Buy This Ad Agency!

April 3 1998 3:30 AM

Buy This Ad Agency!

The one thing today's advertising execs can't seem to brand is themselves.

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In a sense, the advertising industry is reluctantly moving toward a business model much closer to the so-called free-agent economy than to the traditional idea of a corporation. As advertising budgets become more fragmented, it's easy to imagine a situation in which ad agencies serve primarily to orchestrate production teams, bringing in art directors and copywriters for specific ad campaigns rather than keeping a whole staff on hand. When agencies lose major accounts, they often fire nearly everyone involved with the account. How much longer can it be before agencies decide that operating on a free-lance basis is simply more efficient?

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What keeps the older model intact, in part, is the importance of relationships to the business. Advertising is still a world where glad-handing and drinking with clients is important to keeping their accounts. But the studio system in Hollywood disappeared while studio execs remained important as deal makers, and the same could happen in advertising. As clients grow increasingly less committed to their ad agencies, the economics of the business will have to change. In his immensely tiresome memoir, Confessions of an Advertising Man, David Ogilvy wrote, "If you can make yourself indispensable to a client, you will never be fired." No doubt. But for the ad agencies, indispensability turned out to be a hard sell.

James Surowiecki writes for the Motley Fool. He can be e-mailed at surowiecki@aol.com.

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