Do Irish-owned advertising agencies have any future?

Media&Marketing: If you think this headline is a touch alarmist, well most headlines where marketing and advertising have been concerned recently don't exactly make for happy reading, writes Orlaith Blaney.

Indeed, just about every headline has made pretty depressing reading for our business.

International agency networks are heaving under a debt level of more than $9 billion (€7.9 billion) according to British trade magazine Campaign. In the US, the ghost of September 11th still looms large and economic forecasters remain reticent over any upturn in the US economy.

Closer to home, general economic sterility has seen job losses on a weekly basis. We've seen redundancies on the client and agency sides.

Downsizing, restructuring and merger talks are all on the agenda at some Dublin advertising agencies. RTÉ revenue is down 12 per cent and, although this may be partly due to lost Procter & Gamble revenues, September figures should give us a more accurate indication. We've also witnessed the rapid demise of the Dublin Daily and, before that, Stars on Sunday.

Furthermore, a number of key marketing spenders are freezing portions of their advertising spend for the second half of 2003. Media owners appear to be having a price blitz on space.

Media fragmentation continues to be an issue and is unlikely to ease with the imminent launch of two more newspapers and the issue of further radio licences. So cost cutting is on everyone's agenda.

Is it merely a sign of the times? Is it just a short-term lull? And, if we haven't turned the corner yet, just how long is this corner?

Right now, almost every client is focused on the bottom line. Commitments to year-end profit targets must be delivered and margins have to be secured. Stockholders starved of dividend and weary of wilting share prices need good news (and this affects some Irish advertising agencies too).

Plc clients are hardly likely to favour hanging around for a marketing campaign to deliver. Cutting ad spend, which can go to the bottom line, sounds like a much more realistic option. Equally, private-sector clients are going to take a hard look at their advertising spend in light of poor sales forecasts and economic gloom.

If clients don't scrap their advertising spend altogether, they're certainly going to look at how much they're paying their agency. How this affects the agency depends on a client's view of advertising - whether they see it as a cost or whether it is seen as value for money.

If it comes down to lowering costs, which it certainly will, the agency can take it on the chin or try and argue a defence for offering better value.

Both have risks. In the first instance an agency that drops its cost will not be allowed to raise them when the good times return. In the second instance, it's a risky strategy in the current economic climate.

In his essay in Campaign (July 11th, 2003) Mr Tim Delaney, chairman of UK-based agency Leagas Delaney, states: "As an industry, we often don't help ourselves when it comes to demonstrating our own value. I sense a climate of fear developing at a time when there's never been a bigger requirement to be brave."

That is really what it all boils down to. In the past it was a relatively simple matter of agencies bringing their costs and charges down into line with client expectations. After all, advertising in the past had a reputation for charging excessively in the first place. Sadly, this ugly residue still sticks with many clients.

Today there are more than 100 full-time purchasing controllers who have a say in the appointment of agencies in Britain. Three years ago there were fewer than 10.

One large British account was recently up for pitch and tendered purely on the basis of price. All the signs are there - advertising and media are slowly been seen as nothing more than a commodity.

So what's the solution and how will agencies survive?

Let's go back to Mr Delaney's words and the idea of demonstrating an agency's value to its client. Good ads sell. But, if good ads sell, why are we suffering now?

In a climate of fear, agencies opt for pragmatism over just about everything. But just getting the job done comes at a price. The ads produced are inevitably shoddy, uninspiring, and witless, and have no strategy beyond being completed on time and on budget. Is this really the basis for which we want to be paid now or in the future? It sure doesn't sound like a business plan to me.

Is it any wonder the ads don't work? Is it any wonder you lose the respect of your clients? More than at any other time, we need to absolutely earn the respect of our clients.

We need to share the responsibility with them and we need to begin proper, meaningful partnerships.

Real partnership means spending time really understanding not just the marketing issues but the commercial issues faced by our clients, and making sure you know the answer to the question: what does success look like?

Pressurised by the need to get ads done fast, we can be guilty of skipping the really critical questions. And, in a highly competitive agency environment, the search for the answers to some of these questions can lead to clients deciding to go elsewhere.

Equally, we need to challenge ourselves and our clients about what we are asked to advertise. It stands to reason that if we get back to developing truly compelling advertising that sells, we can claim a stake in the success of the campaigns.

Very simply, we have to operate more professionally as a business. Transparency, effectiveness and generating compelling advertising are the future.

The sooner agencies and clients put it back on the top of their respective agendas, clearly the better the chance for advertising to succeed for both parties.

So do Irish ad agencies have a future? Yes, but we need to be brave and we've more than "a bit to do".

Orlaith Blaney is managing director of McCann-Erickson, Dublin.