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  • Writer's pictureMichael Hunter

“So, You Think Advertising’s Dead, Huh?”

Clients are spending more money; just not necessarily with you, the agency.

If advertising is dead – or even dying – then why is there more stuff than ever in your mailbox? I don’t mean just the one on your phone with the envelope icon on it, but the one by your curb or apartment entrance. 

Because it works. Businesses don’t do that which is uneconomic; otherwise, they run themselves out of business.

Since the invention of the wheel spread through a combination of grunt-of-mouth marketing and product demonstration, and until the end of civilization, advertising will exist. Every business needs to sell the product it provides, and a consumer can’t buy something she or he doesn’t know about. 

So, why, then, the periodic proclamations of advertising’s demise? Some theories:

  1. Clickbait. I, too, used it in the headline of this article. Death is bad and sad, but also interesting.

  2. Bias. Have you noticed that those who declare the death of advertising oftentimes do so while hyping the launch of their own type of agency – social media, experiential, public relations, content marketing – all of them advertising by another name? If the Internet has taught us anything, it’s to check your sources. You should expect bias in everything you read, which is okay, as long as you understand the direction in which it’s slanted.

  3. Wishful thinking. The kind, perhaps, borne of self-loathing? How often have you heard comments from within our own industry that advertising is just too “sales-y.” With the implication that sales is icky. Too, well, commercial. My view is that providing people with information that helps them – and, yes, persuades them – to decide is a valuable function in an economy, which is one of the few things that concerns 100% of us. The beauty – and the dilemma – is that they retain the power of choice, and it’s up to us to convince them. The art lies in determining the combination of the emotional and rational that will do so. Oh, and them is us, because we’re all consumers of something.

Let’s review some numbers to see how undead advertising is. According to Magna, marketers will spend 5% more money this year – an all-time high – when compared to last year, which was 3% more than the year prior’s all-time high.

And yet, agency revenue in aggregate is essentially flat, which means that your agency is as likely to be declining as growing. And decline can feel like death, or even worse, because when you’re dead at least you no longer feel anything, like your own decline. It’s no small feat to shrink your share price in a stock market gone wild, but the holding companies have done it. The Dow is up nearly 50% over the last three years, while the average stock price of the four major HoldCos is down about 10%.

So, where’s all that extra money going, if not to agencies? Brian Wieser, Senior Research Analyst for Pivotal Group, alludes to these client trends in his industry notes: 

  • In-housing creative and media.   

  • Compressing fees and scrutinizing contracts, so that more of their money goes to having consumers see their ads and less to the agencies who make them.

  • Buying direct from new media platforms like Google and Facebook.

  • Shifting work to consultancies (small but growing). 

Anyone with a cell phone and a laptop can call herself an agency. With low barriers to entry, it was only a matter of time before the industry had its reckoning. The greater surprise is that it took this long. Nevertheless, there are ways to find growth, and smart agencies are pursuing them.

With more media choices than ever, advertising is undoubtedly shape-shifting and more fractured than before, but it’s the opposite of dead. Long may it live.  

Michael Hunter runs Parallel-49 -- a business growth consultancy that has advised Lowe’s, Panasonic, GE, and agencies BBDO and Landor -- and has held senior marketing roles at Best Buy, KitchenAid and Campbell Soup.

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