Agencies cannot live on ads alone

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DDB Worldwide has a problem. Anheuser-Busch thinks DDB makes nifty commercials, but the beer marketer decided to go elsewhere for a move into branded entertainment.

A-B's decision isn't surprising: It hires agencies to create ads and looks elsewhere for specialists-in this case, startup DTC Entertainment-in other marketing services.

For DDB-and, more important, for ad agencies generally-this is a missed opportunity. The intent here is not to focus on DDB but on the broader issue of whether agencies address marketers' ever-shifting needs.

Agencies that lose their relevance die. Only seven of the top 25 agencies in Advertising Age's 1954 ranking survived to make the 2004 list; the rest were merged or purged.

DDB should be unnerved by the comments of A-B's Bob Lachky, who indicated in Ad Age last week that he wants DDB to stick to what it's good at: making commercials.

Holding companies have diversified their offerings. Omnicom Group, DDB's parent, last year generated 57% of revenue from marketing services beyond traditional advertising.

But holding companies' flagships still are perceived as "ad agencies." For the most part, agencies have done a poor job of articulating that they're anything more than ad factories with other services grafted on.

The industry can debate the future of 30-second commercials or prospects for Madison & Vine interactions. But however specifics play out, marketing is changing because marketers' needs are changing. The last thing agencies should do is focus on what they're known for today: creating ads. Let's see which agencies can truly be creative in solving their clients'-and their own-problems. Agencies face a future of stagnation and eventual death unless they evolve.

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