Madison Avenue Manslaughter: An Inside View of Fee-Cutting Clients, Profit-Hungry Owners and Declining Ad Agencies

by Michael Farmer

Advertising agencies are caught between fee-cutting clients and profit-hungry owners. In the meantime, their creative workloads are growing, driven by increased TV, digital and social advertising. How do agencies generate profit margins under these circumstances? Through downsizing, salary freezes and 'juniorizing.'

Agencies are disinvesting in capabilities at a time when their clients' marketing challenges have never been greater. No wonder their clients are beefing up their internal capabilities and changing agencies at an accelerated rate! This is Madison Avenue Manslaughter, documented in detail by Michael Farmer, who has been working in the industry for the past 25 years.

Farmer, who was formerly a Director of Bain & Company, provides a gripping analysis of advertising agencies and their deteriorating situation. He describes the key trends that have weakened agencies during recent years -- the shift from commissions to fees, brand globalization, the rise of holding companies, client obsession with shareholder value, the digital and Internet revolutions -- and outlines the steps that senior agency executives need to take to restore health to their organizations and improved results to their clients.

This book is a first of its kind -- a detailed examination of ad agencies as businesses: their cultures, organizations, management philosophies and strategic choices -- providing an unforgettable inside look at the Mad Men's declining world.

Genres: Business, Nonfiction

256 pages, Hardcover

First published September 15, 2015

Reviews

[Vincent · Rating 4 out of 5]

Madison Avenue was a very interesting and geeky read, authored by an advertising agency consultant, in the context of understanding the 50s-80s and how advertising agencies slowly died in favour of management consultants. The advertising executives failed to catch two significant waves: operational efficiency and the shift away from media spending commission-based remuneration. Their business model was not prepared for a world where television was slowly becoming just one of many channels, with the internet ultimately delivering the coup de grâce during the dot-com bubble.

In the first part, the book delves into the organisational challenges faced by advertising agencies, highlighting their failure to document, measure, and track workloads effectively. This oversight led to a misdiagnosis of strategic problems and an inability to adapt to changing market dynamics (including financial crises, the rise of procurement and management consultants in particular focusing on operational efficiency ). Farmer emphasises the need for agencies to shift from a creativity-centric model to one focused on delivering measurable results for clients (with a clear scope of work) aligning with the growing need to deliver shareholder value (and the rise of “finance”.

There are many interesting references to “strategic positioning” and "shareholder value," often forgotten in creative industries but clearly core to the rise of data-driven brand executives such as CMOs, who heavily rely on social media platforms for distribution.

The follow-up of this book for me will be a series of management consultants' history books as I believe that's where the future of this industry lies and I'm keen to understand its trajectory. Highly recommend this book to anyone working in marketing or willing to understand the agency business.

[Matt · Rating 3 out of 5]

An interesting look at the decline of ad agencies from the Mad Men era to today. Some salient points about holding company financial pressure and the race to the bottom with fees.

Nothing earth-shatteringly new (though a good refresher on why agencies constantly seem to be trying to do more with less.) The second half of the book read more like a sales pitch for Farmer's consultancy business, but worth skimming through that part just to see what an approach to change would look like.

[Alan Lewis · Rating 3 out of 5]

Enjoyed the first half, which provided a credible history of ad agencies, in the aggregate, up through ~2010. But “digital”, mobile, and social ads are presented as unproven as formats that are still on the horizon, so reading it now the history is out of date. The latter half gives the author’s point of view on how to fix ad agencies, for which I’m not the target audience.

[Brittany LeMoine · Rating 2 out of 5]

I won a copy but it was not a very interesting book to me.

[Jocelyn Fan · Rating 4 out of 5]

Insightful. But more relevant to the creative agency, rather than media agency.

[About Books · Rating 3 out of 5]

At first, I was so excited about this book and went out of my way to buy it. The author does a great job outlining/ describing the profit centers and revenue paradigms of agencies and their transformations as the age of mergers and holding companies evolved. The writing is crisp. But it just took too long to get to conclusions. Conclusions that seemed fairly tactical and does nothing to remedy the slow strangulation imposed by holding company and shareholder profit squeeze.

I feel like its only a two star. But I gave it a third because I am so glad to see this "emperor's new clothes" look at the revenue structure of advertising agencies.

[Catherine · Rating 2 out of 5]

At first, I was so excited about this book and went out of my way to buy it. The author does a great job outlining/ describing the profit centers and revenue paradigms of agencies and their transformations as the age of mergers and holding companies evolved. The writing is crisp. But it just took too long to get to conclusions. Conclusions that seemed fairly tactical and does nothing to remedy the slow strangulation imposed by holding company and shareholder profit squeeze.