Consolidation And Project Pricing -- Two Trends To Reshape Adland In 2017

As this is the final London Blog of the year, it's a good time to pinpoint the two huge macro trends that will shape advertising and marketing as we progress through 2017. It's hard to get away from predictions at this time of year, so suffice it to say that we all know mobile's going to keep getting bigger next year, particularly so mobile video, and that analytics and metrics are going to be increasingly important now advertisers are beginning to question what they're told. These are a given.

What strikes me, however, is that 2017 will see two big trends that are already emerging come to fruition. The first is consolidation. Times are tough. Procurement is ever-present in drawing up rosters and handing out contracts. They guys who were given the chore of looking after number crunching on the media side have started to get a toe into other waters too. It means there is a danger of commoditising advertising and marketing to a point where it's always about cost and the lowest bidder.

When this happens, you can expect billings to come down and for agencies to look to be bought by an agency higher up the food chain. Small independent shops can expect to be increasingly nervous throughout the year. All around will be buying revenue with bids, or the terrible e-auction, driving down billings to the bare bones. But what can you do? Unless you have a wise, brave client marketer who can stand up to the accountants and recognise quality, all you can do is play the game. Everyone will be increasingly buying revenue to look good, like plumping up a fatted calf hoping to get a good price at market.

Yes, consolidation will be a major theme -- and it's not just about the traditional food chain of small to medium to larger independent to holding company. The consultants are now out there too, as Accenture's recent purchase of Karmarama showed. So to get bigger billings, revenue will have to be bought in the hope that a big bid comes in from a larger agency, or consultancy, which can offer some form of protection from billings heading down. It's kind of an endless circle, isn't it?

With media margins being cut to the bone, WPP's Sir Martin Sorrell has repeatedly suggested a large shop will be swallowed by a holding company and that even one of the big five -- by which it's usually accepted that he is referring to Havas -- will be bought by one of the bigger four. It's perhaps a bit of mischief-making but it does underline a point that we are likely to be entering a period of consolidation.

Which brings us to clients moving more toward project-based strategies. Instead of always relying on a retained agency, a project focus allows CMOs to hire agencies a project at a time. It generally means there is more budget for one very simple reason. If you reduce everything to cost, you end up with cheap work and cheap media. Over the course of a year it becomes a general trend, but for an individual campaign it means that a project fails to deliver and that immediately impacts the guys who did the hiring. They want to see a good result more than anyone else, and can see the sense in opening the purse strings for the best talent and tools. 

So, just maybe, this shift could counteract the general shift toward procurement skinning every contract to the bone. Just maybe working a project at a time will underline how if you input cheap, you output cheap. This could, then, show the value in paying for the right service which could, just maybe, see some common-sense return and may marketing and advertising will be a little more about value than cost.

However, this constant need to pitch a project at a time will be time-consuming and expensive. That's got to impact small agencies far more than their larger counterparts, and in turn, add more momentum behind the trend for consolidation. 

1 comment about "Consolidation And Project Pricing -- Two Trends To Reshape Adland In 2017".
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  1. Frank O'Brien from Five Tier, Inc., December 23, 2016 at 5:12 p.m., powered by Five Tier.

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