Is 4a advertising company really no longer viable?

Why is the advertising industry, which used to be so crowded, so depressed?

Traditional advertising industry

Is it really not possible?

01 The shaky advertising industry

1. Salaries have not increased in ten years

Not long ago, a passage from young designer Fang Jingjun resonated with advertising practitioners:

In the spring of 2003, I joined my first advertising company as a rookie advertiser. At that time, real estate advertising was very popular, and I got a copywriting job that paid $6,000 after tax. Now, sixteen years later, our per capita GDP is seven times what it was back then, and the entry-level salary in the advertising industry is not even higher than it was then.

If you go to the recruitment channel of AdChina, you will find that the overall salary in this industry has not shown any sign of increasing even a penny compared to when I left the advertising industry ten years ago.

If there are two college graduates who both studied art design and are classmates, after graduation one joins a well-known advertising company to do art design and the other joins a well-known Internet company to do UI design, five years later the salaries of the two may differ by 3 to 5 times.

It’s not that the person who joined the advertising company didn’t work hard, it’s just that he chose a poor quality gold mine and couldn’t dig out much gold.

2. Survive in the gap between Internet advertising and brainwashing advertising

How difficult is the current situation of the traditional advertising industry?

In terms of creativity, traditional advertising has clearly fallen behind Internet advertising. These companies seem to know how to be creative better than advertising agencies and are more likely to become marketing hits harvesters.

In terms of communication, traditional advertising has been completely wiped out by simple and crude brainwashing advertising.

*Picture source: Internet

With their abilities questioned and advertisers abandoning them, today’s advertising companies seem to be in dire straits.

02 Why did the once popular 4A company fail?

1. Increase in competitors

1. Consulting company opens advertising agency business

More high-level companies have emerged in the advertising agency industry, such as IBM, which have greater resources and capabilities than traditional 4A. Moreover, many 4A agencies often say that they can provide strategic services, but this is not the case. In most cases, they only provide plans related to their work. For any major strategic challenge, clients typically turn to a consulting firm (like Bain or McKinsey) to ensure strategic foresight.

Someone once joked that half of the consulting companies in the world are busy competing with 4A for business, while the other half are busy acquiring 4A companies. This statement is indeed not wrong.

A report by independent marketing consulting firm R3 shows that of the 398 acquisitions in the global marketing circle in 2016, 78% were completed by companies including IBM, Accenture and Salesforce.

*Picture source: Internet

2. Advertisers build their own advertising and marketing departments

According to Adobe's research, more and more advertisers are optimistic about digital media and programmatic advertising buying; many companies even prefer to set up advertising and marketing departments or companies, handing over part of the marketing business to internal teams, and officially entering the stage of marketing budget downgrade. For example, in order to establish a new advertising company, P&G even poached many elite employees from world-renowned 4A companies such as Grey, Leo Burnett, and Publicis Groupe.

*Image source: Madison Bang | Procter & Gamble Advertising Team Source

2. Impact of new marketing methods

The continuous emergence of new media marketing methods has also brought a huge impact on the traditional advertising industry.

From TVC, print, to micro-movies, H5, and now to the so-called social standard of "two Weibo and one Douyin"; from the early 4A advertising companies' hall-of-fame existence, to local advertising companies and creative hot shops becoming the focus of the industry, and now to the rise of MCN incubation agencies, these changes in content formats and industries are the inevitable result of the development of the times. The traditional 4A model has long been unable to meet the needs of advertisers and audiences.

In the past two or three years, the trend of breaking boundaries and diversification in the field of advertising and marketing has become increasingly obvious - from online to offline, from pop-up stores to young people's subcultures, with the demands of consumption upgrades and younger people, the market faced by brands is unprecedentedly segmented, and the communication channels are also complex and changeable.

*Picture source: Internet

In this era where everyone can use media, good "content" has become extremely important. " The boundaries of advertising will be broken, and everything can be content." Because of "content," these Internet celebrities and new media with high-quality content productivity have become the darlings of the industry. Li Jiaqi, a male blogger who recently became popular because of the magical phrase OMG, sold 15,000 lipsticks in 5 minutes, which is a typical case. This is a strong ability to bring goods that cannot be ignored, and this is also the value of traffic.

3. The drawbacks of traditional advertising cannot be eliminated

1. The workflow is too long to meet high-frequency needs

One of the reasons why the traditional advertising industry is constantly being replaced is inseparable from its own drawbacks that cannot be eliminated.

In the past, it took about half a year to complete a case at a 4A company. In a year, I help clients carry out 1 or 2 campaigns. But now the communication environment has changed, and customers have to launch a campaign every two months. The work processes of large advertising companies are relatively long, and it is difficult for them to meet the high-frequency marketing needs of the Internet.

The advertising industry generally works a lot of overtime, but very few works are produced each year. This is because the communication efficiency between parties A and B is too poor. When doing a project, the manager has one opinion, the director has one idea, the VP has one view, and the CEO has to revise it again. This is the current situation. If advertising companies want to increase their output, they should start by improving their efficiency.

2. Closed industry information

The advertising industry seems to be a very avant-garde and trendy industry, but it is actually very closed. It lacks learning and communication with other fields and habitually rejects information and experience outside its own circle. Compared with the new media industry that absorbs and draws on diverse information, the advertising industry is unable to provide clients with the most effective communication plans at the moment, and its grasp of hot topics is far inferior to that of new media marketing.

4. Brain drain in the industry

The decline of the traditional advertising industry is closely related to the reduction and exodus of talent.

Some people say that the advertising industry is a bit like sports, where only a few top athletes are allowed to exist, and others, even if they are very good, cannot be valued. And how can you become the best? After reaching a certain level, luck is often particularly important because the track in this field is too narrow and there are too many competing masters. Therefore, many advertising veterans choose to leave, either to open their own advertising companies or to do advertising and marketing in other fields.

In addition, the salary level is lower than that of other industries, so fewer and fewer talents want to enter the advertising industry. Without better creativity and content, the quality of the advertising industry is increasingly questioned by advertisers.

03 How can the advertising industry save itself?

1. Industry transformation and increased digital marketing

In this era of self-media, the creativity and content capabilities of the past are far from meeting customer needs. The capabilities of technology, data and algorithms are becoming increasingly important. The advertising industry needs to integrate marketing and data technology to carry out innovative practices.

It is understood that digital marketing has become an important part of the advertising industry. Public data shows that BlueFocus’ business revenue based on data technology accounts for more than 80%.

Advertising companies are also paying more and more attention to digital marketing.

*Picture source: Internet

According to the "2018 China Marketing Trends Research" report released by R3 Consulting, the proportion of digital marketing in China's average marketing budget has increased from 25.4% just two years ago to 42.6%, an astonishing increase. Similarly, according to data released by AdMaster in December, 79% of advertisers said they would increase their digital marketing budgets in 2019, of which nearly 30% saw their budgets increase by more than 30%.

Publicis Groupe, one of the advertising giants, has completed its largest acquisition in history! Acquired data marketing company Epsilon for $4.4 billion.

2. Expand new business directions

As more consulting firms open advertising businesses, ad agencies are fighting back. In addition to setting up an internal consulting business department, they even established a consulting company.

*Picture source: Internet

Last June, Ogilvy announced the official launch of a new brand visual identity system worldwide, added a new version of consulting services, and further renamed the OgilvyRED strategic department to Ogilvy Consulting;

The WPP Group is very actively developing its consulting business. Wunderman, AKQA, VML, Ogilvy and Mirum, all of which are subsidiaries of the WPP Group, have established consulting business departments. Last year, Kantar Group, the data investment management business branch of WPP Group, also established Kantar Consulting.

Publicis Groupe also acquired consulting firms to expand its consulting business.

Expanding consulting business is a direction that all advertising groups are exploring. Expanding consulting business is a direction that all advertising groups are exploring.

Author: Uni sauce

Source: Uni Sauce