Prediction: Ad Agencies will be Purchased by Web Marketing Firms

Ad agencies will be purchased by web marketing companies in the future.

Starting now. Position yourself for this.

Why? Well we know in a recession that advertising budgets and public relations budgets get slashed. Drastically reduced. From big ad budgets to nada asap.  Staples is one obvious example of cuts:

From the looks of things at Staples, the recession is upon us.

and

So, the Framingham retailer is trimming costs everywhere it can, reducing advertising, delaying new hires and renovations, curtailing employee travel, and saving gas with devices that limit the maximum speed of its delivery trucks.

See that first item on the list? Ya, that one? It is *advertising*.

Advertising is almost always the first thing to get slashed in a recession. You CAN live without advertising in hibernation mode. Should you cut your advertising budgets? Well, let’s ask those in the business of advertising. The magic-eight-ball says about cutting advertising budgets in a recession.

Everywhere I turn we hear of the downward spiral of our economic state. I know what you are thinking; it’s time to cut that marketing budget. Signs of recession are all around us. Let’s start slashing costs and marketing is the first to go. Makes sense, right? No! Let me explain.

Don’t you dare cut your marketing budget. That is one of the first mistakes businesses make during times of economic crisis.

So the marketing professionals (I are one) recommend you do NOT cut your marketing budget. It is a bad idea. "Advertise through the downturn and you will come out stronger on the other side" we wisely encourage you. And this is actually my advice. Really it is. But it won’t happen. Here’s why.

Changing hats to the CEO hat if most people don’t conserve cash there won’t BE an other side. And it is damn hard to lay people off and justify a 25k spend on billboards. So don’t hold your breath if you think companies aren’t going to cut their advertising budgets. OF COURSE THEY WILL.

So the top 15 reasons ad agencies will fail and be bought by web marketing firms.

  1. Ad agencies honestly like flash intros. Seriously.
  2. They still think web sites have to be "above the fold"
  3. They are more worried about aesthetics than conversion rates
  4. They still charge commission on ad buys, which creates a conflict of interest for online PPC management which is an auction format
  5. They would rather lay off 50 people than admit their creative direction sucks
  6. They hire two people to run the "interactive division" and don’t integrate online efforts with overall strategy for the clients. But they get a cool name for the division.
  7. They create web sites and take them down after a few months denying the client link backs over time. Clients will someday realize they are being linkback-screwed.
  8. Agencies pitch micro-sites because they are afraid of the actual work of running a web site and lack the expertise (beyond the two guys of course).
  9. They do not train their people on search engine optimization (everyone’s job)
  10. They don’t hire bloggers and if bloggers work inside the agency they are cynical and hide because of the rest of this list.
  11. They outsource all video production and don’t have micro-video-production capabilities. Flip Video anyone?
  12. They view advertising and public relations as different disciplines and prefer to have ad peeps tell the PR people what to do. Which is backward. Strategy first.
  13. They think badging means something a badger does.
  14. Webs have followed a progression from  1) web design to 2) SEO to 3) web marketing/conversion and now 4) social media. Most advertising agencies are still at 1. This is not good.
  15. Ad agencies don’t have a strong recurring revenue model beyond new business acquisition.

Why will web marketing companies buy the ad agencies? Because web marketing companies are profitable.  They can buy the client base, make money converting the remaining budgets into online advertising and massively leverage the network for reasonable interlinking and micro-video development.

What can you do if you work at an ad agency and you see management driving towards a cliff with no signs of changing course?

  1. Take responsibility to build your own personal brand. Strong people have their own voice. Get yours.
  2. Start a blog. It won’t make sense at work, but you WILL learn the basics quickly this way.
  3. Be active on facebook (not linked in so much as facebook specifically) and twitter
  4. Train yourself on social media and search engine optimization. Lynda.com has both and for $30 bucks a month you get unlimited training. Just do it.
  5. Look for curious people to work for. Curious people are FAR more open to change.
  6. Read. Read. Read. etc.

A couple of housekeeping notes. No, this doesn’t apply to all agencies, but it definitely applies to many I have seen. I have examples for every item on that list.

I see dead people if they don’t change their ways. 

PS – If you know me and think I am writing about your agency in particular. I might be. But everyone else reading this is thinking the same thing. I really want to see everyone succeed, especially in Houston. What I don’t see is advertising agencies making material changes to fix their businesses in a web marketing centric world. And that will end badly my friends. Or with an acquisition from a web marketing firm in a few years.