Are we in step with the morphing advertising landscape?

Among the numerous forms that sprung from mass communications, advertising has become a good indicator of economic health. Since its popularization in the 19th century, when publications such as Harper’s Weekly featured such exotic items as elixirs, velocipedes (bicycles to you, historically-disadvantaged readers), yeast powder and toilet soaps, advertising has become a billion-dollar industry, normally taking some 40 percent share of the cost of producing a consumer product, such as softdrinks and shampoos.

In the halcyon days of traditional advertising, a period bracketed by the last half of the 20th century, advertising was a communications force to reckon with. Ad agencies were calling the shots and influencing critical marketing decisions of huge multinational conglomerates selling everything from automobiles to perfumes, from hotdogs to housing loans. Companies hired ad agencies to tell them how to sell their products on print, radio and TV, allocating million-dollar budgets to create just that right image for the product that would induce millions to buy it, never mind if the actual quality of the product sucks.

Huge ad budgets were a manifestation of a robust market economy. Manufacturing and sales giants in the consumer industry lavished great promotional hype over product launches, further spurring competition. This, in turn, caused an ever-spiraling rise in advertising, each company trying to outdo the other. There wasn’t much need for accountability then, because advertising was generally viewed as an esoteric science full of mumbo-jumbo and voodoo magic only advertising professionals understood.

The world has changed very rapidly since those days, with technology fueling a revolution in the field of communications that has redefined the arena and brought many marketers and product managers back to the drawing boards. The instantaneous and pervasive nature of modern communications has drastically reduced the hold of traditional mass media on targeted audiences. Thanks to the remote control, for instance, the challenge to create TV ads that would continue to captivate the viewer over and over again has pushed the envelope in terms of creativity and risque-taking. Ads that failed to tickle the viewer’s interest suffered the ultimate penalty: zapped by the remote.

New Games, New Rules

Cut to the present. A world reeling from the cataclysm that was the economic disaster of the late 1990s where fortunes were lost, the dotcom bubble burst, the stock market crashed and the giant multinationals started looking for areas where they could cut their budget while increasing accountability. Not that this was a surprise. A good two decades earlier, ad agencies already saw the writing on the wall. This was at the time when revolutionary ideas were starting to hit the industry: lawyers and doctors started advertising their services (a sacrilege!), advertisers were starting to advocate socially-redeeming values (a travesty!), and, later, tri-media was evolving into multi-media with the Internet, SMS technology, 3G phone, iPods, online gaming and e-bay online auctions (an assault on tradition!).

New technology also empowered the once-gullible client into a take-charge and competent marketer. Power database technology now allowed them to identify markets, track consumer behavior and predict audience responses. Business models now drive the "soft" side of marketing. It has also redefined the relationship between the advertiser and the ad agency, from client-supplier to collaborators. Clearly, what once was the exclusive turf of the advertising practitioner was now fair game for the corporate marketer.

This confluence of developments has brought the advertising industry into a quagmire, a quicksand of conventional thinking that has sucked up many famous names in the industry into oblivion, or, at least, into the ranks of the has-beens. Today, we are seeing new configurations of agencies that no longer follow the mold, no longer exhibiting the monolithic, corporate structures that used to be the hallmark of success of global agencies. What we now have are small, intrepid creative boutiques that can provide creativity and execute in a very short period of time, ideas that are initiated by the clients, and not the other way around.

An article by Stuart Elliott in the New York Times reports: "The ad firms are more eager to please than ever. The major public agencies face shrinking profit margins and sagging stock prices, leading to a shakeout and a frenzied effort to cut costs. It’s unclear if the traditional agencies will be nimble enough to halt a slow decline. Already, many famous names are vanishing: N.W. Ayer; Bates; Bozell; D’Arcy Masius Benton & Bowles; Earle Palmer Brown; Lintas; Warwick Baker O’Neill."

Conventional practices, too, have been replaced with more progressive methods. Advertisers now prefer to pay for man-hours spent than on campaign packages and tired commission rates. Each ad campaign is now monitored, measured and ranged against a set of objectives and targets, leaving very little room for the ephemeral feel-good effects that used to wow the clients to nodding acquiescence. Every square inch of ad material, every second of TV exposure, is now quantified and its attendant costs laid side-by-side with sales targets and results of post-campaign surveys.

Creating The Difference

It is against this background of shifting paradigms that the 2004 Agency of the Year Awards (AOY) – an annual event staged by the Association of Accredited Advertising Agencies of the Philippines or 4AsP – will try to identify the ad firms which have best responded to the times. In the rhetorical overview of the AOY awards brief, it asks: "Do (ad agencies) have the flexibility to play a different ballgame? The Agency of the Year is the contest that will determine which among the ad agencies had the ability to escape or to run towards the tsunami of changes that have happened in the past year." Which agency can create the all-important difference? Which one will stand out in a fast-morphing industry?

The Philippine advertising experience mirrors the global upheaval that has taken place. In the tightly contested top 10 list, some of the big names have been shuffled to less stellar heights, and new names have been included. Many of the mother companies have spun-off small creative shops, to face the onslaught of small independents, blow by blow, in the fight to get the accounts of small-to-mid-size advertisers. And the old notion of a one-stop-shop agency has been lost to the practicality of the more frugal outsourcing approach. It not only cuts down on headcount at the office, it also allows greater flexibility in hiring third-party consultants best suited for the job.

The New York Times article continues: "Worse yet for agencies, profit margins have been shrinking significantly as clients, facing relentless competition and consolidation in categories like automobiles, fast food and telecommunications, are anxiously squeezing every nickel of waste from their ad budgets. In the ’80s, we used to fight with clients over creative. In the ’90s, it was about strategy. Now, it’s only about money," said Jonathan Bond, co-chairman of Kirshenbaum Bond & Partners in New York.

Advertisers now try to extract as much value for each advertising peso that they spend. Filipino companies are even more so. And then some. Corporate strategists looking for a way out of a profit rut sometimes look to advertising as if it were a panacea to their problems, expecting an ad campaign to turn a company’s profits around. Product managers now look to non-traditional vehicles to extend their ad budget, and rightly so. The advertising budget is the first item to suffer during hard times. Given the protracted period of time that our economy’s been on the doldrums, it doesn’t look like it’s going to be getting better anytime soon.

We’ve been known to be a resilient people, ad professionals included. The rules of the game may be changing, but the players are still willing to play hardball. By choosing the winners, the Agency of the Year Award may give us some insights on how to cope with these changes. This July, 4AsP will bestow honor to participating member agencies that demonstrated their best achievements in management of business, market performance, creativity, industry leadership and community service. The AOY will likewise give media excellence and production excellence awards, the former to full service ad agencies and media independents, and the latter for print and broadcast production houses that has a proven record of excellence for the period evaluated. The agency that has consistently excelled in every area of discipline will be named Agency of the Year.

Whatever the outcome, whatever new-fangled industry offspring may arise from this confused muddle of the new and the old, of creativity and pragmatism, of limitless ideas and cost-cutting, life does, even for the moribund industry, go on. Ad agencies must be vigilant in reading the signs and seeing the pattern, and in ensuring that they are in step with the morphing advertising landscape. As the AOY Award brief puts it: "Amid the widespread discussions and debates – a chaos scenario, as someone sensationalized it, there’s a client waiting in the wings for his print ad. So let’s attend to him. He pays hourly rates."

(Note: The AOY search is chaired by Ricki Arches, president of McCann Erickson Phils., with Chiqui Lara, president of Y & R as vice chairman. The panel heads are Abby Jimenez, JB-Jimenez Basic; Nonna Nañagas, president, Dentsu Phils.; Tong Puno, managing partner, TBWA-SMP; Sockie Pitargue, president, PC&V; Mitos Borromeo, president, Mindshare; Bing Beltran, executive creative director, AB Communications; Vanne Tomada, executive director, 4AsP; and this columnist representing Campaigns & Grey. The board of advisers include Emily Abrera, chairman, Cultural Center of the Philippines; Gerry Ablaza, president, Globe Telecom; Luisito Alejandro, president, ABS-CBN; Congressman Teodoro Locsin; Malou Mangahas, co-founder, PCIJ; Senator Mar Roxas; and Department of Trade & Industry Secretary Juan Santos.)

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You may e-mail bongo@vasia.com or bongo@campaignsandgrey.net for comments, questions or suggestions. Thank you for communicating.