Why Advertising is moving away from Ad Agencies

It’s highly likely that the next ad agency you work with will not be an ad agency

For at least a decade, the ad agency model has been creaking, like a submarine that dived too deep. And now, finally, it looks to be disintegrating.

It started with a few small holes, the water began to rush in, and those leaks are now turning into a flood. The only question is whether it will implode suddenly, or crumble slowly.

The main trends that have holed ad agencies below the waterline have been in-housing, the rise of hybrid models, and automation.

In-housing is really a return to how advertising began. Unbelievable as it sounds, when advertising first started, there were no advertising agencies. Media buying agencies had long existed (the first recorded British advertising agent was one William Taylor, who placed an advertisement touting his services in the Maidstone Journal in 1786) but the first ‘full-service’ agency in the US – that both bought the space and filled it – was N.W.Ayer in 1869. Before that, large advertisers such as department stores and beauty brands created all their ads in-house.

Once advertising agencies were invented, they quickly flourished, and by 1906 there were 400 agencies in London alone. Why were clients prepared to pay more, to get their advertising produced by external companies? The simple answer is they were persuaded they’d get better work. And that argument rested on a (true) belief that creative people want to work with other creative people. They want to live in the trendy party of town, and wear exciting clothes that might be frowned on by the ‘normals’. They want to be able to put their feet on the desks, and experiment with facial hair. All of which they felt wouldn’t be possible within a client company.

The trend lasted a hundred years, during which in-housing rarely happened. When it did, it was a creative experiment. The most famous example was the work for the Italian fashion brand Benetton, which for an 18-year period (1982-2000) didn’t use an ad agency but instead employed the photographer Oliviero Toscani, who created a controversial (and successful) series of advertisements.

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This article is published on The Moon Unit