September 18, 2008

The Crisis Of Advertising, Part 2

Here at TAC Global Headquarters, we agree with the pundits who say the ad industry is all screwed up. However, we disagree with them about why it's screwed up. Over the next week or so, we're going to be looking at what's gone wrong, and why the business sucks so bad. Today's post is about consolidation.


There is one thing that the last 10 years has taught us about consolidation in service industries. Whether it's advertising, airlines or retailing, consolidation has been a nightmare for customers.

The startling thing is that airline customers get it. Retail customers get it. But, for the most part, clients of global ad agencies still don't get it.

Any survey of marketing companies makes it clear that they have lost confidence in ad agencies' abilities to positively affect their business. Yet they continue to hire the same five global agency networks over and over.

Not that long ago, Y&R had the largest share of market among advertising agencies at about 1.5%. Today five global behemoths control as much as 75 to 80% of advertising in America. Ask people who work for one of these monstrosities and 90% of the time you will hear how dysfunctional, corrupt, and greedy they have become.

Advertising was at its best when it was run by the entrepreneurs who were the "founding fathers" of the modern era. They started agencies because they thought they could do it better. They were mainly craftsmen -- copywriters, art directors, and account guys -- who had three goals: 1) to get out from under the thumbs of the schmucks who ran the dull agencies they were working at; 2) to make some money; 3) to make good ads.

Let's not be overly romantic here. The founding fathers (and a few founding mothers) of modern advertising were no less interested in making money than today's worldwide fat boys. However, they lived in a different world -- a world in which making money in advertising was a by-product. It came from making good ads.

They were interesting people. Not every one was George Lois or Jerry Della Femina, but for the most part they were not the stupefyingly dull men in gray suits that run today's global ad corporations.

Today's publicly traded behemoths are lead by lawyers, accountants and MBAs who could no more recognize a good ad than replace a carburetor. If their agencies never had to make another ad -- if they could just be consultants and branding bullshitters -- they'd be perfectly happy.

I am not naive enough to believe that the past was always better than today or that small is always better than big. And the ad industry has invariably had its share of con men, empty suits, and bullshit artists. However, having lived through it, I can tell you this -- the conglomeratized ad industry of today, compared to what it used to be, is a steaming pile of smelly shit.

Coming Soon: The Crisis Of Advertising, Part 3 - "Talent"

The Crisis Of Advertising, Part 1
The Crisis Of Advertising, Part 2: Consolidation
The Crisis Of Advertising, Part 3: Talent
The Crisis Of Advertising, Part 4: Brain Drain
The Crisis Of Advertising, Part 5: What To Do

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