As goes mainstream media, ad agencies might follow.
For a little over a year, mainstream media and marketing has continued to tumble. In fact, according to AdAge, Wal-Mart Stores and McDonald's Corp. were the only two of Advertising Age/Bloomberg AdMarket 50 stocks to see gains.
The rest of the 48 marketer, media and agency stocks were all down in 2008, with most dropping double digits in value. Not surprisingly, McClatchy Co. fared the worst of all, down 91 percent.
As for ad agencies, they are struggling too. In October of 2008, AdAge reports agency employment fell to 182,400, a loss of 6,200 jobs from the business-cycle staffing peak. Combined market capitalization of the Big Four agency firms — Omnicom, WPP, Interpublic Group of Cos., Publicis Groupe — in December 2008 was $23.4 billion, not dramatically above the June 2007 market cap of WPP alone ($18.3 billion).
While some of it can easily be traced to the recession, not all of it is a byproduct of tough economic times. Advertising agencies and marketers seem to be struggling because fewer and fewer advertisements are capable of cutting through the clutter. Perhaps it's no coincidence that Wal-Mart won after capturing understated consumer sentiments with its "Save Money. Live Better." campaign.
Ad Agencies Will Have To Listen In 2009
While some pinpoint the problem to the advertising industry's relatively slow embrace of social media as suggested by a promotional video for Age of Conversation 2, another part of the equation is simpler still.
Remember the Matrix? In 1999, the Matrix took audiences by storm and won four Oscars, including Best Visual Effects. Four years later, audiences hadn't had enough, but were already saying that The Matrix Reloaded was a little too much of the same. By the time Revolutions hit theaters, the franchise had long jumped the shark.
The advertising industry has done exactly that. In the early 1990s, many agencies moved away from messaging to focus on Photoshop, Flash, and special effects. The new tools easily caught consumer attention. But by the end of the 1990s, it wasn't really enough.
So some agencies pushed harder with guerrilla marketing to generate buzz. But nowadays, buzz is not enough. Consumers want to relate, which is why a simple Wal-Mart ad can boost sales in a down season and give the company 17.3 percent year-to-date gain for 2008.
Listening to consumers isn't about social media. It's about relating to the audience, regardless of the media. It always has been. And only those agencies that remember that will see any hint of success in 2009.