The end of an era: Ad Agencies are doomed.

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I’m more than convinced that the business model of ad agencies is at a major turning point.

With the advent of crowd sourced platforms offering logos, templates, pre-made layouts and, in general, any kind of inspiring creative ideas (think of sites such as Zooppa, which offers users’ contributed videos for TV commercials) for ad agencies is becoming harder to justify their “raison d’être” in front of their clients.

In three years the role of ad agencies has been undermined by a new form of creative flow coming directly from customers. No doubts that very soon this phenomenon is about to explode and spread in every direction.

Major brands are already publishing pitches and creative contests.
These open competitions have the absolute great advantage to generate cheaper and probably far more inspiring ideas than any ad agency will ever be capable of (creativity from a group of few vs creativity coming from hundreds or thousands of brand-lovers).

Among hundreds, or maybe thousands, of submissions there’s certainly a small percentage of great ideas worth exploring or considering. For few thousands Dollars anyone can publish a video contest and receive nearly ready-to-be-aired commercials from amateurs or prosumers: few lines for defining the pitch, some cash and that’s it. Less costs and no more tedious meetings with those creative gurus, their bla-blas and egos.

People-powered contests are the most violent and disruptive phenomenon ever occurred and, in my opinion, is what will put an end to the role of ad agencies in the creative process.

No ad agency owner is willing to admit it, but we are all doomed.

We have to compete against thousands and thousands of talented freelancers who are entering these contests: the power of the mass against a few, although brilliant and excellent art directors or creatives hired and working for us, is a lost battle.

As an owner of an ad agency I must admit that there’s nothing I can do about it: I honestly can’t debate against quality or technical execution.
Professional tools have always been available and accessible to almost everyone willing to learn, experiment and publish their results online. Prosumer cameras offer super-quality pictures and videos that have (almost) nothing less compared to high-end gears. Tutorials and tips to get professional results are everywhere and accessible to anyone. It simply means that today hundreds and thousands of individuals have exactly the same opportunities to offer brilliant and qualitative results. Except from hollywood style productions, it’s hard to really find substantial differences from a professional video, picture or web site compared to one made by an inspired amateur. Simply check Vimeo and decide for yourself if I am right or wrong.

Individuals publish finished products, designs, logos, tv commercials. Crowd sourced platforms are killing the whole process in favor of the final result (again: Zappos took the winning proposal and aired it as it was published and presented on Zooppa; no savvy ad agency usually dares to enter a pitch with a final version of a commercial, especially if there are no warranties to be hired as a contractor).
To be able to win a pitch on any of these crowd sourcing platforms an ad agency is required to produce a top quality and inspiring final version, which undoubtedly is a serious problem in terms of resources and costs. Add to the equation that there’s absolutely no warranty that the published proposal will have chances to win the competition. It’s clear: we’re in great turmoil.

Let’s face it: with freelancers we had to compete against prices, poor execution and lack of a stable structure that could potentially be a good reason to avoid them. 1 out of 10 an agency won the pitch and got the job. But with the advent of crowd sourced platforms it’s not about prices, poor execution or lack of structure; it’s about the single idea, the single inspiring idea that comes out. And believe me: the chances for an ad agency to win a pitch becomes 1 out of 100, or more realistically 1 out of 1000. The battle is against final versions of commercials, pictures or web templates.
Dear colleagues, tell me: do you really have the resources, the time and the structure to – maybe – win a pitch of $10’000 while competing against tens of thousands of talented individuals?
I don’t!

Probably, it’s the end of an era and I, realistically, I only (and hardly) see a few and radical solutions:

  1. shift towards a business model that embraces consulting as the main core competence (i.e., become a sort of recruiting office, where the only reasonable offer is to help entrepreneurs and companies do a smart selection of the proposals);
  2. fire all your creative team and concentrate on highly specialistic offers (i.e., app or web development versus web design, events organization versus brochure design, an so on…); in a few words, define a new business model and evolve;
  3. wait until this trend is over, hoping that mass idea generation will soon turn into an exhausting way of looking for inspiration and companies will rather ask a professional (of course for far more less than before) to present his vision.

Of the three possibilities none is mutually exclusive. But there’s a certainty: ad agencies are facing hard times and I’m convinced that soon there will be no more ad agencies the way we know them today.

Let me know what you think… Am I right or wrong? Do you have a more optimistic vision of the future of ad agencies? Feel free to share your comments and critiques!

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