Tuesday, February 10, 2009

How advertising agencies grew up

In another fantastic example of my two birds, one stone philosophy, I'm blog-posting and collecting supporting evidence for a presentation my group is making on Thursday about ad agencies.

I'm reading this interesting book, Adland, all about the growth of the advertising industry. It's a summary account of major global agencies and their influential founders. The book gives equal credit to the importance of consumer insight (research), outstanding creativity (artistry), and compelling messaging (copywriting) as elements of successful agencies. Often the most noteworthy agencies were started as a partnership between a planner, an art director, and a copywriter (or a combination of).

Here are a few examples of successful advertising agencies and how they grew up:

Lord & Thomas, an old print ad agency at the turn of the 20th century into the thirties, led by Albert Lasker, known as the true father or modern advertising. Lasker created the form of the modern agency with a department of copywriters and a focus on sales, planning, and business development. He recruited famous copywriter Claude Hopkins, known for a rational sales-focused style honed through research and empirical results. As simple an obvious as it now sounds, the 'Hopkins Approach' to good ad development implies finding the unique factor for any product that sets it apart from its rivals. Groundbreaking stuff in 1907. The importance here is that even as early as 1907, there was a strong scientific basis to advertising and agencies that could deliver a more effective advertisement were more successful. Lord & Thomas is now DraftFCB, part of Interpublic.

JWT, founded in 1878 by J. Walter Thompson (who actually bought out the agency owned by Willian Carlton), one of the largest and most successful advertising agencies ever (now part of the WPP holding company). Grew significantly from 1920s to 1950s under Stanley Resor and his wife Helen Landsdowne who emphasized the need for credible research to back up claims of product superiority (think doctors, psychologists). JWT is now the largest US agency, fourth largest in the world.

Young & Rubicam, founded in 1923 by John Young and Raymond Rubicam, is now one of the largest advertising agencies in the world. It grew like other modern agencies but had a strong focus on backing up ideas with solid research. It may therefore be considered among the less risk-taking agencies because of its more dogmatic approach to campaign development. Y&R was known for its creativity in the 1950s, but Rubicam also wanted to instill a practical, reason-based foundation in the work. In 1932, Rubicam hired George Gallup (yes, that Gallup), a sociologist and researcher to head a consumer research departmnt of 400 people within the agency. The primary research collected by field researchers working for Y&R would lead to the development of better, more relevant campaigns. In 2000 Young and Rubicam Brands (including Wunderman and Young & Rubicam) was acquired by WPP.

DDB, founded by Ned Doyle, Maxwell Dane, and Bill Bernbach in 1949 as the antithesis to what was seen at the time as stodgy and conservative creative work by the major agencies (Greay, Y&M, O&M, JWT). This was the creative shop in the 1950s, the team responsible for the famous VW Lemon ads. DDB established itself and grew based on creative risk-taking and simply great ideas rather than a focus on consumer research (the Levy's Rye Bread ad, shown above, is a classic example from DDB). A defining quality at DDB was the deliberate collaboration between art directors and copywriters to spark great ideas, known as the creative revolution in advertising. DDB merged with BBDO and Needham in 1986 to create Omnicom, then the largest advertising company in the world. DDB is seriously successful, with many creative awards (to this day) the highest revenue ($12.69B in 2007) of any agency.

Chiat/Day, creative hotspot founded in Los Angeles in 1962, best known for the '1984' Apple Superbowl ad (shown below). Although Stanley Pollitt at BMP developed the practice of 'account planning' - placing researcher and account managers directly together on client teams to better facilitate consumer insights, it was the application of account planning at Chiat/Day that catalyzed the agency's meteoric rise. From the introduction of account planning organization in 1982 to 1992, the agency's client billings grew from $50MM to $700MM. Chiat/Day merged with the European collective TBWA in 1993 and was acquired by Omnicom.

Wieden + Kennedy, founded in 1982 by Dan Wieden and David Kennedy out of Portland Oregon. W+K is a big favourite of mine for producing amazing creative work, notably Coke's 'Coke Side of Life' and the Nike 'Just Do It' campaign. The shop was the first to challenge the advertising hegemony of Madison Avenue. It's now one of the largest independently owned agencies and still producing great work, like this fantastic spot for Nike (shown below) which premiered during the 2008 Olympics. I still get chills and cry. Seems to have grown as a result of strong TV capabilities.

M&C Saatchi, founded in 1996 by the same Saatchi brothers who were forced out of their original agency, their namesake Saatchi & Saatchi. M&C Saatchi is relatively small but global, highly creative, and highly strategic in their thinking. It uses the concept of 'Brutal Simplicity' to deconstruct brands and consumer strategies to their simplest elemental forms. One word thinking. It's meant to get to the heart of insight. (Note, I really want to work here when they finally open a Toronto office!)

180, an innovative shop founded in 1998, spun off by account managers from Wieden + Kennedy's Amsterdam office who committed the most grievous of sins, pitching for Adidas, the hated rival of Nike, W+K's primary client. 180 is a multicultural agency, strongly reflecting the diversity of its Amsterdam HQ. In 2007 they opened an Los Angeles office and are now 50% owned by Omnicom. 180 describes that they first "think of the big idea and then apply it to media channels. If it doesn't work in all channels, then it's not a big idea." Interesting example of an agency that relies on incredible talent as a driver of creativity.

StrawberryFrog, started in 1999 (also in Amsterdam) as a digital media agency, now is a specialist in creating cultural movements. An example of a shop that really gets the optimism and creative risk-taking (remember DDB in the 1950s?) that makes advertising exciting. The agency specializes in popular movements using a wide array of contact points with consumers, from outdoor advertising to web-based initiatives. They design brand environments, says cheif CD, Mark Chalmers. Cool, cool stuff. Check out their story of advertising.

What I think is cool - and a key linchpin of my 601 group's strategic recommendation for our site - is that successful agencies have grown by a deliberate recognition of the importance of strategic planning and consumer research. In the case of BMP, this function is highly integrated into campaign development in the form of the 'account planning' model. In the case of Young & Rubicam, it's the purposeful distancing of a research department to develop pure, unadulterated and meaningful consumer truths.

Agencies need strategy. It's a higher value adding service and something that can improve the quality and relevance of campaigns for consumers.

But in other examples, agencies became successful simply because of the way they did work. They were more cultural. Riskier and with fresher ideas. M&C Saatchi, DDB, StrawberryFrog, and 180 are examples.

So we're now left with an interesting industry - it's highly divided, with six massive players and their collection of agencies at one end (WPP, Omnicom, Havas, Publicis, Interpublic, and Dentsu) and small boutique standalone agencies at the other. In the middle are micro-networks of agencies with networks of regional offices or partnerships.

It's these mid-tier agencies which are the most interesting to look at because they defy convention. Sure, they're creative, but they're also executional experts at new media channels which they grew up using. StrawberryFrog is an example. Same for Razorfish/Avenue A. They're strategic creatives, talking big ideas as much as consumer marketing strategies. And they're winning business. Adidas is handled by Sid Lee out of Montreal and 180 from Amsterdam. Nike is handled by Wieden + Kennedy. Burger King is handled by Crispin Porter & Bogusky from Miami. The German boutique Heyer & Partners developed the McDonald's 'I'm Lovin' It' campaign.

So what happens when strategy is increasingly being determined by nimble shops that can produce a global impact but don't need global operations?

All accounts are up for grabs.

1 comment:

Nicholas Fodor said...

Strawberryfrog has to be one of the most ingenious firms I've ever seen. They're truly on the front lines of merging multi-platform advertising with company specific (and relevant) campaigns which adhere to both the company and consumers' core values. Cultural movements indeed.