The world looks very different today than a year ago and that is certainly true of the ad industry. At the end of 2009 the industry at large faced several challenges. Specifically, they had to restore their reputation in three ways:
Trust: Consumers drew little distinction between the companies that precipitated the global economic meltdown and the advertising that fueled the ‘Keep up with the Joneses” mentality encouraging families to incur more debt.
Relevance: The digital revolution was a sobering lesson in how hard it is for organizations to refocus and retool themselves in the face of new technology. Social media has proved just as challenging for advertising agencies, especially since consumers are now talking directly to brands eliminating the traditional intermediary role.
Credibility: While both brands and their marketing partners have warmed to the adoption of social media, they were slow to prove their marketing expertise extended to these new platforms and tools. But recent exceptions, most notably the Old Spice campaign by Wieden & Kennedy, Portland, and the Pepsi Refresh Project and Digital Death campaigns by TBWA/Chiat/Day (Los Angeles and New York respectively), have done much to restore the credibility of creative ad agencies in the social media space.
It’s not surprising then that we are seeing an uptick in the advertising industry as an extension of the tentative economic recovery underway and the renewed relevance and credibility of ad agencies. As Advertising Age reports, shares in WPP, Omnicom Group, Publicis Groupe and Interpublic Group of Cos. in December 2010 were at or near their highest points since the start of the 2007 recession. Further, U.S. ad agencies have added 9,200 jobs since bottoming at a 16-year low in January 2010, according to figures from the Bureau of Labor Statistics.
This is all cause for optimism in the ad industry but agencies cannot overlook the fact that the market they are returning to is very different to the one they monopolized up till 2008. Social, mobile and gaming technology will continue to challenge their business models, profit centers and creative departments making it consistently difficult to control, persuade or engage connected consumers in social business marketplace. What’s more consumers expect greater transparency, authenticity and accountability from brands, as well as greater social contribution, and ad agencies must help brands achieve this.
Given these conditions, perhaps the most exciting sign for the ad industry is its renewed entrepreneurial spirit. But this can’t be a temporary solution. It must become a constant state of being. But if current behavior is any guide the ad industry is awake, engaged and creating inspiring work again as are other industries. As WPP Group Chief Executive Martin Sorrelput it at an investor conference in December : “The amazing thing about this year is that America is performing, the United States is performing like an emerging market.”
Do you think ad agencies are on the rebound? Or is it just a few notable exceptions?