$46.8B Record U.S. agency revenue in 2015
If what they say about getting there being half the fun is anywhere near the truth, I had more than my share on a recent trip to snowy Syracuse, N.Y.
And along the way I learned why ad people who foresee creative agencies reuniting with their
media counterparts are entertaining an impossible dream.
The reason for my trip was an invitation from Eric Mower, who runs Eric Mower & Associates in Syracuse and other locations, to speak at a lecture series at the S.I. Newhouse School of Public Communications at Syracuse University. I was glad to oblige, because Crain Communications is celebrating our centennial and I've written a speech about rules for the successful entrepreneur gleaned from our startups and acquisitions over the years.
The event was supposed to be an advertising forum, but Eric assured me that many of the students had an entrepreneurial bent and the subject would be of interest to them. And, in all modesty, it was: One student wrote me a nice note saying my talk "inspired us to do great things!"
Getting up to Syracuse from New York was a challenge. Only one runway was open at LaGuardia due to gusty winds, so my flight was delayed several hours, which meant we had to abandon a tour of the Newhouse facilities and a "meet the speaker" session. Because of heavy snowfall in Syracuse, my driver got into an accident and couldn't pick me up at the airport—and of course there were no cabs available.
Out of options, I called James Tsao, chair of the ad department at Newhouse, and asked if anybody there could drive through the snow to pick me up. James dispatched professor Ed Russell, a Leo Burnett alum who had led the agency's P&G international business.
In a little essay he wrote just for me titled "The Night I Nearly Killed Rance Crain," he said, "I was pretty sure I was going to be responsible for the death of one of my heroes of journalism."
The normally 15-minute trip to the airport took about two hours round-trip. It got really interesting when we headed toward campus, along with 25,000 other people going to see the Syracuse basketball game. At one point, Ed's Toyota Prius got halfway up a hill and the tires just spun. "We slipped backwards a few times on solid ice and I was pretty sure I was going to slide backwards down the hill and kill Rance Crain," he wrote.
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But we made it up the hill and I finally got to the school and started my presentation one hour late. They must have locked the crowd in because James said no one snuck out for the big basketball game that night.
After my "inspiring" speech (I'm just quoting the student), we adjourned to a dining room at Newhouse for dinner. That's when I got into an interesting discussion about the plight of ad agencies as they "balkanized" themselves into smaller parts (to use the word of consultant Michael Farmer in his book "Madison Avenue Manslaughter").
Brian Sheehan, professor of advertising at Newhouse and former exec at Saatchi & Saatchi and Team One, argued that the big agencies commodified themselves when they spun off media. "The goal," Brian elaborated later at my behest, "was to get the lowest prices through bulk buying, while leaving the creative agencies to stand out and differentiate themselves in the realm of creativity, as opposed to the idea-deficient, boring, numbers-crunching world of media."
The only problem, Brian noted, was that the emergence of the internet "transformed media into a dynamic space." At the same time, the holding company strategy was "to bet around the creative agencies rather than on them." Holding companies like WPP might take resources from a number of agencies to create a new agency to work on just one client. Or, he said, they might negotiate a contract stating that if a client wanted to pull the business from one agency, it would be pitched first by others in the holding company. The various deals were all accompanied by "some of the most aggressive financial arrangements" in the industry, and other holding companies had to match them.
"Looked at one way, this approach is a very effective way to win big pieces of global business, yet the effect on the value of creative agencies is devastating, leading to lower prices, less differentiation and perceived interchangeability," Brian stated.
And it's now the media and digital agencies that are front and center. In 2006, Avenue A/Razorfish, Sapient and Digitas were all independent; now they're owned by the holding companies. And, Brian added, "the perceived lack of specialized-resource expertise within the creative agencies leaves each one with limp versions of the same positioning statement: insights and ideas."
I asked Brian if he thought the digital/media agencies would ever get back together with the creative agencies. "I think it is too late to recombine them," he told me. "They are too valuable on their own." SapientNitro (now owned by Publicis) is bigger than any creative agency in the U.S. based on revenue, and DigitasLBi (also owned by Publicis) is bigger in the U.S. than the JWT agency, he said.
My Newhouse experience had one more surprise in store. After dinner, we packed up and were ready to leave James' office, when I discovered I'd left my coat in the auditorium and the guy in charge of the room had already gone home. James said he was "panicked, unsurprisingly." A custodian whom James had never met walked by and I noticed he had a key chain on his belt. I asked him if he had keys to the speech room, and he replied, "Of course, who do you think I am?"
So I was able to check into the hotel for my 5 a.m. wake-up call, coat in hand.
"Happy ending," as James put it.