7 Reasons Why Ad Agencies Are Disappearing Fast?

Conferences, all over the globe and including India, dedicated to themes like “The Future of Advertising” are an indicator that there is a crisis going on. It’s something that all businesses are concerned about. After all, a lot depends on the advertising industry because advertising has been an indispensable part of the means to generate revenue for all industries.

Yet, conferences can be the great venues to start spreading lies, or wishful thinking, to say the least. Because conferences are a way of advertising, no conference organizer is going to let it be known that advertising in the old fashioned sense of the term (print, TV, radio) is dying. And so are ad agencies.

Because you may not be sure about whether to believe in the “the-future-of-advertising-is-bright”, you should read these 7 reasons why ad agencies are fast disappearing.

7 Reasons Why Ad Agencies Are Fast Disappearing

1. Old Fashioned Notions of Creativity

2. Lack of Transparency in Methods of Working & Earning ROI

3. Unaffordable Costing

4. Rise of Channels Not Bound By Time

5. Lack of Right Resources

6. The Rise of Influencers

7. The Increasing Popularity of Consulting Services

1. Old fashioned notions of creativity

Clients these days are no longer happy with creative solutions. Therefore, awards do not matter. A well-designed website, campaign is not what brings revenue to a business. Design here refers to changes in colour or applauded design that wins a lot of awards.

Sensible brand custodians are no longer interested in how many awards an agency has won. Awards don’t bring revenue. Squabbling over colour and look and feel doesn’t bring revenue either.

2. Lack of Transparency

Because ROI is now measurable, advertising agencies are being made more answerable to their clients.

Every conversion is traceable to a customer via the chain of links. Traditional advertising hasn’t been this transparent. Business now realize they’ve been taken for a ride by ad agencies when they’ve been shown flashy front page ads.

3. Unaffordable Costing

Ad agencies have behaved like parasites, sitting on you and eating your resources till you can bear it all.

Delivering creative solutions has not been their only source of revenue. They have been making money from other services they provide to businesses. They have been charging hefty commissions from:

1. production houses they hire for videos and TVCs

2. photographers

3. people they buy outdoor advertising solutions from

4. models they hire for your projects

This practice of taking fees from brands and from the vendors who work on a brand’s project has been taking a serious toll on businesses’ investment in advertising. Because they are the ones been billed for those kickbacks to the agencies. Brand custodians haven’t been in touch with the vendors themselves, the ad agencies have been calling the shots so far.

Business leaders recognize that it doesn’t have to continue like this anymore. They are now refusing to be being played by the agencies. In an ideal world, ad agencies should have been working for their clients. Instead, the clients’ projects have been working for ad agencies.

Social media advertising has its own way of media planning. Because the social media are not obliged to pay commissions to the social media platforms, the costs of social media advertising can’t be inflated.

Social media advertising and search engine advertising have their own analytics that don’t require clients to pay for extra. Because the numbers of clicks and the user journey is transparent, there’s no reason for businesses to keep paying extra charges for all the time.

Ad agencies do not have a dedicated tech team for app development or UX/UI experts. Most of the resources they work with are freelancers.

Therefore, clients are now thinking, why not hire freelancers instead of ad agencies? They’re perfectly capable of assembling teams to work on their unique project alone instead of sharing the freelancers with several other projects.

4. Rise of Channels Not Bound by Time

Advertising and marketing needs are not a one-off investment or expense. These drive business further by communicating to audiences about what brands have to offer them.

With the coming of digital technology, brand custodians don’t have to depend on conventional ad agencies any longer. Customers have moved to digital platforms and brands no longer need gatekeepers like ad agencies to reach out to them.

But brands do need communication channels all the time. That’s where digital marketing has been helping them. Business leaders now realise they don’t have to depend on one particular newspaper to carry their ad or one TV programme for a slot that carries their ad. Which may or may not reach the customers brands want to reach. And consequently, which may or may not lead to sales.

Digital marketing works 24*7 though. Customers are surfing the internet all the time. They’re searching for information online all the time. They’re hanging out on social media all the time. These are means for marketing and advertising that do not involve advertising agencies at all.

Because advertising is no longer brands’ only solution.

To be sure, businesses do need content. And brand custodians know that they need it all the time because they want to reach as many potential customers as possible.

Having paid-for content all the time and turning to ad agencies for that is not a good idea for marketing needs. Because ad agencies may not look at clients’ needs benevolently.

Clients are taking their business elsewhere because they need communication all the time.

5. Lack of right resources

Ad agencies have known that their typical formats of newspaper ads that worked inch-wise or column wise doesn’t work anymore. Neither does the framework of TV ads according to seconds. They’ve mastered a making 1-minute long TVCs, for instance, that can be shortened to 30 seconds or 5 seconds for future use.

Digital advertising or content marketing doesn’t have any such limitations. Webpages can be scrolled endlessly. Videos are not bound by any number of seconds.

If the message is interesting, audiences are here to stay.

Ad agencies have tended to hire youngsters to do the social media posting for the clients. So while their teams may have the right skills and have been capable of delivering audio/video/blog content, they lack experience.

The team members to a great extent are self-certified. There’s no B-school offering degrees in digital marketing. And no advertising/design school offering any great specialization in digital advertising.

The traditional Ps of marketing no longer fully work in the digital space. There are no seasoned veterans of digital marketing in India yet. Clients can now see that the expertise in old school marketing married to new age digital packaging is not quite delivering the results they want to see.

Ad agencies haven’t been able to put the resources together — where they have content, they don’t have strategy and vice versa.

6. The Rise of Influencers

Business leaders now are more informed. They read about digital marketing. They consume content themselves. As a result, they have their own ways of understanding what kind of communication channels work with the customers.

Influencers are such channels. Brands are ready to rope in influencers because these influencers, through their content, have built a community. The community listens to what these men and women have to say about a topic. And if a brand fits well in that discussion, it’s not necessarily an ad.

Because it’s not an annoying ad, customers are more open to the brand’s message.

And there are ingenious ways of roping in brands into influencers’ posts. Influencers on TikTok, normally considered an inane platform, are being leveraged by the best of the brands everywhere. They’re not bound by age or location either.

The number of views and followers an influencer has might be deceiving but it’s possible to look at the quality of engagement and determine whether a brand should work with a certain influencer. And big brands are already turning to them and meeting specific goals like increasing brand awareness or website traffic.

7. The Increasing Popularity of Consulting Services

Brand communication through content marketing is an ongoing, non-stoppable process. Brands that are not yet equipped with resources to take charge of their content are working with influencers or full-fledged credible digital marketing agencies.

Digital marketing agencies help business grow. But one may think there’s no difference at all. It may look like shifting from one kind of agency to another. After all, digital marketing agencies can also continue to make money off brands. Because they’d need content all the time.

Not quite.

Digital agencies cannot run away with client’s money when they know what they’re hiring the digital agencies for. With them, it is the clients that are in charge. When the clients are armed with the right information and strategy, they turn to the digital agency for certain precise things.

Consultants have been helping businesses to determine what kind of solutions they should ask the digital agencies for. They have been acting as catalysts for first helping brand custodians understand what this new form of advertising is.

They’ve been helping clients understand what digital transformation is. And to give them a framework to analyse the digital agencies’ work. Now, business leaders are less likely to get lost in the process of more design options. They now ask the questions that matter because the consultants ensure that the clients are not cheated.

Ad agencies all around the world are forced to learn digital. Some are successful. Business now are learning how to avoid working with the ones that do not adapt. Within the next six years, the number of ad agencies that do not adapt will have shrunk drastically.

Tell us about your experience of working with ad agencies. When was it? What value did you get out of those relationships?

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