Jul 15, 2006

‘Traditional’ Ad Agencies: is it really getting better?

The VEA (line organisation for marketing communication agencies in Holland) has done some research among 127 agencies. The results are;
– EBIT of 4,3%, which is to low (according the VEA)
– 20% of the agencies was loss making
– the amount of fulltime equivalents decreased to 2500
– wages are increasing due to shortage on the labour market
– it’s hard to withhold talent
The chairman of the VEA is nagging about pitches for free and he points the finger towards big advertisers and brands like Heineken and ABNAMRO.
I think this is great news for all of us (to use the phrase of a spokesman from Nielsen/Netratings – see my post on ‘The Next Web’). I think that small foccused agencies are doing great, also in the field of traditional advertising. The results of the VEA research is due to the big global agencies. These agencies are facing a lot of problems which they could have foreseen, but closed their eyes for. These problems are;
– not able to embrase and incorporate the interactive discipline within their agency and deliverables.
– not able to extend creativity towards business thinking, stuck within the classical communication paradigm.
– high prices which doesn’t reflect the added value.
– not able to shift from a relation based business model towards a more project and result based model.

So, stop nagging and pointing fingers – change!!

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