the clients themselves building up their in-house capabilities.
78% of ANA marketers have created an in-house agency offering. In fact, 26% of Top100 worldwide brands said they did not work with any agency at all. And of those that remain, only 8% claim to be “very satisfied with their agency partners”.
What has led the industry here?
Even with fancy new titles and shiny tools, agencies are still running clients in the 21st century with processes from the 1960’s: the structures, schedules, departments, revenue models and working processes have stayed very much the same.
In the UK alone, 72% of interviewed CMO’s of top brands thought that ‘agency structures, processes and pace of delivery’ are not developing at the same rate as a brand’s needs.
As a consequence, agencies have been promising to clients that the “magic project triangle” that holds the three key benefits any client wants: time, money and quality, was just that… magic. And that the client can only choose a maximum of two benefits.
In other words… forcing clients to choose between good work that is either expensive or slow, cheap work that takes ages or is mediocre, or fast work that is ugly or pricey.
What is the outcome of the current situation?
Unhappy talent: people are migrating to pastures new at a rate of 30% every year, with the “new blood” of college graduates feeling less interested to join than ever before.
Unhappy clients: let down by the agencies that were once supposed to be their secret weapon and partner in crime.
Mediocre work: adverts have been labelled as a “tax that the poor and the technologically illiterate pay” if they cannot afford Netflix, Spotify Premium or Amazon Prime, and don’t know how to install ad blockers into their devices.
The world is on the brink of change, and it’s for good
Clients and companies want more. They don’t want to choose between getting good work done, fast and delivered at a fair price. And even if there isn’t a solution that can bring it all together, there are enough options out there to show clients that a better way is possible.
The talent, on the other hand, has also decided to break with the old structures. In the US since the year 2000, the amount of freelancers has grown by 500% . There are now 53 million freelancers comprising 34% of the national workforce, predicted to rise to 43% by 2020. They are currently obtaining a staggering $715 billion in earnings.
The EU saw a 45% increase in the national freelancer workforce year-on-year whilst 78% of the UK population think that contract work has a good work/life balance with a positive effect on family life10.
Just like the available technology, the list of new tools accessible from any device to allow independent workers to find “gigs” and manage their time efficiently is vast.
The current options don’t cut it
Clients currently get creative work done:
- By agencies and the new players like tech companies, consultancies and specialists.
- Directly from freelancers.
- By creating their own in-house teams.
More often than not, they use a combination of all three.
These three options are a departure from the standard client/agency structure, yet none of them ensure that all options on the quality/time/money triangle are met.
The solution needs to combine the best of both worlds: as flexible, diverse and cost efficient as hiring freelancers, and as comprehensive, long-term and robust as an agency.
A new structure and process is needed, by which freelancers can come together, as a micro-agency, combining the right talent that answers the specific client needs, with the chemistry that they have developed in the past as a team
A process that allows talent to keep the quality, whilst creating a more stable offering that clients can trust and benefit from.
The solution for the new world
In the advertising industry, there is enough talent available to improve upon the dwindling output quality.
There are enough tools and technologies for making this talent faster.
This efficiency brings cost savings.
So what is the element that needs changing?
The process that brings it all together.
In other words, the way by which talent and clients collaborate to achieve great creative work.