Calexis

It has been more than 20 years since advertising started to appear digitally.

Today traditional advertising agencies have been reconfigured and reconstructed, disintermediated and disrupted.

Originally advertising agencies were charged with creating the marketing messages that built brands and with buying the media to support those messages.  In this, agencies managed the clients’ long term branding needs.

But because agencies’ income was somewhat indirect, through media commissions, services started to be separated and parceled off in the 1980s.  Clients started by buying media services only and there was plenty of margin to allow lower commissions by media buying shops.  This started to strangle off the creative services and make them appear costly.  When they were bundled in as a total package this wasn’t transparent.

As this drama had played out, digital media arrived.

Agencies were well invested in traditional media (print, radio and TV) and were still fighting to maintain their role in managing it.

They were slow to embrace the web feeling it was a small time, one shot below the line expense – like direct mail or promotion.  But as has been the case of many institutions vested in an old technology, they were wrong about digital.  Ask newspapers how expensive this mistake can be.

The model shifted.  Someone stole the advertising agencies’ cheese.

Digital studios started up to provide websites, and then banner ads, big boxes, social media and the parade out of advertising agency control started.  As did the start of fragmentation of vision for brands.

Clients started buying the digital ads themselves and commissioning the creative as well, using the graphic assets that their agencies had created.  And they could do it at a cost for creative much less than they would have paid to the agencies.

The traditional agencies were not ready for many of the other skill sets that came with digital, like managing search, building websites, social media or buying digital ads.

The technology skills required frightened many agencies.  There was no staffing that was knowledgeable and the entire palette of services didn’t fit into any of the traditional agency service silos of Creative, Media, Account Management and Research.  Plus there was a lot of confusion on how to charge for the services, since the established model relied on media commissions.

Agencies could see it coming; they knew it was coming; but, few could react to it.  Or when they did react, they overreacted and couldn’t find the economic balance that could support such an overreaction.

And the 100 years of advertising agencies as the creative, media buying experts started to disintegrate.

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