ADVERTISING’S ANNUS HORRIBILIS

By Sandeep Joseph

As the year comes to an end, and you kick off your shoes, settling into your most comfy sofa, you may just pause for a moment and think, “What on earth just happened?”

Advertising has just been through its annus horribilis. Make no mistake: the advertising industry has never faced this kind of challenge to its very structure and reasons for existence.

Specifically, never have the following things all happened, at the same time:

1. Since the advent of radio and TV, in the early 1920s, never has one medium commanded 75% of ad spends in media. Such is the dominance of digital media, at the cost of every other media. TV and other media are in disarray, like never before.

2. There are only 6 major ad agency groups: WPP, Publicis, Dentsu, Omnicom, IPG, Havas. Never have ad agencies been so disrupted, with two of these top 6 merging (Omnicom+IPG), and another 2 are apparently on the block to be sold to anyone naive enough or brave enough to buy them (WPP and Dentsu). It’s carnage with the expected order of things in complete flux.

3. By my estimates, over 150 people have lost their jobs in Malaysia, in the ad industry, over the past 1 year. It is not openly spoken about, but these numbers include CEOs of large groups, creative rank and file, as well as film production teams and more. Production houses have shuttered, Outdoor entities have merged or folded, and with the merger of Omnicom and IPG, more losses are expected.

4. Paradoxically, while the industry struggles, never have consumers spent more time consuming media, almost ten hours of media per day as a global average. In the USA it’s 13 hours, in Malaysia it is more than 11 hours. This means ads are constantly fighting with content for consumer attention, and consumers are so overloaded with content that ads don’t necessarily cut through.

5. Never have consumers been given more choice to skip ads. Over 90% of Gen Z skip ads. More than 36% of Malaysians use ad blockers.

6. AI is crunching timelines diabolically. Press releases that used to take 3-5 days now take less than a day to draft. Production budgets, a major source of revenue for agencies, are being slashed. Music is being composed by AI. Photographers are losing business.

The ad industry is like the Titanic, after it struck the iceberg. It’s all hands on deck and deploying the life rafts.

So who will survive the icy cold waters of reality?

Those who can tackle AI and use it to their advantage. They will need to retool and reskill their agencies, cutting off those who can’t swim in these new tech waves. They will need to re-structure pricing and offerings.

Those who offer something that AI can’t hack: advice, experience, knowledge and, importantly, soft skills. I know a former agency head who now earns a handsome living advising clients how to work better with their agencies. Something that today AI can’t replicate – yet.

Media agencies who deliver value: the landscape is still complicated and clients are not in-housing media as fast as they in-housed creative.

Gen Z who are nimble, quick to learn, digitally native, adaptive and crucially, not expensive.

Gen X who own their own entities and can adapt, by managing costs, giving more rein to their digital savvy folk and have a clear strategy to offer clients.

Strategy personnel who are media agnostic and not creatively biased (these are rarer than unicorns, btw). They must innovate and find ways to blend execution with pretty slides.

Gen Y who don’t manage others, but guide, and also roll up their sleeves and actively row in the lifeboats.

You, if you read this article, take heed, enjoy your break, and come back refreshed and recharged!

Seasons’ Greetings, Merry Christmas and see you on the other side!

Sandeep Joseph is the CEO and co-founder of Ampersand Advisory, Campaign Global Media Independent Agency of the Year and FT Statista 500 High Growth Companies Asia Pacific 2023, 2024. He can be reached at sandeep@ampersand-advisory. com