December 10, 2008
One of the more interesting media analysis blogs is Reflections of a Newsosaur. Blogger Alan Mutter focuses on the struggles of the newspaper industry, but one of his recent postings on newspaper company debt elicited a fascinating comment from Doug Poretz of Qorvis Communications:
“We are not far off from seeing the same type of story on the other side of the communications business: the large multinational publicly owned conglomerates of advertising/pr/interactive/etc. agencies. Even in good times, they have way too many layers of overhead and, in many cases, debt. They have an out-dated business model based on selling the commodity of time when clients do not care how busy the agencies are, just how much value they provide.
“The other side of the revenue formula is commissions on media purchases and markups on production charges — both are against the interests of their clients. Furthermore, they exist in (and promulgate) silos (“practice groups”) when the revolution in communications makes truly integrated campaigns and collegiality across areas of expertise much more important, effective and efficient.
“Finally, this model now exists in a world where communications budgets are being slashed. We are just beginning to see the news of layoffs in the communications business — it will really become apparent in the first quarter of 2009.”
This is the line of reasoning our agency founder, Jorg Pierach, has been pursuing for several yeas now. Thoughts, anyone?