Mad Men: Advertising Agencies since Draper’s Day
James Fan
To understand where advertising agencies fit within the broader marketing agency landscape, a short history lesson is in order:
Back in the 1950s, most clients relied on a ‘full service’ agency that met all of their advertising service needs including creative development, media planning and buying and market research.
In 1960 McCann Erickson established Interpublic, the first major agency holding company. This sparked off a frenzied period of consolidationbetween agencies. More recently, major holding agencies Publicis Groupe and Omnicom group in 2013 looked set to merge, however in May this year it was announced this deal had fallen through. Now the advertising industry is made up of 4 large conglomerates or holding agencies; Publicis Groupe, WPP plc, Omnicom group and the Interpublic Group of Companies (IPG).
Consolidation allowed agency groups to place conflicting clients e.g. Pepsi and Coke under separate agencies, enjoy volume discounts when buying media and achieve a faster rate of revenue growth. Agency holding groups also diversified into other marketing fields, acquiring specialist branding, digital, experiential, market research, media planning and buying and public relations agencies.
Yet as the agency holding companies grew, the services offered by the advertising agencies themselves began to shrink. In the 1990s, media and creative were often unbundled in the interests of economies of scale in media buying, leaving creative agencies that focused on the creation of advertisements and branding. Subsequently clients would rely on multiple specialist agencies, as opposed to a single full service agency. However, given the increased cost and complexity of unbundled services, the industry is debatingover the merits of a return to a full service model.
What do you think? Is a full service agency the way forward? Or should the marketing industry continue to offer numerous smaller agencies with specific services on offer?
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