"The wheel’s still spinning but the hamster’s dead." That’s how You & Mr Jones’ David Jones assessed the current state of the global marketing services behemoths in a recent 北京赛车pk10 interview.
Jones is a purveyor of an alternative business model, so he would say that. But as the ad industry knuckles down for a tough fourth-quarter push – hamster defibrillators on standby – doommonger words have a richer timbre.
It’s been a lacklustre year so far for many of the big groups, with average organic growth of just 0.8% for the first half, down 50% on 2018. Still, it’s the season of strategising for growth, so expect plenty of punchy optimism and delusional self-importance. WPP is mustering in Brooklyn, Dentsu Aegis Network is mustering in London this month, and around the world the big agency groups are trying to identify opportunities amid the threats from in-housing, fee-slashing and management consultancies.
For clear evidence of the challenge, take a look at what Procter & Gamble has been up to. Its annual report last month revealed the company had reduced marketing spend in all five of its key business segments and slashed its annual advertising expense by $350m to $6.75bn, achieving savings partly by "reductions in agency compensation". At the same time, the FMCG giant announced its best organic sales growth for well over a decade.
When the world’s biggest advertiser cuts adspend and agency fees, the holding companies catch a chill. So they’ve taken restorative tonics by investing in data platforms, new technology, integration and cross-agency collaboration.
But if you ask P&G’s chief executive, David Taylor, how cutting adspend and squeezing agencies harder has helped drive sales growth, he has an answer for you: "We’ve increased advertising that makes you think, talk, laugh, cry, smile, share and, of course, buy… advertising that clears the highest bar for creative brilliance, sparking conversations, affecting attitudes, changing behaviour and sometimes even defining popular culture." In other words, it’s not (necessarily) what you spend, it’s what you spend it on: "creative brilliance."
How high creative brilliance will figure in the 2020 growth plans being shaped by the holding companies this autumn will be crucial. The hamster’s life depends on it.