Given the unexpected success of my last post, and seeing as how it began spreading even outside of Italy, I decided to translate it into English to give those who don’t speak Italian the chance to read it.

Naturally it’s a point of view about the communication sector in Italy, but I’m sure that some of these reflections are valid for other countries as well.

What inspired it all was an article published in the online newspaper key4biz featuring an interview with Alberto Contri titled, “The reason for the slow suicide of advertising agencies.”

Alberto Contri isn’t just anyone. You can read his biography here, but what interests us is that he entered into advertising in 1966 and was president of Assap (today, Assocom) from 1993 to 1997. Ultimately he experienced all the evolutions of our craft, from the golden age to today.

“When I began working in advertising in the early 70s,” Contri says, “Italian agencies were compensated 15% on media investment. When the campaigns were successful and the budget rose, so did the profits, without any corresponding increase in cost. It was a boon. In those golden years the agencies did big business. They included the creative and strategic consulting in the total media purchase fee. At a certain point, customers wanted to reduce that percentage. Competition increased and agencies increasingly offered creativity in the purchase fee for the media.”

Without a doubt that was the breaking point of Italian advertising. Managers began giving away creativity and strategy with little foresight, all in the name of an immediate profit. The result? Consulting from advertising agencies now has little value in the eyes of the client. But anyway there was still so much money in media that they could keep the full-service agencies afloat.

Here’s an example.
In 1996 when I founded Enfants Terribles, every time I gave an estimate clients would tell me: “But the other agencies gave me the creativity for free.” And I’d respond: “That may be, but that’s all we do, what would you pay us for if not?”

Thanks to our perseverance in those early years we were able to develop an entrepreneurial model that’s allowed us to survive during this long crisis and become one of the longest-lived independent agencies in Italy. And other independent agencies that started without a media department have done the same thing, building models based exclusively on the compensation of creative work.

Around the turn of the century the international networks made a second mistake, in hindsight even crazier and more damaging than the first: they separated the media departments from the agencies, dividing up the family safe and giving life to media centers.

I don’t know the exact reason of this choice, though I assume it was done for profit as always. Unfortunately the big agencies found themselves forced to pay for creative and strategic consulting, something that up until then they gave away for free.

It wasn’t easy. Especially since every three months Italian managers had to respond to the network about the results of the entire country. And, blessed foresight, to show the bosses in London, Paris or New York that they were new business machines, they began an all-out price war, reassured by the fact that their fixed costs (or at least a part) were covered by international contracts.

Many think that dumping in Italy was caused by small agencies, but they couldn’t be more wrong. It was the branch offices.

My compass from that time was a price list published in 1994 by the previously mentioned Assap of Alberto Contri. My clients looked at the estimates I made based on a more than six-year-old list and told me I was expensive. Nearly twenty years ago. The absurdity is that if I tried to charge those prices today they’d think I was crazy.

That list was created to make up for the fact that creativity had never been paid for until then. It wasn’t very useful and would be even less so today. You can find a part of the list here, on the ADCI’s blog.

The first agency lay-offs came soon after the First Gulf War, around 1991 (before, advertising was a flourishing sector), but the worst of it came in the new millennium. On the other hand, based on the scenario I described, what else would you expect? If you don’t charge enough for your work, you can hardly expect to pay workers. 

So, to continue to generate profits, the networks cut staff. If memory serves me, the defunct and much-discussed blog Bad Avenue published data showing that the advertising sector in Italy lost more than 30% of its work force in the first decade of 2000.

Who was that 30%? Simple: It was the so-called middle class of our profession. That percentage wasn’t made up of the VPs and it wasn’t made up of young workers with low costs; that 30% was the employees, not even managers, able to make a good salary thanks to years of experience. Unfortunately they were also those that passed on to newcomers the difficult (because it is difficult) craft of communication. As they left, so did their expertise, at least in the big agencies.

When a trade journalist like Andrea Crocioni talks about teachers, he’s talking about them. Not the teachers with a capital “T”, not the Creative Gurus, but the simple teachers, the ones who taught the difficult language of communication.

Since then, the big agencies have a select few at the top and an army of post-interns at the bottom. The idea would have been commendable if it meant a generational rotation, but that group of young people was put there because italian agencies can only support an underpaid workforce.

Why would so many young workers accept years of internships, project-based contracts, and subcontractor work with a limited professional prospective in return? Why did they accept the wages of a starving artist in exchange for nights and weekends spent working?

Because they didn’t have a choice.

Top-tier agencies leveraged their vanity (whose vanity? The workers or the company): “come work for us. You’ll work your ass off but you’ll work on huge projects and win awards. Then, when you can’t take it anymore, when you’re exhausted and you realize that you no longer have a social life, change agencies! In the meantime you’ll have created a great portfolio and a track record of awards … you’re sure to find a well-paid position somewhere…” It’s a shame that well-paid positions don’t exist anymore.

Like I said, the model of today’s big agencies only works thanks to a labor force that works long hours and is paid next to nothing.

Those awards that I mentioned are a particularly controversial subject. Awards were originally created as a stimulus for quality work. They were created to motivate advertisers to give their best every day, but they’ve taken a toxic turn. Over the years they’ve become the strongest hallucinogenic there is: the lure of awards hid from creatives the fact that their employers had taken away everything.

And not just in Italy.

Riding this trend of awarding everyone and everything, even the Festival of Cannes multiplied their award sections and categories year by year and its profits along with it. That is until it became impossible to sustain even for the big networks. The cost to sign up for projects and register delegates became so high that last year the CEO of WPP, Martin Sorrell, said he sent 500 delegates, half of the delegates compared to previous years. Arthur Sadoun, the new CEO of Publicis, was even more drastic, declaring that the agencies under his group wouldn’t be participating in Cannes Lions 2018. These huge changes in stance had immediate results: Ascential, the company that organizes the event, stated that the next edition would be “more streamlined and creative.”

Take a look at that!
Once upon a time winning a Lion in Cannes could launch a career or move significant budgets. Now that’s no longer true. Not even abroad where the Lions have always had more weight.

David Droga is the king of worldwide advertising. He’s won more than 200 Lions and last summer he even won the Lion of St. Mark, the award for an entire career and yet even his agency is suffering: Droga5 New York just laid off 5% of its employees.

The race for awards at all costs has brought other negative effects to the sector. A lot of Italian creatives have an infinite list of awards but not even one campaign in their portfolio that they remember or worse, not even one true campaign. This phenomenon of fakes exploded in Italian companies in the early 2000s, both to make up for the difficulty of producing quality output on real projects and to distract from the terrible contractual situation in the agency. Very few creative directors fought against the fakes, while others gave the same old excuse: “I do it for my creatives… poor guys, they already earn next to nothing, what’s the harm in letting them win an award or two?”

Wouldn’t it be better if all of the effort dedicated to producing a fake converged in the attempt to improve the employee’s economic situation?

The full picture on the fakes is even more irritating to analyze. There are a couple of aggravating factors: The first is that some creative directors’ bonuses were tied to awards. So the massive amount of fakes produced in advertising wasn’t just about free generosity toward the young creatives. The second, which for me is even worse than the first, is that many creative directors contributed to the loss of our best creative energy on fake projects rather than growing the determination and quality of the most challenging projects, birthing generations of fragile and selfish creatives. If we want to accuse the creative directors of something, it should be this. They didn’t fight to improve their collaborators’ economic situation, they didn’t pass on the craft and above all, they didn’t transmit the importance of applying yourself to real and complex projects.

Until the beginning of this year, however, in Italy they were never touched by staff cuts. They were considered the ones who made the difference, the stars that charmed the clients. Even though, to tell you the truth, there was at least one alarm bell. On November 9, 2010 JWT announced, with the usual hypocrisy, that Pietro Maestri was leaving the agency. It was another breaking point: a small but eloquent signal that preempted the fact that even creative directors weren’t safe in international agencies. It anticipated what then happened at the beginning of this year in Italy, when some of the biggest names in advertising were pushed out.

Beyond the human aspect, were these losses good or bad for the entire environment? For many people that I heard from, some of which commented on my post, it’s without a doubt a good thing. More opportunity for the new generation, more opportunity for digital!

I’m not surprised to hear or read these affirmations. When a giant falls, the underdogs always rejoice. It’s a natural human instinct. It’s difficult to pity someone who earns 10 times more than you. Especially if, as we’ve seen, the giant belongs to a group that cultivated its own interests and screwed up time and time again. But this is a superficial vision of things, especially if the guy who earns 10 times more than you is replaced by someone who only earns two times more. Then it’s a problem for everyone. That means that, even if you’re full of talent and determination, when you arrive to the top you’ll only earn double the small amount you earn now. Actually, seeing how things are, it’s likely that you’ll only earn 1.5 more.

There’s something else to consider: If the big agencies eliminate all those that supposedly guarantee the creative difference from other agencies, it means they no longer believe in creativity and that, after the clients have done it for awhile, they’ve lowered the creative profession into a mere commodity.

There’s an interesting article on the topic, and one that I completely agree with, by Daniele Cima on Brand News.

Some may claim that these layoffs are directly caused by the birth of digital, since many old-school creative directors aren’t competent with new media, but I don’t think they fully understand the situation. Digital media influenced only a small part. These cuts are an extreme consequence of an unsustainable model set up years ago.

At the end of last summer WPP’s stocks fell 10% and Martin Sorrell just declared that “2017 was not a pretty year for us”. In Italy the advertising market is diminishing even faster, by at least 4 billion euro alone from 2008 to 2015 from 10 billion to 6 billion euro.

In this sort of situation, the arrival in Italy of Consultancy Agencies in our sector is a blessing. After all of the damage that the advertising networks did in Italy, Accenture and co. couldn’t do any worse. They have the money and the will to make significant investments. Besides, since they’re used to being paid for consultations they could bear the burden of reeducating clients, bringing benefits to the entire sector, especially financially speaking.

These are the advantages, but there is a disadvantage also, or at least an unsolved question. The consultancies lack a communications culture. So much so that the communications projects that they’ve signed for but that they haven’t yet produced, clearly show their inability. We need to wait to see if they’ll continue to use communication in a tactic way, like an agency that produces Powerpoint to get their foot in the door and bring home the best digital business, or if they’ll work to grow their communication culture and make it a strategic unit for themselves as well.

The question is: why would they want to enter into an already-suffering sector with much smaller margins than what they’re used to in their own? It seems in Italy we’ll have an answer soon. For sure they’ll stock up on copy and art directors, maybe even creating some sort of huge creative department, but that’s not the reason. Instead, we need to look at the type of projects that they’ll develop and at the type of people they choose to manage them. I wouldn’t be surprised if they’re passing around names of creative directors who’ve recently been pushed out of agencies. Without a doubt these companies need a high-profile figure to seem credible on the market, but how will they take advantage of him? Will they give him space to work or will they dress him like an artist and show him off to clients like a trained monkey?

Soon we’ll be able to find out the answer to many of our doubts on the impact and strategy of the consultancies. In the meantime, we have an answer for those wondering if maybe these same consultancies are the new disruptors of the field. Riccardo Garavaglia, in one of the most articulate and original posts I’ve read recently, explains exactly why they’re not.

Disruptors come from other fields to revolutionize the market. In the case of advertising, the disruptors are Google and Facebook. He also says that given the weight of these two giants, its useless to blame the old creatives for lowering their expectations instead of fighting to save the entire advertising world, cultivating in its place alternative dreams about “farm-stays” and “niche bookstores” (cit.).

His conclusion is just as interesting.
Across markets the disruptors were successful because they improved products as well as the lives of people. Apple did it in mobile telephone technology with the smartphone. Netflix did it in television. Spotify in music…. Yet in communication it still hasn’t happened. Google and Facebook revolutionized advertisements by worsening the user experience, making it if anything more invasive and pervasive. Where once advertisements were only on TV, just a few meters away, now they follow you 24 hours per day on your phone, at roughly 20 centimeters from your face. Where once advertising had the decency and foresight to try to entertain you, now it’s morphed into bossy “calls to action.”

Millennials’ grandchildren, in their history ebooks, will describe our current period as the First Great Digital Revolution. And I for one think it’s exciting to live in such an important moment for the human race. I love innovation. I’m all about progress and allergic to the Status Quo. That’s why I’ve been fascinated by digital technology from the start. At the same time though, I know that every revolution comes with victims and a series of negative results.

The first of these consequences is marginality. Those who have a minimum of experience in managing an agency know that digital advertising has much lower margins than traditional advertising but takes a lot more entrepreneurial resources, both in the number of workers and in the depth of their specialization.

The second consequence is that, due to the type of format as well as the rigidness of the platforms used, digital advertising struggles to produce truly interesting communication projects for users.

Finally, we need to bust the myth that digital media will revolutionize our way to communicate. It’s not true. It will change it, sure, but not completely. Because even if people become more and more attached to their smartphone than the TV, the persuasion mechanisms are the same. They’ll always be based on emotions. Kittens will always be kittens, whether you scroll past them on your brand new iPhone X or watch them on an old TV from 1986.

https://www.youtube.com/watch?v=YHn8Zg1XJ74

And yet one of the latest mantras is Data Driven. According to the experts, data will change the way we communicate. We know everything about consumer behavior and we react accordingly: A/B test after A/B test in a sort of extreme Black Mirror episode.

A part from the fact that Data Driven is only one of the many formulas we’ve used to describe the advent of the model of agency in the last fifty years (we talked about Full-Service Agencies, then 360° Communication followed by Integrated or Cross-Media Communication), its total application is utopian. Just like anything that aspires to perfection while ignoring the irrationality of human beings is utopian. That said, the thought that we can measure and control everything is not only a neurosis found in any psychology manual, but the eternal dream of marketing. One of the reasons that it will never be possible to measure everything is the increasingly delicate problem of privacy (ops, Mr. Zuckerberg). One of the reasons we can never control people is that, like I said before, human behavior is motivated by subconscious and irrational logic. It’s nearly impossible to break it down to simple numbers.

So we can collect millions of data, but if we have nerds or engineers with an emotional sensitivity of a chimpanzee analyze the results, the only results we’ll have will be bananas. They may be 3D bananas, but they’re still bananas.

Alberto Contri said it better than me: “The creatives are the ones who must interpret the data, because they’re the only ones that can give it value. Without someone who knows how to create interesting, touching and convincing messages, the data is a simple commodity, and that’s something that only excellent and experienced creatives know how to do.”

And since we’re talking about data, let’s also debunk the myth about the completeness and reliability of digital. Anyone who has ever tried to cross reference the insights from a Facebook campaign with the analytics of Google knows that it’s not true. Not exactly true, that is. Anyone who has monitored the number of page views of any campaign video on Facebook knows that you only need to watch for 3 seconds for it to be counted as a view.

You might disagree, but the exact same argument has been expressed by people with more authority and influence than me. In a recent interview with Adweek, Keith Weed, CMO of Unilever, identified the biggest problem in digital marketing in three Vs: Viewability, Verification and Value.

Marc Pritchard, CMO of P&G, was even tougher and more direct in calling for the creation of a third party to verify the digital marketing data. Last year he moved 200 million dollars of digital investments to TV, audio and e-commerce, dropping spending by nearly 20% and gaining a 10% increase in reach.

It doesn’t surprise me a bit.
For more than ten years I’ve been lucky to work for P&G, a multinational company that based its success on the continual evolution of marketing. I’ve been a witness to many of these changes, including the change Pritchard spoke about.
In these years I’ve been able to follow all of the social media evolutions, for example. I’ve lived through the period of pages’ fan acquisition, before the first big algorithm change at Facebook, and then the period when brands published few posts but promoted them all. For obvious reasons I won’t get into current times, but the latest evidence shows that the conversation index on social networks doesn’t perform as well as they want us to believe and those who are able are turning back to television. It’s more difficult to get their foot in the door, but has a much greater impact.

I don’t have anything against digital. On the contrary, it’s my passion. If anything I have something against the people with dogmatic and opportunistic stances in the name of digital. As far as I’m concerned the truth is indisputable: the transformations introduced by digital haven’t changed my profession much. The final outcome is still to capture people’s attention and tell the story of a product or service in the best way possible, making a brand more appealing. The most important instrument for the job is and always has been emotion. Emotion was the most important instrument from print to radio to television and it will be in the future as well because the Internet is just another medium like all those before it. It’s easy to learn how to use the different mediums, but the sensitivity and the ability to provoke emotions is a rare gift. For too long we judged creatives for how they dressed and how many awards they had on their shelf – maybe we thought they were hair stylists – but good creatives are anything but arrogant. Arrogance kills intelligence and makes us close-minded. The best creatives I know never stop learning and absorbing concepts, information and emotions. Their strongest quality is curiosity. And don’t you think that for people like that, learning some technique is the easiest and most stimulating thing in the world? Sure, once upon a time all a creative had to do was go to the cinema, read a good book and see beautiful exhibitions. Now, however, digital has opened new and infinite scenarios, but for a true creative these will never be obstacles, but if anything incredible opportunities.

So yes, Data Driven is interesting, Digital Marketing is fascinating, the New Wave of communication is wonderful, but be careful. Don’t be fooled into thinking that the mechanisms of persuasion have changed. Don’t underestimate the importance of good strategy and good creativity. Don’t undervalue consultation even in digital and repeat the same errors of past advertising agencies.

History teaches us that rational forces are always competing against irrational forces, that after a period of Enlightement there’s always one of Romanticism. The hope is that the two will one day meet and learn to live together, but it hasn’t happened yet. And if today we are in a rational time, a period in which it seems that data can solve everything, the time will come when everything will be reversed.

I have good news and bad news for creative advertisers. The bad news is that marketing and international networks will try to push out everyone in the name of perfection, control, and profits at any cost. The good news is that they’ll never succeed. Until the world is substitute by billions of chatbots, the international networks will always need our talent, intuition and our ability to excite and excite others.