Just when you thought a challenging year for agencies had reached its peak, the plot took a dramatic twist as four of the industry’s highest profile CEOs abruptly handed in their resignations.
‘Shocktober’, as this month has been coined, has seen Starcom’s Pippa Glucklich, OMD’s Nikki Medonca, Dentsu-Aegis’ Tracy de Groose and Havas’ Paul Frampton form an exodus of Biblical proportions. But is it all leading to a Promised Land where wobbly agency models are overthrown and slick consultants, in-house teams and tech giants Google and Facebook come to rule the roost?
Recruiters have added to the hype with claims that their phones have been ringing with anxious agency talent looking for a ticket out of the networks. Talent is the crucial word here.
My own experience of working with agency people has been positive - smart, ambitious folk who (on the whole) care about what they do and are motivated by doing good work (an award recognising this is usually desirable).
If agencies are to remain hubs of talent and fend off lucrative job offers from circling consultancies and tech firms, they must do what it takes to retain bright staff and maintain their reputation as an attractive places for the sharpest minds in marketing to ply their trade.
Even before the Great CEO Exodus (as nobody is calling it), agencies were seeing a 30% annual turnover of staff. The Advertising Association, which launched its ‘Great Advert Campaign for Britain’ today, says Brexit will make it worse.
A third of people who have joined London’s advertising workforce in the last 12 months come from non-UK EU countries, it estimates. The reason why the AA says the UK is "the number one source of international advertising and marketing talent” is in no small part down to the reputation of agencies here.
As Zig Ziglar’s famous business quote says, “You don’t build a business – you build people – and then people build your business” (a line that could have been lifted straight from a management consultancy book).
In the wake of this loss of agency leadership, a sentence in WPP’s results earlier this year has an eerie sense of soothsaying: “Some (agency leaders) are storing problems for the next generation of management”.
In the same update, Sir Martin Sorrell warned that the advertising industry is “in danger of losing the plot” in a race to the bottom driven by competitors slashing margins in an attempt to win high-profile accounts at all costs.
Tales of huge accounts run by agencies on paper-thin margins are unlikely to inspire staff to deliver brilliant work and service. Leaders have a duty to do deals that are realistic and empower the people executing them to deliver. There is a bigger picture at stake.
“You might get agency-like service from Google if you are a high-spending client like Booking.com…But that’s not the reality for most.”
Service is one area that can set agencies apart from tech players. As one senior exec recently told me, “you might get agency-like service from Google if you are a high-spending client like Booking.com…But that’s not the reality for most.”
The vast majority of clients can continue to benefit from agencies’ economies of scale and talent.
As media changes, agencies will inevitably have to evolve their offer from traditional planning and buying and move into the realm of consultancy. But there’s an inherent risk of playing the likes of Accenture and Deloitte at their own game at a time when the agency model has taken a bruising (especially when you add the attractive salaries being offered into the mix).
Bringing to the fore talent, scale and actual experience of delivering for brands within an agency structure, it’s up to the agencies to define their offer and clearly articulate it to clients and the wider industry.
Agency confidence may have taken a beating this month but the successors to these four prominent CEOs have everything to play for - so long as they define their purpose, address the structural issues that have dogged the industry this year and turn the tide of talent loss.
Paul Frampton will chair day 1 of ad:tech London (29 November). Pippa Glucklich joins CEOs from OMD, Mindshare, Vizeum, Initiative and Havas Media Group in debating the future of agencies on 30 November.