This morning I poured a cup of coffee and opened up Dagens Industri. “Tough year awaits advertising agencies” it said in bold letters across the front page. And I’m sure that’s true. But why have this “glass half empty”-attitude on such a beautiful morning. Why not write “Big opportunities in store for alert advertising agencies” instead? Because I think that is also true. Here’s why:
It took a decade or so for the advertising industry to start embracing the internet, and when it did so it didn’t immediately go through the painful process of redrawing the entire organizational structure of the industry to fit this era. This will take another decade, and we’re somewhere around midterm exams for that process right now, exams meaning economic slow-down.
The most profound change that the internet has on our business is that it makes everything move faster. And when everything moves faster, companies and their consultants need to be more agile. So let’s look at the organizational structure of our industry to date: We have strategic brand agencies, design agencies, advertising agencies, digital agencies, pr-agencies, several types of production companies and one or two media agencies per client. Just setting a meeting with all these involved will take you weeks. Once you manage to get everybody into a meeting they all need to align their different interests and egos in a single direction. Then we need to produce. Then deploy. Now, how agile can we be in this organizational environment?
At Honesty we’ve put massive effort into integrating disciplines. The purpose is to optimize for focus and speed. For our clients we take care of strategy, design, advertising, PR and production. (I don’t mention digital here as we don’t view that as something separate at Honesty). Cost for production equipment has basically followed Moore’s law, which means we can now have full film and post production capabilities in-house. We produce music, radio, film and some types of digital solutions at Honesty today and we expand our capabilities continuously. This integration makes us fast, focused and keeps production close to the creatives and their vision. This is good for the client, but it also makes us efficient which makes it good for business on our end. When we only need one account director and one account manager/producer and not one per agency, we don’t waste money on double, triple of quadruple overheads. The client gets better prices and we get better margins (overall profit margin on turn-over 2010/11 for Honesty was 36%).
All these things combined cushion the economic slow-down for us, but more importantly, it opens up opportunity to gain market share when clients at less modern agencies start shopping around for a more efficient solution to their communications needs. (Honesty grew 35% 2011-2012).
Times of crisis are times of opportunity for the well prepared. So why the sad face?
This blog is written by Walter Naeslund and has been around since 2007. The blog is about the journey of starting an advertising agency and a sneak peek behind the scenes of what goes on at the Honesty HQ in SoFo, Södermalm. It is also a blog about communication & technology. The blog has gathered almost a thousand posts over the years with several longer and shorter breaks. Welcome and enjoy.