Analysis of a 10,000-word article: Why do advertising companies want to do consulting? (Part 2)

In the above article, we talked about how the relationship between consulting companies and advertising companies changed from friendly to competitive, and then to the emergence of creative hot shops. What will happen next? Will they continue to compete with each other, or will they develop together? Let's continue reading this article.

Continuing from the last chapter, the book said that before 2018, consulting firms and advertising companies gradually shifted from mutual cooperation to competition, and eventually formed a situation where you have me and I have you. While the two were still battling, in line with the trend of consumer fragmentation, small and beautiful creative hot stores came on the stage and became the new favorite of brands...

1. It’s time to make a choice: “Bigger than bigger” or “think small”

Of course, 4A companies will not sit idly by and wait for consulting companies to eat away at their business bit by bit. Advertising companies are beginning to realize that in addition to creativity, they need other weapons to equip themselves.

For many large advertising groups, internal transformation has become an inevitable choice: adding consulting departments internally to develop new types of services to meet the needs of brand owners, or conversely acquiring consulting, technology and design companies to strengthen their own business capabilities. With continuous mergers and acquisitions, and attracting more talents from different backgrounds to join the company, a large number of companies have begun to choose to merge their own different companies to provide advertisers with full-link services.

In China, the same is true for local 4A companies. Both Blue Label and Leo Digital are trying to extend their business scope through investment or internal incubation, enter and provide different communication methods and models, and try to provide more diversified services.

Finally, the gap between the definitions of strategy and tactics has gradually narrowed. Both advertising and consulting companies regard Strategy based on data and insights as their important weapons.

As a result, many large advertising companies finally had two new tools: strengthening their future strategies and integrating the digital advertising industry. Of course, we can also choose to be more straightforward: at that time, the ultimate purpose of this change was to cater to the wave of digital advertising. For large advertising companies, they not only had to undertake full-case services including public relations, advertising, and communication, but also had to do their best to promise marketing results to advertisers.

Larger and more comprehensive full-cycle service capabilities ensure both creative presentation and stability throughout the year, becoming a new moat for the survival of many large advertising companies.

But at the same time, the digital age has also brought new changes, which have been repeated over the past few years: when communication becomes fragmented and even powdered, traditional Big Ideas are no longer an effective path. This means that for brands, they still need creativity, but what they need are "small and beautiful ideas" that can be spread at the speed of light on mobile and social platforms.

Just like the Think small that Bernbach customized for Volkswagen, advertising companies are also trying to become smaller. In order to be responsible for the diluted content, media resources and out-of-focus advertising effects, they began to focus on small ideas one after another.

But the reality is that for a complex, diverse, open and stratified communication environment, if an idea still needs to start from the client's brief, be understood and translated by AE, brainstorm and think by creative staff, be handed over to designers to complete the design, and finally be handed over to the production department for finalization, this traditional process is a bit too lengthy.

For the large-scale 4A companies, transformation was undoubtedly difficult, which is why they were late in transformation. The 4A companies that were not fast enough in transformation obviously had a hard time in that era.

Therefore, a creative person on the front line can quickly respond to brand needs and seize fleeting hot spots in a very short time. Therefore, making the brand quickly become a creative hot shop that can stand in the current hot spots has become another way to break the deadlock . When everyone is trying to be Bigger than Bigger, being the person who thinks small may be another solution.

Moreover, the mobile Internet was still in the process of rapid growth at that time, and it was relatively open to most Internet media. As long as the content was interesting enough, it could get enough traffic. As a result, one after another creative ideas from creative hot shops were wildly spread and highly sought after on various social media. There was a screen-sweeping case almost every few months.

Therefore, at that time when 4A had not yet completed its transformation, the volume of digital advertising was not very large, and the industry had not yet completed full integration, the small and beautiful advertisements created by creative hot shops and in-house models became important partners for many brands.

In this regard, in 2018, Creative Hot Stores reached its peak.

2. The second half of the creative hot store

As people have always said, nothing lasts forever, and the changes in the Internet era are even more dramatic. With the gradual rise of various Internet platforms, in 2020, marketing communications have begun to change again.

People have their limits, and so does the growth of mobile Internet. There are only 24 hours in a day, and when the growth rate of mobile Internet users gradually began to stagnate, almost all Internet companies realized one thing: the era of endless barbaric growth is coming to an end.

This brought about a further problem. Although the growth in the number of mobile Internet users began to slow down, the market was far from saturated for individual content creators. Especially with the rise of short videos and short graphic content, more and more content producers saw the benefits. As more and more people joined the ranks of content creation, the content production capacity of a large number of platforms has made a qualitative leap.

Especially for short video platforms, the simple production threshold has largely unleashed the creativity and creative ability of individual creators. In order to compete with other KOLs (Internet celebrities, experts), these creators rack their brains every day to create. Then their creativity is recommended by the algorithm to users who may be interested in these contents one after another.

This means that creativity is no longer a skill that belongs exclusively to advertisers.

Combined with a new weapon different from traditional media - intelligent algorithms, it further exacerbates the trend of user segmentation and segmentation, and people can easily get the content they like. This means that even those creative contents that many advertisers thought were shoddy or incomprehensible in the past have the possibility of being widely disseminated.

With the increasing maturity of recommendation mechanisms, information flows have become the number one overlord in the mobile Internet era. They almost monopolize users' time, and even their thinking and cognition.

This means that a familiar transformation has occurred again, just like the story mentioned above about the transformation of the advertising industry after advertisers took control of marketing communications.

Now, unlike the past institutional media that focused on content production, the new generation of media that started with the free Internet mindset is naturally closely integrated with advertising. Moreover, with the development of technology, Internet media platforms that control traffic, user time and attention have quickly gained the initiative in the field of marketing communication.

In addition to these, with the emergence of a large number of creators, MCN agencies that have sprung up like mushrooms after rain are also constantly eroding advertisers' budgets. Not to mention that on the other side, after several years of pain, 4A has completed its integration and has re-opened its new "first half".

In addition, for brands at this time, after experiencing the false traffic incidents and the traps of the black advertising industry, as well as the crazy pursuit of various performance ads, they have almost all begun to be thrifty and cautious in their investments. In addition, the traffic prices and cooperation thresholds of various channels and platforms have continued to rise, and a number of brands will wake up from blind investment and rethink their brands and marketing strategies.

To put it more bluntly, the problems of advertising agencies are probably caused by the times. In the golden age of the advertising industry 20 years ago, almost all brand budgets flowed through advertising agencies, and there were only so many reliable media. This meant that for advertising agencies at that time, if they had a good enough relationship with the media, they could make a lot of money even if they were just a bookkeeping company.

But now, MCN, e-commerce channels, and Internet platforms are all sharing the profits of advertising companies. In addition, with the increasing influence of the younger generation, the trust in KOLs, bloggers, and Internet celebrities is increasing day by day, making it an era where influencers have their own traffic, creativity, endorsements, and can directly complete sales conversions.

Not to mention, in the past few years, due to the decentralization of marketing communications, brands or clients may have long been tired of having to connect with several or even dozens of suppliers for a single campaign.

Therefore, for creative hot stores, just like the 4A companies at that time, the time for transformation has come. This is why the transformation time of almost all creative hot stores is concentrated between 2021 and 2022.

3. Transformation is about to begin

Therefore, even the creative hot store that was popular in 2018 has reached the time to transform.

Therefore, for the creative hot stores at that time, there were only two ways to transform:

Let’s talk about the simpler one first: be more vertical and more segmented, and become the current leader in a certain segmented field - become the most professional in filming, or become the most well-known offline event company, or become the most professional part of Xiaohongshu marketing.

The other path is relatively more complicated. To put it simply, it is: to gain the initiative in more directions of the marketing chain.

For example, the two core positions in an advertising company are copywriting and design, which are used to produce text and visual products. By incubating cultural and artistic IP, the company can enhance its media attributes, break the traditional business boundaries, and transform into a diversified independent organization with content + creativity + IP + culture, thus opening up more growth points.

Of course, although this direction sounds a bit like that of an MCN organization, in essence, its design direction may be broader.

For example, Hua Shan and Hua Nan have written books, Liang Weifeng of BBDO and Lao Shuangen of JWT have both been composers or lyricists. W+K has created experimental electronic music groups and HIFANA, New York creative hot shop Anomaly filmed the American version of "12 Tastes of Chef Nic", and Jimmy, who worked as an advertising man for 12 years, switched to drawing comics...

Or TAMNAAAA, which has shot commercials for a series of companies such as 7-up, New Balance, and Tencent Games, shot "Amazing Click", and then began to interpret movies in a creative way in 2016. Even after nearly four years of suspension in 2019, it still has 1.874 million fans. At the same time, after the suspension, it further shot the original web drama "Under the Bustling City".

Of course, from the current perspective, TAMNAAAA can no longer be considered an advertising company or a creative hot shop, and has directly transformed out of the advertising industry. But in the current situation where the cultural track is becoming increasingly crowded, this may be a more difficult path.

Considering that many creative hot shops were actually founded by creative people who left 4A, it is more realistic to transform and build personal IP. If you can't shine in the cultural field, then continuing to express your own views in the creative and commercial tracks and becoming a KOL naturally becomes a good choice.

The problem then arises: if a personal KOL, especially a vertical and professional KOL in a business field, wants to realize its value, it cannot rely on selling products. For creative people, this is not only difficult, but also undignified. Since they are already exporting their professional views on brand building and marketing communication, even if they do not engage in self-media, strategy is a relatively important item in the arsenal of advertising companies.

Moreover, corporate strategy is too broad and marketing communication is too detailed, so how to transform corporate strategy into brand strategy or brand strategy into marketing communication prospects has become a necessary link. Or to be more specific, corporate strategy is more inclined to mathematics and logic, while marketing communication is more inclined to perception and creativity, so how to translate and transform the two has become a very important link.

Just like game companies already have art and technology, but often need a position called technical art. It emphasizes the combination of rationality and sensibility, logical thinking and creative aesthetics, so that the two can work together.

For Creative Hot Shops at this time, it is just like what consulting companies said when they invaded the advertising industry: since consulting companies can use data and professional analysis reports to knock on the door of advertising, why can't Creative Hot Shops use their ability to understand the laws of communication, and then absorb some talents who understand strategic consulting, and naturally return to the top-level design of the brand, provide Party A with integrated strategic and creative services, and use innovative ideas to help customers solve business problems from the source of marketing?

If we focus on the domestic market, another very important reason is that in the past few years, a large number of new consumer companies have emerged with the slogan of "consumption upgrade". The founders who have received a lot of financing all firmly believe in the saying: all consumer products are worth redoing.

However, with the changes in the overall economic environment and people's increasingly cautious consumption views, over the past long period of time, many new consumer brands and morketing have expressed similar dilemmas, that is, they have begun to differentiate into two categories: some brands have begun to shrink and have to face the ultimate choice of transformation or bankruptcy, while other new consumer brands have completed their initial growth, but also need some external opinions to break their own barriers and achieve further growth from a small sub-category.

The commonality between these two types of brands is that they both need the assistance of consulting companies. Moreover, compared with the advertising creative business where 200,000 is already a big deal, the consulting business that easily costs more than 2 million is obviously a better direction.

After all, if we don’t make money, it will be just like the joke: There are two professions that haven’t seen a salary increase in 20 years, one is taxi drivers, and the other is advertising people. 20 years ago, a fresh graduate working in a 4A apartment earned 5,000 yuan a month, which was enough to buy a square meter of house in Beijing. 20 years later, a fresh graduate working in a 4A apartment still earns about 5,000 yuan a month, which is not enough to rent a one-bedroom apartment within the Fourth Ring Road.

Not to mention, there are so many outlets available to creative talents nowadays.

4. Use consulting to build your brand

However, it is not accurate to say that the current advertising companies have completely transformed into consulting companies. Strictly speaking, the consulting nature of advertising companies at this stage is more like the sandwich: it takes on corporate strategy from the top and performs specific market communication execution from the bottom, combining the strategy that used to rely on data and logic with the communication that relies on perception and creativity.

Of course, this may still sound a bit abstract.

To put it more bluntly: the essence is that with the changes in the current economic and communication environment, it has become an old legend that if you don't become a president, you become an advertiser. In the past, limited channels and rough communication methods led to the fact that brands and consumers were almost completely connected by advertising companies and advertisements. Therefore, for brands, even if half of the advertising costs were wasted, they had no choice but to accept it.

But at this stage, MCN and live-streaming e-commerce brokerage companies, advertising business departments of giant Internet companies, e-commerce channels, and almost all media platforms that can directly connect with consumers and complete conversions can almost always give advertisers an ROI that will not deviate too much before placing an ad .

In contrast, in the era of division of labor between consulting companies and creative companies, advertising companies cannot and dare not give a definite answer. Whether the creativity will work and how much it will work are almost unknown. To put it bluntly, even if the work fails, they can only blame the consulting company: the advertising company says that the strategy set by the consulting company is problematic, and the consulting company says that the advertising company's communication execution is not good enough.

Therefore, to some extent, the consulting nature of today’s advertising companies is essentially a change in the ecosystem. As the entire advertising ecosystem changes, brands are eager to get closer to the brand in the digital age, which naturally changes the marketing ideas of brand owners.

Although this does not mean that all advertisers’ marketing budgets will be strongly linked to ROI, once the brand’s thinking changes from future development to survival in the present stage, those marketing budgets that cannot bring clear returns will naturally be cut at the first opportunity. Even if this does not happen, advance payment is very fatal to many small and medium-sized companies.

As a result, advertising naturally began to differentiate into two categories: either more segmented like the creative hot shop to 4A companies at that time, but such segmentation must have a growth ceiling; or trying to further expand consulting business, so as to reach a fundamental agreement with advertisers, clarifying which content is for returns, which content is for promotion, and which may not bring clear returns in the short term. But for brand development and growth services, these contents are clearly distinguished before delivery.

Of course, the final transformation is likely to be what advertisers have been looking forward to as early as 2020 when the IN-house model became popular: co-creating a brand.

Author: Innocent Roland

Source: WeChat public account: Morketing (ID: Morketing)