Advertising Agencies – Fragmentation is your nemesis.

I have been lucky to be on both sides of the business.  Actually three sides of the business is a better word. Spent quality time with creative and media agencies, Publications and broadcasters & Client side as well. Have enjoyed working with agencies of different hue and size and loved interaction with some rational some not so rational clients.

I would talk about clients who seek partnership with advertising agencies. Partnership which extends the relationship to that of a marketing arm, looking at all aspects of brand – including challenges at demand generation, perception building, image correction or improvement & create higher market share, external and internal communication etc. etc .

No denial that there is a real dearth of clients as explained above, but equally important question to ask – Are there agencies who have capability and competence to walk this path with such clients ?

In my opinion the full service advertising agency – which is what clients bargained for – has been fragmented by us folks – purely to satisfy individual aspirations and ambitions of agency folks.

Typical advertising agency would need Strategy,Planner,Creative,Art,Studio,Films,Media,PR,Events,Research etc and all important talent to manage each of these co-related business verticals. Factually how many agencies have each of these functions ? In my view of interacting with agencies in India and abroad, hardly any agency does all. If they do they are termed as boutique agencies and clients dis regard the scale and hence do not work with them (This is a very important for clients to understand that scale and creativity are at times inversely proportional).

My point is if agencies cease to offer all solution under single roof – we are calling for trouble and giving birth to a vicious cycle. Clients would go to multiple partners for a single solution and fragment the dollar further. As such agencies have learned to survive on a a remuneration which is hardly a motivation to hire quality talent. We are fishing in waters which offer a 1 % – to 5 % commission as against a healthy 15 % of a full service offering. We are creating designations and crazier portfolios for people just to keep them hooked on to the job. The fragmentation is not benefitting anybody – nor the clients , nor the agencies , and not the people working in these agencies.

Creative has confined it self to creative thinking and strategising, however studio function is more or less relegated or outsourced to vendors, Production is outsourced to production houses how double up as “deal makers” or “broker houses” who will broker a deal in the given cost. Media agencies have fragmented into – Mainline, OOH, digital, Retail, Rural, Retail , experiential and what not. Each one surviving on the already meagre margins but scurrying for top talent. No wonder we are not able to attract top talent and hence further going down in this downward spiral called fragmentation or as some creative genius would put it – Specialisation.

Call it old school thought, or simple business thinking – consolidation will give you scale, talent, cross business gains and clout to manage reputed brands. Fragmentation would probably give each one of a corner office – if that is what it has come to.