Spot On Creative Agencies

 

Spot On Creative Agencies

April 18, 2018 

CREATIVE AGENCIES — UNDER FIRE

John Kaiser, Oaklins’ creative agency specialist, is pleased to share some high-level industry intelligence in this edition of Spot On.

Background

Prior to the mid-1980s, most creative agencies were “full-service” in their offerings. They crafted strategies; created advertising for traditional media channels — television, print, radio and out-of-home, planned and purchased media for the ads, engaged in promotional activity and delivered a range of other services. Differentiation was largely based on size, geography and vertical market expertise. There were global networks such as J. Walter Thompson, McCann Erickson and Saatchi & Saatchi, as well as regional, national and local agencies.

1986 marked a turning point. The Omnicom Group was formed with the merger of BBDO, Doyle Dane Bernbach and Needham Harper; Saatchi & Saatchi acquired Backer & Spielvogel, Dancer Fitzgerald Sample and Ted Bates; and Martin Sorrell founded WPP. The following year, WPP acquired J. Walter Thompson, Hill & Knowlton (PR) and MRB (market research). Thus began the rise of agency holding companies and the massive consolidation of the advertising and marketing services industry.

Agency Structures

Driven by economic considerations, and quite possibly the prices paid for agencies, clients in the late 1980s began moving from the traditional commission method of compensation to only paying agencies for the services they desired. As a result, large agencies “unbundled” services, which gave rise to specialist agencies instead of in-house departments. Media planning and buying agencies were launched, as were agencies focused on promotional activity, public relations and other marketing disciplines.

Large agencies “unbundled” services, which gave rise to specialist agencies instead of in-house departments

The unbundling of services was most pronounced within the holding companies. The services were spun out of individual agencies and consolidated by the holding companies. For example, GroupM is the parent of WPP’s media agencies. It is the largest media services group, with more than 30,000 employees in 81 countries. GroupM is responsible for over US$100 billion in media billings globally.

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