Why Big Agency Names Aren’t Nearly as Relevant as They Once Were

Many struggle with self-promotion in a rapidly changing industry

The holding company model and client-dedicated units have hastened the decline of once-potent agency brands. - Credit by Getty Images
Headshot of Erik Oster

Advertising pioneers like J. Walter Thompson and Raymond Rubicam built creative empires that dominated the industry for decades. That era may be nearing its end.

Insufficient self-branding, limitations imposed by the holding company model and client-dedicated units led to the decline of once-potent agency brands. Holding companies have responded by consolidating struggling creative agencies with other offerings, a trend that shows no signs of slowing.

“It seems to me that the devaluation of agency brands and the devaluation of creativity are moving in lockstep,” Ad Contrarian blogger and BadMen author Bob Hoffman said, leading shops to attempt to be “everything at once.” He added, “We do the opposite of what we tell our clients to do.”

Doublebit Narrative partner, brand language strategist and Interbrand veteran Caitlin Barrett attributes branding issues to agencies not investing enough time or resources into their own identity and positioning. She said employees working 60-plus hours per week are tasked with building their brand, but aren’t given the right circumstances to succeed.

Traditional agencies have struggled to keep up amid industry evolution, restricted by holding company relationships from investing in new technical capabilities or seeking out smaller, upstart clients that may lead to short-term financial losses but ultimately build value.

"Ten years from now I’d expect there will be far fewer agency brands."
Analyst Brian Wieser

Pivotal research analyst Brian Wieser said that “traditional creative agencies have underinvested” in key capabilities, arguably as a result of holding companies withholding resources in the interest of investing centrally. “I think that starving of resources of the agency brand, if you do that long enough, the brand is dying,” he added.

Clients frustrated with their agencies’ approaches and seeking alternatives are still navigating how to alter or exit existing relationships to work with different types of partners.

A source who was privy to a client conversation for a large CPG brand witnessed team members discuss how to detach themselves from their AOR, which ultimately led to logistical frustrations in moving work to new partners, saying, “Risk-taking is rarely rewarded in the corporate environment, so the easy thing to do is to stick with the conservative bet.”

Over time, independent agencies and other players are continuing to chip away, however, as evidenced by Ford’s recent decision to assign its upcoming fall campaign to Wieden + Kennedy and name W+K as a new innovation partner. The question is whether traditional agencies can adapt before clients move work elsewhere.

“The bigger agencies are trying to catch up and offer things that are more nimble, more affordable,” Barrett said. “They’re very big ships to change course, and it’s taking them a lot longer than they would have thought.”

Barrett said the industry’s perpetual revolving door contributes to a lack of differentiation, recalling a review with agencies from rival holding companies in which one pitch deck included images of “some of the exact same people that were in the other presentation.”

Holding companies have responded to demands for a nimbler approach with structural changes, including dedicated units and consolidation.

Forrester principal analyst Jay Pattisall explained that agencies not adjusting quickly or radically enough to meet clients’ changing needs has led to structural changes such as client-dedicated units. Holding company brands have become “more relevant today than they ever have been,” he said, leading to a point where “CMOs will be selecting the holding company first and then the agency culture that fits their needs second.”

Holding companies are attempting to boost the value of struggling creative agencies by attaching them to other offerings, as WPP did with VMLY&R. This is not because such agencies are “unimportant individually,” Pattisall said, but because “they’re stronger together,” calling the subsequent devaluation of the individual agency brand “an unintended consequence of the need to consolidate and strengthen the agency capability.”

Pattisall characterized such consolidation “necessary for all holding companies, to one degree or another, to create more integrated agencies and more integrated capabilities.” He anticipates similar moves over the next 12 to 18 months.

There’s reason to believe consolidation is a long-term trend.

“Ten years from now I’d expect there will be far fewer agency brands,” Wieser said, the number of which “has arguably made what the holding companies have to offer somewhat confusing. There is a simplification transition.”

Barrett envisions consolidation at holding companies continuing until brands have a choice between “very few big agencies” or boutique shops boosted by the talent laid off from such consolidation.

She said the consolidation trend “seems really unsustainable.” Barrett added, “The trajectory they’re on seems pretty clear: continuing to bring agencies together and squeeze people out.”

This story first appeared in the October 22, 2018, issue of Adweek magazine. Click here to subscribe.

@ErikDOster erik.oster@adweek.com Erik Oster is an agencies reporter for Adweek.