Thought Leadership Company Culture

January 2018

Ad Agencies Must Die

Consultancies are doing what agencies took too long to do: adapt their model, practices and culture to the digital age.


by Kevin Xuof Beck & Stone

The traditional ad agency will go the way of the dinosaur, and consultancies will be the mile-wide asteroid that wipes them out. So apologies to every starry-eyed kid who wanted to be just like Don Draper. The ’60s (and the ’80s) are over.

The barrier to entry to create and to invent for the digital and physical world is lower now than it has ever been. This was a boon for agencies for quite a while and they could find new (and cheap) talent to throw bodies at accounts for more and more deliverables. But with the ease of use of creative tools and the ubiquity of resources (Google, really), the skill gap has been dramatically lowered. We’re at a point where companies start questioning the value of going to an agency for creative work. These traditional agencies face competition from brand managers and consultancies that are deeply embedded in their client’s operations and bring more to the table than just creative output. The party’s over now—and good riddance to it.

These consultants may know everything from a company’s KPIs, the customer perspective and audience segmentation, to the number of bathrooms their client has out of a franchise in Wichita, but it’s this attention to detail and data that allows for a results-first approach to making recommendations that bleeds into the creative output. They go beyond making creative stuff that the client can use to advertise. The consultancy is a model of true partnership in reality, not just in a pitchdeck.

The consultancy does what the agency failed to do: adapt their business model and business practices to the digital age. The traditional agency model, with all its sluggish practices and its poisonous culture, will now die; it must if these legendary firms from Advertising Past are to live-on.

Ad agencies aren't doing enough.

Advertising is one of the few industries which has adapted and in fact thrived by riding the wave of the internet age. A traditional ad agency’s purpose is to create brand awareness for their clients (and themselves), and it's easier than ever to disseminate creative output. However, the industry monetizes attention, something which is now in short supply. Agencies package and sell creative output, deliverables, and this human capital becomes client services. I would argue the crux of the agency model can be a major disservice to its clients. Despite what they say in the agency world, they value content over content strategy, and laud campaigns and deliverables over actual results. In contrast, brand managers who truly understand their clients are able to tell their clients whether a multimillion dollar ad campaign is even worth it. Oftentimes it's the client who will chase after press mentions, mindshare, and feel-good pop culture virality, and in turn are enabled by their agency. After all, it’s easy to praise a witty tagline, or an eye-catching campaign. It’s much more difficult to think strategically to have your creative deliver results. Media companies like The New York Times, Vice, and Time, Inc., have even bought agencies to shift towards in-house advertising and branded content production. I don’t think this trend is tenable for traditional ad agencies. I don’t the traditional client services relationship is enough for either agencies or their client and you can see seemingly daily, dissatisfied big name brands pivoting towards brand agencies and consultancies.

Consultancies and research firms are building out creative teams to handle projects typically farmed out to advertising, marketing, and other agencies. Yes, the pocket protector-wearing number crunchers and Big Data fanatics are now competing with the coolest kids to graduate from ad school. 

While consultants may have traditionally been a neutral party with expertise on critical financial, operational, and staffing decisions, their main focus is to make recommendations. They don’t mess around in InDesign or spend their days rewriting copy. What consultancies do have, however, is the attention of C-suite leadership. Consultants likely possess a comprehensive image of the whole organization built over years of being deeply embedded within the business. More importantly, they provide data-driven recommendations (and results) backed by a deep understanding of their clients and their clients’ competitors.

This is dangerous. Like Apple and its approach of keeping its customers within its own ecosystem, consultancies can bring value by making key strategic recommendations, then funnel their clients to creative services provided in-house by the same consultancy. 

Moving in, breaking up.

By random chance, we were fortunate enough to bump into the chief executive of a submerging multinational fast casual dining company, who are scrambling to right the ship, so to speak. After exchanging pleasantries, they went on to describe their relationship with their creative agencies. Despite spending tens of millions on national campaigns with some of the most prestigious ad agencies, sales continued to fall, and there was one PR nightmare popping up after another. The company decided to cut loose their advertising agency and instead build their own internal team at the behest of their consultant that would handle not just the creative production, but new mobile apps, and other digital-focused initiatives. At this point, the consultancy would be better described as a brand consultancy. By addressing some of the key shortcomings for the brand, the consultancy provided results-oriented solutions with an awareness of changing consumer habits. They advised their client to take control of their own destiny.

Consultancies put the team first.

So for agencies to survive, it’s not enough for them to just do one thing well. I have a colleague who works at a consultancy headquartered in China. Because they believe in employee development, over five years, they trained her on how to code, analyze and report with proprietary analytics tools, integrated her with the internal design team to learn the full Adobe suite, all on top of traveling the world to advise executives on how to better run their business at the age of 27. When a consultancy and more importantly their employees, can demonstrate knowledge of design, development, market expertise, and storytelling, why should a client go anywhere else? 

If you're at an agency right now, or have been in the past, how supportive have they been to your professional development?

I have no doubt that consultancies possess a different approach to developing internal talent that bleeds into the work that they do for their clients – they view their employees as partners, much like with their clients, and they stay on top of trends to prepare their clients and their own employees for the future. 

It has created an environment where consultancies, and the relatively new brand consultancy, can provide multidisciplinary services from advertising and marketing, to development work, to internal reviews. Brand consultancies are capable of both advising and creating for digital and print that enhances the brand messaging and improve upon how the user enhances the brand, not just attention-grabbing copy and ads. 

Ad agencies and even the more digital focused marketing agencies are slower moving, with the giants often dedicating a large portion of the business to legacy media like television, radio, and print. While this can be very profitable, it doesn’t match the direction of where consumer habits are heading. Brand consultancies on the other hand, are inherently more agile. They possess and require data in their decision making process. They are waking up to the potential of transitioning to a full-service brand consultancy. They can take the embedded partnerships with their clients and execute on creative that is driven by data, promising greater results and ROIs. 

So don’t be surprised when Deloitte and Accenture start snatching up most of those Cannes Lions. Don't be shocked when recent creative grads start taking internships at KPMG and PWC, continuing the talent crisis in the ad world. The consultancies are already eating the agencies' lunch; soon they'll be taking their dessert.

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Kevin Xu

Kevin Xu is a writer and social media manager who is engrossed in the intricacies and difficulties of communication between brands and the consumer. He is Junior Strategist at Beck & Stone, a brand management consultancy in New York City. He can be found on Twitter at @kevin___xu.