New Breeds of Advertising Agencies Are Born

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The increasing prominence of visual design in advertising led to the development of two specialized types of advertising agencies: mega-agencies, large firms that are formed from the merging of several individual agencies and that maintain worldwide regional offices, and boutique agencies, smaller companies that devote their talents to just a handful of select clients. Both types of agencies wield great control over the type of advertising we see daily.

Mega-Agencies

Mega-agencies provide a full range of services—from advertising and public relations to operating their own in-house radio and TV production studios. In 2012, the top four mega-agencies were WPP, Omnicom, Interpublic, and Publicis.1 (See Figure 11.1.)

FIGURE 11.1 // REVENUE FOR THE WORLD’S FOUR LARGEST AGENCIES
Source: “Advertising Age’s Agency Family Trees 2011,” http://adage.com/images/random/datacenter/2011/agencyfamilytrees11.pdf, Accessed on August 16, 2012.

The mega-agency trend has stirred debate among consumer and media watchdog groups. Some have considered large agencies a threat to the independence of smaller firms, which were slowly bought up in the 1990s. Others warn against having a few firms control much of the distribution of advertising dollars globally. According to these critics, with such concentration of power, the cultural values depicted in U.S. and European ads (such as an obsession with youth or appearance) could unduly influence people in developing countries or regions who have markedly different values. Such critics decry the supposed intrusion of American culture into these other cultures.

Boutique Agencies

The visual revolutions in advertising during the 1960s elevated the standing of the creative side of the ad business, particularly the designers, writers, and graphic artists who became closely identified with the look of specific ads. Breaking away from bigger agencies, many of these individuals formed small boutique agencies. Offering more personal services, the boutiques prospered—thanks to the innovative ad campaigns they developed to popularize brands like Nike, ESPN, and Target.

Throughout the 1980s and 1990s, large agencies bought up many of the boutiques. Nevertheless, some boutiques continue to operate as fairly independent subsidiaries of multinational corporations. With the economic crisis, both types of ad agencies suffered revenue declines in 2008 and 2009 but slowly improved in 2010 and 2011.