This op ed first appeared on allmediascotland on October 25 2013.
I WAS clearing out some old cupboards in the office when I found the very first presentation we made as an agency.
It was 18 years ago, a presentation to our bank manager, outlining our business plan.
There was a section on the marketplace, showing the 25 agencies in Scotland The Union would be competing against. A strong and vibrant marketplace, full of creativity and entrepreneurial spirit, serving a wide range of clients.
Brands such as Kwik-Fit, RBS, IRN-BRU, Bank of Scotland, Tennent’s, Sports Division, Highland Spring, ScottishPower, Baxters, Scotch Beef and Standard Life have all benefited from the creativity of agencies and the creative talent that lies within Scotland.
Dusting down the old charts, I reviewed the long-forgotten list. How many of these companies are still here I wondered?
Amazingly, by my calculations, only two: The Leith Agency and Levy McCallum. All the others have sadly disappeared – and, indeed, during the intervening years many other agencies have come and gone.
What has happened to the creative agency market in the last 20 years I wondered? Sure, it has changed. But for the good? Why has it changed? And what does the future look like?
First of all, what does the data show?
A search through the industry website, The Drum, indicates that agency closures and mergers have accelerated in recent years, with 2011 and 2013 in particular seeing some well-established names close their doors.
By my calculations, between 2001-2007, 14 businesses either closed or merged.
And then, between 2008 and this year, the figure leapt to 24 – a 71 per cent increase.
Since 2008, the agency names that have passed into history include 1576, Barkers Scotland, Graphic Partners, Merle, Navy Blue, GRP and Redpath. Recently, Newhaven Communications, one of the creative stars of the industry, has merged with The Leith Agency, with the founding directors leaving for pastures new.
The other data which presents a sad picture of the health of the agency scene in Scotland is the Campaign magazine/Nielsen annual billings report, a league table record of client advertising expenditure.
In 2007, there were no less that seven Scottish agencies appearing in the UK’s top 100 chart – a respectable showing, and indicative of Scotland’s share of the UK economy. But for the last few years, only two Scots agencies, Leith and The Union, have flown the flag for advertising north of the border. A huge shift.
So, what are the reasons for what would appear to be a dramatic decline in the Scottish creative agency world?
Perhaps the most obvious is the most fundamental shift in marketing in living memory – the rise of the internet.
As a result, the last ten years has seen the dramatic rise of a new breed of digital agency. Equator, Dog Digital, Whitespace, Realise, Storm ID and others are all relatively young digital companies, and all appear to be thriving and bursting with talent.
It is perhaps no accident that the few remaining successful ‘traditional’ agencies have evolved their offering effectively to include digital, direct and field marketing services. For example, The Union launched ‘Union Tech’ last year, while Leith have their own sister digital agency, Blonde, within their group structure.
So maybe the change simply reflects the shifting technology environment? There has been a huge power shift towards the web – and many did not adapt sufficiently to the new world?
But I wonder if this rather obvious analysis glosses over a more fundamental point about both the Scottish economy.
Government data shows that Scotland lags considerably behind London and the South-east of England in economic terms, and although the Scottish economy has shown some small signs of growth in the latest data, we are way behind GDP growth in Southern parts of England.
It stands to reason that Scottish agencies will struggle compared to their English competitors, who have the benefit of a post-Olympics booming London to live off. The recession has undoubtedly been a key factor in the staggering casualty list among Scottish agencies during the last few years.
And there’s a third explanation – an ‘old chestnut’ which makes life tough for agencies in Scotland. Big Scottish clients go South for their creativity.
It is a stark fact that the vast majority of the Scottish marketing pound is exported directly out of Scotland to London. Some of Scotland’s best-known brands spend the lion’s share of their budgets outside Scotland.
These budgets run into several hundreds of millions of pounds. Scottish agencies regularly ask the question: Why do these major clients by-pass the marketing community on their own doorstep? Even a small portion of these funds ‘repatriated’ would give the creative industry in Scotland a much-needed emergency transfusion.
Three factors – the internet changing the way marketing works combined with a brutal recession, and large Scottish advertisers going South – have undoubtedly, in my mind, combined in a perfect storm to make life very tough.
Whatever the facts, it’s easy to be pessimistic about the creative agency scene in Scotland. Time will tell whether these trends will have a long-term effect, and whether the new breed of creative agency can maintain the range of talent and value we need in Scotland.
We need a strong creative marketing sector in Scotland. Thankfully, a huge repository of creative talent still exists, despite the challenges of the last few years.
Whatever happens, one thing’s for sure: We must all must evolve if we are to remain competitive.
Ian McAteer is group chair of the Edinburgh and Leeds-based creative marketing agency, The Union.
This op ed first appeared on allmediascotland on October 25 2013.
