Hey, stop stealing my clients!
A piece in yesterday’s New York Times discussed how magazine publishers, such as Conde Nast, have been creating their own in-house ad agencies and how this is a threat to traditional ad agencies. Instead of an advertiser paying a trad agency to create work that runs in the magazines, the in-house agency will do it for them, so missing out the middle men in their trendy glasses.
Publications creating ads for advertisers is hardly new, of course. In the early days of advertising this was how all ads were done. A publication would sell space, one of its copywriters would write a snappy slogan and the art department would lay it out all fancy, all included in the price. Then agencies sprang up to sell the space for the publications and throw in their creative services “for free,” paid for by the 15% discount they would get from the pubs.
But it is different now. Conde Nast’s in-house agency, the Conde Nast Media Group, for instance, generates about $200million in revenue from programs for advertisers: programs that include TV specials, radio spots and in-strore promotions in addition to magazine ads. And Conde Nast can pull in some major celebs for its ad campaigns, so giving the advertisers another reason to use the in-house agency.
Should traditional agencies be worried? Of course they should! They will need to work harder to justify their role in the mix, as advertisers find they can easily bypass them. They will have to prove that they have a better understanding of the consumer, that they have better ideas and that they can do better campaigns by not being tied to any one media vehicle (after all, unlike the in-house agencies, traditional ad agencies are impartial advisors to advertisers).
