SOME THOUGHTS ON OBSOLETE BUSINESS MODELS

SOME THOUGHTS ON OBSOLETE BUSINESS MODELS
And How Big Agencies Have Done Remarkably Little to Reinvent themselves
February 28, 2006
By Jonah Bloom

Media arts company

In this ROI-obsessed world, a world in which technology is bringing us closer to the number-cruncher’s holy grail of ads married directly to a consumer transaction, you have to wonder whether there is a sustainable business model for a company that creates media art.

It’s not easily measurable, yet weaving brands into culture in such a way that we no longer know where art finishes and commerce begins can occasionally yield brilliant brand results -- and would differentiate an ad shop from its media, direct and interactive siblings, which are better prepared for the one-to-one, transaction-focused ad world.

But I didn’t want to wax about Clow’s proposal here -- I’m not privy to his thinking -- so much as point out that the guy responsible for many great “ads” was prepared to contemplate the reinvention of a large ad agency as something quite different.

Fatally flawed

Despite an overwhelming mass of evidence that their business models are fatally flawed and their service offerings out of step with many marketers’ demands, the biggest agencies have done remarkably little to substantially reinvent themselves. It doesn’t seem to matter how many of their clients shift projects or even full-scale brand assignments to smaller, nimbler, flatter structured, less-30-second centric agencies, the biggest agencies seem reluctant to really blow up their model.

That’s not to say there have been no moves at all. John Dooner’s McCann Erickson has made smart use of Worldgroup to offer a multidisciplinary approach to marketers’ problems; Andrew Robertson’s BBDO has shown willingness to make personnel changes and is evolving from a 30-second-obsessed agency into a flexible organizer of collaborating Omnicom shops; and Ogilvy has shifted to a single P&L to eliminate financial barriers to collaboration among its disciplinary units.

Layers of bureaucracy

But all the big ad agencies still have layers and layers of bureaucracy, rampant job-title inflation and hundreds of people whose chief role seems to be managing up. Their product has barely changed (you could count the genuinely big ideas from the last 12 months on one hand), and I’ve heard at least three separate first-hand reports of people within those organizations who’ve had good non-TV ideas for a client being told that they’d have to be turned into TV commercials before they could be pitched.

I’ve recently been rereading “Re-imagine!,” management guru Tom Peters’ brilliant look at the new business order, wrought in large part by the Internet and which, he says, requires every modern business to constantly destroy and reinvent itself to survive.

Fear incrementalism

He takes issue with organizations that tweak rather than reinvent: “MIT Media Lab boss Nicholas Negroponte said: ‘Incrementalism is innovation’s worst enemy.’ Sad fact: Big organizations, by their very nature, are addicted to incrementalism ... they seldom make the changes necessary to deal with a discontinuous environment. ... Most big enterprises that survive a challenge from an upstart do so as shadows of their former selves. Still alive. Still big. But no longer the pathfinders.”

Lee Clow sounds as if he still wants to be a pathfinder. How many others do, too?

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*Bogusky and Clow, the industry’s pre-eminent creatives, had come together to interview each other as part of the upcoming celebration of Creativity magazine’s 20th anniversary, and you’ll be able to put Lee’s remarks in a little more context when their one-on-one is screened on AdAge.com and Adcritic.com next month.