What’s Hot: Top Advertising Executives
Advertising is a talent-driven business and demand for top advertising executives is on the rise — a trend that is being fueled by the resurgence of the advertising industry. Total spending by the 100 Leading National Advertisers has topped pre-recession levels — it reached a record $108.6 billion in 2013, passing the previous spending peak set in 2007. Spending for the U.S. advertising is on track to top the 2007 record in 2015.
At The Good Search, we’ve witnessed an increase in advertising executive search engagements at the senior executive level. Interestingly, the rise in demand has been accompanied by a shift in where those opportunities are based. A greater percentage of our executive recruiting engagements are for advertising executives on the client side. What we’ve witnessed as executive headhunters is but a reflection of a greater ad industry trend.
Remarkably, a growing number of ad agencies and media agencies are competing with their own clients for business as some of the world’s most beloved brands build their own ad agencies in-house. Apple is reportedly creating an internal agency to handle its advertising work after expressing its unhappiness with its longtime advertising Agency of Record TBWA/Media Arts Lab. This is the very agency that Steve Jobs had TBWA create for Apple — the agency that created Apple’s most iconic ads, including “1984” and “Think Different.”
In-House Ad Agency Disintermediation
Apple’s recent move to bring advertising inside is part of a growing trend. The Association of National Advertisers recently released a report that found nearly 60% of clients used in-house capabilities in 2013, up from 42% in 2008. More than half (56%) of the clients with in-house capabilities have those teams handling assignments that were previously handled by an external agency. Nearly half (40% ) of those clients have brought creative strategy in-house. Historically, creative has been an ad agency’s main attraction.
A second trend is also resulting in a reshuffling of talent. The Agency of Record model is what it once was. Clients are rethinking the Agency of Record model. PepsiCo is experimenting with a more flexible model of a curated teams at Omnicom across BBDO, TBWA/Chiat/Day and 180 LA. PepsiCo President of the Global Beverages Group explained in a recent Ad Age article:
Where the efficiency comes in, we’re not buying a whole agency infrastructure. We’re curating the exact number of people at the exact seniority with the exact capabilities we need.
However, as Avi Dan recently wrote in Forbes, the more flexible Galaxy model did not keep PepsiCo from using other ad agencies outside Omnicom. He observes that the Agency of Record relationship model may have jumped the shark:
For a few years now there have been predictions about the future of marketing’s Agency of Record model – the age-old, exclusive partnership between a marketer and its agency. Now that relationship model is under fire. AOR tenures are disappearing, marketers are enlisting agencies outside of their roster, and many marketers simply don’t have a traditional roster at all.
The Senior Executive Value Proposition
The rise of in-house agencies on the client side is a common trend in professional services. Companies that use lawyers, accountants, ad agencies — and, yes, even executive search firms — learn through that experience and often decide to do some of that work themselves. Consequently, professional service offerings of advertising and media agencies must adapt to address evolving needs. The volatility of AOR agreements is but a symptom of that overarching trend. At the end of the day, we all want the same thing: value. It is not an easy thing to deliver — when, according to WPP CEO Sir Martin Sorrell, advertising is in a state of anarchy. However, increasingly, the most sought-after senior executives are those who deliver exceptional value, despite advertising’s ever-shifting advertising landscape .