Advertising Agencies are Coal Miners

Russell Davies compares the big agencies to the coal-mining business. Growing up close to coal mines, I think his analogy is brilliant:

“Mining died in the UK because it was uneconomic, not because all the coal suddenly disappeared. In many parts of the world it’s still a thriving business, it’s still economic. That seems quite like the ad agency business.

Extracting attention using advertising agencies isn’t suddenly impossible, it’s just gradually becoming uneconomic in the West. This is predictable and it’s possible to prepare for it – through retraining and re-skilling. Whether that will actually happen is debatable. There may be for a future for some specialist businesses and for a few heritage ones, but that’s about it.”

I was a kid when the coal mines started to close down in Germany. I never understood why miners demonstrated for months without any pay to keep their horrible job: Generations worked in the mines and died pre-maturely. I understood the idea of tradition but I also believed in the power of progress. The German government had to subsidize the mines for years (up to $200k per employee) to stay competitive and keep the miners union quiet.

The same is about to happen to disruptive advertising models. Yes, they still work but the costs are astronomical  Disruption models will start become inefficient and brands will move on to models to guarantee higher ROI’s. Corporations might be slow moving but they react quickly when the ROI is not working anymore. Agencies, just like the coal miners, will hold on to old business models as long as they possibly can. And that might be too late for most of them.

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One response to “Advertising Agencies are Coal Miners

  1. Pingback: Transitions «

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