The shutdown of Barton F. Graf is yet another sign of the times for creative agencies. The shop, which was founded just under a decade ago, has been one of the darlings of the creative pet art agency world. It will close its doors later this year. Founder Gerry Graf, speaking to Ad Age, said the closure was due to “a perfect storm.”
But that storm shouldn’t come as a surprise; it’s been brewing for a while. Barton F. Graf, like other agencies, was hit hard by the ongoing movement from clients towards more project-based work. That’s a tough pivot for agencies like this one, which was built on models that prized agency of record work.
And agency models, despite lots of loud and public calls for “innovation,” haven’t really evolved much at all. Agencies are typically based on an FTE model, where they’re paid according to the level and number of employees needed to service a client’s business, with (hopefully) a margin added on top.
A labor-based model doesn’t really work in a market like this one. Clients want to pay less money overall, marketing is still considered a cost-center, and they’re likelier to only want to pay for things they can’t do themselves. That means, in many cases, the money agencies are charging won’t cover their costs, let alone garner a profit.
How much of this is the agencies’ own fault? Some say it’s a mindset that they’d always get paid for the services that are coming back to bite them. At least a few agency CEOs and former execs have said to me that agencies for too long charged clients too much for work they could have done with less. That meant clients, sick and tired of that kind of financial arrangement (and under pressure from their bosses) are understandably looking to save money.
Some agencies have attempted to evolve. Some of them tried to make products themselves, leading to an explosion in “agency IP” projects a few years ago, with little in the way of tangible results. Some are offering to co-create Cartier Replica and co-invest, thus having more of a hand in making and growing the client’s products and businesses. Many will survive, especially newer ones accustomed to working in this new way. But for pure creative agencies who are unwilling or unable to make significant and drastic shifts in their models, it seems like the end is nigh.
David Droga, who sold his agency to Accenture Interactive just a few months ago, says agencies should ensure they’re selling more than just a “big idea”. “It’s one thing for us to want great and grand ambitious creative thinking that positions a brand. But our fees are one chunk of that. It’s not all. There are things that a consumer experiences about the brand that don’t touch a creative agency,” he told Digiday previously. “Blue-chip brands give AORs fees of $10 million or $15 million. But the people who are controlling the customer experience, they’re getting paid an ongoing fee of $100 million a year. I don’t need that number, but what I want is to be that important and that influential. I want CMOs to love us and CEOs to love us as well.” — Shareen Pathak
The subscriber is always right?
There’s no shortage of data encouraging news publishers to lean into consumer revenue. But there’s also ample proof that relying on readers for direct revenue means managing a completely different kind of relationship than many publishers are used to.
This week has already offered examples of both.
On Wednesday, The Guardian announced it had broken even for the first time in years, thanks largely to growth in its membership ranks and donations. The British news publisher said it now has over 655,000 paying supporters across print and digital around the world, who get perks such as free access to Guardian events, depending on the tier of membership. An additional 300,000 people gave to The Guardian via one-off donations.
But it wasn’t all good news for reader revenue this week. On Monday, the #CancelNYT began trending on Twitter after a handful of Twitter users took issue with the way the newspaper framed a speech on gun violence given by President Donald Trump. Within hours, a mixture of Times subscribers and gleeful conservatives were tweeting that they were tired of the publisher’s handling of the president’s racist rhetoric and provocations. Some framed the headline as the straw that broke the camel’s back, placed atop everything from the paper’s employment of conservative columnist Bret Stephens to a decision to accept advertising that attacked Congresswoman Rashida Tlaib.
Grandstanding on Twitter is easy, and canceling a newspaper subscription can be notoriously hard, but it appears that some people did follow through. The paper admitted to the Columbia Journalism Review that it had experienced a “higher number of cancellations than is typical” following the incident.
The Times is held to an unusually high standard because it is regarded by many as a standard-bearer for American journalism. But the dust-up confirms that news publishers, particularly those focused on growing subscriptions, have to think intently about the expectations of their subscribers, and how that relationship can be managed.
Newspapers have decided to embrace the idea that they are bulwarks of democracy and community vitality. That’s an admirable responsibility, but people expect different things from their idols. — Max Willens
Digiday+ Research: Instagram wins over Facebook for role in brands’ holiday marketing
Brands differ on how they use each marketing channel during the holidays -- even when it comes to sibling social media platforms Facebook and Instagram, Digiday+ Research found.
How — and why — Candy Crush is in the midst of a 10th anniversary brand refresh
In the years since Activision Blizzard acquired the Swedish game studio King in 2016, employees at the gaming giant have started to internally refer to their company as “ABK” — that is, Activision Blizzard King. But the corporation’s recent financial reports indicate that “KAB” might be a more accurate abbreviation.
Independent agency Goat invests in influencer strategy for clients as it expands in the U.S.
Everyone is after influencers to up their marketing game. But the secret to success, Goat contends, is in viewing influencers as performance media and using data to deliver clients guaranteed outcomes.
SponsoredHow brands are measuring incremental performance on CTV
Connected TV is unique among other advertising channels because it combines linear television’s storytelling capabilities with digital marketing’s targeting and measurement. As more marketers leverage CTV advertisements to reach relevant and engaged audiences, they also want to understand the real value they are generating with their investment. Incrementality reporting and measurement allow advertisers to measure […]
Marketers bring Web3 to the FIFA World Cup with augmented reality, NFTs and virtual worlds
The month-long tournament, which begins this weekend, will be the first World Cup since it took place in Russia in 2018 long before “Web3” entered the global lexicon. Now, official and non-official sponsors are hoping to harness the hype with a range of NFTs, virtual worlds, augmented reality tools and other trendy tech.
U-Haul diversifies its social strategy to tell people it’s more than moving trucks
In recent years, U-Haul's in-house agency has been working to "better leverage social media for brand loyalty."