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Commentary: Will 2019 be a decisive year for ad agencies trying to reinvent?

2018 saw the reinvention of ad agencies and reorganisation of network structures. It was a challenging year for the industry as pressure on margins was high and everything became ROI-driven, leading to more accountability. So to stay in the game, agencies need to revamp themselves with a fresh view and stay agile

Facing business pressure for the past few years, advertising giants globally were seen reinventing their business model and structure in 2018. The industry realised it was high time they stopped calling themselves just ‘advertising agencies’ as there was less respect left in that name. They chose to become disruptive, creative and effective solution providers in the real sense for brands.

The disruption caused by digital forced WPP to put its digital agencies ahead of its old and established creative agencies in the process to re-invent the structure to become a more data and technology-driven advertising giant. The move to put VML ahead of Y&R and Wunderman ahead of JWT in the merged entities was criticised by former WPP CEO Martin Sorrell.

After the mergers were announced, it is yet to be seen how effectively the integrations are being done. Citing the example of integration of Havas Group agencies in India, highlighted last month how challenging a smooth and swift integration could be.

In order to look revived and fresh, the leadership of Indian advertising agencies changed hands. While a few left on their own will to explore the path of entrepreneurship and newer spaces, many were either asked to leave or make space for fresh talent. The best of the network agencies like Lowe Lintas, Publicis, Havas, Ogilvy, JWT, Contract, Rediffusion and McCann saw their leadership shifting base from one agency to the other as the last resort to stay abreast in the game.

The question that remains unanswered is that, would an interchange in leadership positions within networks solve the problem? It is really old-fashioned thinking that if you get some star creative in the agency, he would turnaround the things. If these people were champions, they would be helping their current agencies to do well and simultaneously would have grown with them. It mostly looked like a knee-jerk reaction to see some newness within the setups.

In every sense, 2018 was a tougher year for the entire industry’s business. While the smaller and mid-sized agencies are still managing to register some growth, the year has been way too tough for agencies with large old-economy revenues.

It would be wrong to say that the brands have reduced their spendings, but for the agencies to make money from that, they would have to structure themselves differently. The entire conversation is now happening around accountability and efficiency. Brands are not cutting down advertising budgets rather they are spending it on a more accountable channel.

With the usage of big data coming into practice, most of the brands are now clear with their target audience. Everyone is trying to transform their marketing for the digital times. Everything is beginning far more technology-driven. Having a clearer definition of who your customer is and having a more sharply targeted communication tool to them are now prominent.

There isn’t going to be a single model working for all. In the future, everything will become return on investment-driven, whether it is coming from traditional or new mediums. The conversation should not be about the old or the new model, but how are you able to achieve your effectiveness goals.

People who require disruption to grow don’t have deeper pockets. There are a lot of discussions around compensation models also and outcome-driven compensation is one of them. One model won’t work for all. In fact, a single agency will have to try different models with different clients depending on what the client wants. Earlier, a TVC used to be the answer to every problem. Now we don’t have a standard response to every question.

The agencies are now becoming more involved with the clients from the beginning to solve their business problems as compared to old times when agencies were asked to create advertising after everything is done.

All said and done, a lot will depend on how agile and dependable are the Indian agencies in the future.

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