What’s Left for Agencies?

Poor Cannes. This year the parties were way overshadowed by the no-longer-unspoken fear that the agencies we’re most familiar with now may not exist in the future. After all, what can their business models be if everything is automated and media buying has gone in-house?

A sign of that fear were the programming initiatives around artificial intelligence, which half the conference feels would save advertising and half felt would destroy it.

Another sign was Martin Sorrell’s new company.

London-listed S4 Capital, the new company, is being built on the shell of Denniston Capital and named for four generations of Sorrell’s family. Sorrell said he has raised about $67 million for the new venture, which plans to be an “international communication services business focused on growth.”  Sorrell noted he hoped “not to be frenemies” with Google, Facebook and Amazon and that S4 Captial will be structured differently than WPP, though he did not go into detail.

“We are starting at ground zero,” Sorrell said, promising “grand ambition” and end deals with the “highest companies.” S4 capital will be “more creative, more agile, less bureaucratic … I still get the feeling that that our industry is stuck in the past and we need to move into the future.”

Listening to Sorrell, you would think the days of the agency were over, since it will be displaced by his movement into the future. But he’s always been a big talker, and when he says communications services he’s just using code for agency. And that’s because he knows as well as anyone else what the core competency of an agency is.

It’s simple. Agencies have to return to being the brand strategists that connect the company to the consumer. They go back to being what they were in the Mad Men age, the people with the secret creative sauce.

This is a differentiator that is very difficult to destroy, although during the past two decades agencies have done everything possible to undermine their own value proposition, including putting themselves out there as data experts, arbitraging their clients’ media buys, and downright lying to their customers.

There’s a role for an agency trying to do the right thing, because inside companies, there is very little time or energy to undertake really memorable campaigns. However, Sir Martin, who presided over so many of those lies in his previous incarnation, may not be the person to lead it.