I’m waiting with bated breath to see what kind of pay raises the top executives at the major ad holding companies get for 2017.
I mean, they’ve all made a big deal in recent years of tying compensation to performance — in other words, growth at their companies.
And growth was in short supply last year. Brian Wieser, the Pivotal Research analyst, ran the numbers in a report issued earlier today.
Wieser found that organic revenue growth for the major holding companies last year — organic excludes the impact of currency fluctuations and m&a — amounted to a paltry 1% in 2017 and an even paltrier 0.1% (basically flat) in North America.
By now, we have all heard the rationalizations, which include stingy clients putting pressure on agency fees because their growth is lacking as well. P&G, Unilever and others have publicly acknowledged slashing hundreds of millions in ad costs over the past couple of years, with more slashing to come.
Clients are not only cutting agencies from their rosters, but as Wieser notes, they’re bringing an increasing amount of creative and media capabilities in-house. To a lesser extent, big IT and consulting firms are taking business away from the holding companies, via both competitive pitches and acquisitions.
Yes -- for Adland, it’s all doom and gloom, times three.
At least that’s the perception, which is great for journalists because we love to write about bad news and trouble in any way, shape or form. But as Wieser has pointed out in the past, and continues to believe, Adland will figure out ways to grow in the future with new services and capabilities.
And I, for one, agree. I mean, change is constant, right? Tech advances will continue to present opportunities to sell new stuff to consumers that they don’t really need, while marketers and agencies will figure out ways to convince them to buy it. It’s always been that way.
But competition will be fierce. My bet is that despite all their tough talk and big speeches (designed primarily for investors), big-ass marketers like P&G will continue to rely primarily on outside vendors — agencies, that is — to help them meet their sales goals with convincing advertising programs.
That's because companies like P&G have their hands full conjuring up new products to sell. As consumers continue to become more empowered and harder to track, marketers will need help finding those consumers and delivering each one the right convincing message to get them to buy.
That’s what agencies do best. And while it’s going to take a ton of effort and hard work, that’s why Adland is going to thrive for years to come.