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Two setbacks caught my attention last week. And in a way it’s an analogy of the challenges facing Madison Avenue these days.

The first involved Crispin, Porter & Bogusky. Eight years after departing the advertising business, Alex Bogusky tried for a comeback with the agency he led. But, less than 18 months later, the storied creative director discovered that there are no second acts in advertising and departed the agency again. 

Bogusky was a rock-star in the 2000’s. His agency’s dazzle was tied to digital innovation and agnostic integrated campaigns, while the legacy agencies’ were clinging to TV commercials. The agency started last decade as a small regional shop and by 2010, CP&B was the most-admired agency in America with big clients including Microsoft, Nike, Coca-Cola and Volkswagen. It snagged Ad Age’s Agency of the Year award in 2004 and 2008 and was crowned Agency of the Decade. It had won Ad Age’s Creativity Agency of the Year four times in six years by during the decade.

Expectations ran high for Bogusky’s return. But the reset wasn’t successful. CP&B closed its flagship Miami office and shuttered its Los Angeles outpost. A decade earlier, the agency was successfully able to persuade clients to adopt risky campaigns. Back then, the agency famously refused to pitch business. It didn’t need to. Clients flocked to it. CP&B was so hot that fast-food rivals Arby’s, Domino’s and Burger King agreed to coexist at the shop, conflict be damned.

After Bogusky left in 2011, a slew of executives followed, including Bogusky’s replacement. The agency’s work stopped being dazzling as it was struggling to reinvent themselves in the face of shifting client needs. Even with Bogusky 2.0, the agency couldn’t catch lightning-in-a-bottle again.

Another great agency, WPP’s Ogilvy, started the new year by having a round of layoffs. It dismissed 80 employees, including the agency’s creative director who just joined just a year earlier. That came on the heels of another round of lay off just last August.  

The agency has been one of the brightest stars on Madison Avenue in the second half of last century, ever since David Ogilvy founded it in 1948. However, by the end of the last decade Ogilvy’s fortunes changed after failing to win a number of high-profile pitches like Walmart and Sprint, and it slashed 10% of its staff in North America. Ogilvy’s response to the challenging undercurrents was a restructuring.

The problem with losing momentum in the agency business, as CP&B and Ogilvy are now discovering, that it is extremely hard to revive the brand once lack of success sets in. Morale falls low, good people leave, clients take their business somewhere else, the agency loses confidence and the collateral damage is that it often loses one pitch after another. 

This is what has happened to two historically venerable shops, Young & Rubicam and J. Walter Thompson. In the 1970s and 1980s these great agencies were the biggest agencies in the U.S. at the time but eventually began to decline and were downsized. They are no longer standalone shops.

Ogilvy, like most legacy agencies, was caught unprepared for the digital wave of the early 2000’s that helped CP&B soar. Ironically, CP&B too was not prepared for the competition from consulting firms such as Accenture, Deloitte, and PwC, which are increasingly encroaching on ad agencies’ turfs to compete for marketing budgets. Not to mention, the squeeze on fees, smaller budgets and in-housing.

To pull through, agencies must show willingness to be more reflective of clients’ needs. Only the ones that can adapt will survive. Agencies will have to meet a number of incoming trends and challenges, from figuring out data and AI and fighting for top talent, to keeping up with consultancies and focusing on innovation that has to deliver ROI.

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Business News

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