Agencies are briefed on scope of work and fee, never on the actual growth problem - and clients aren't taking that question to consultants either.
PrincipleBrand Strategy
Agencies are briefed on scope of work and fee, never on the actual growth problem - and clients aren't taking that question to consultants either.
Agencies are not briefed on the actual problem. They receive a scope of work and a procurement-set fee, never a request to help grow the brand - and the client is not taking the growth question to management consultants either.
Source
The WARC Podcast - Who murdered Madison Avenue? (host David Tiltman, guest Michael Farmer) (2026)
Michael Farmer (author, Madison Avenue Manslaughter / Makeover / Revisited); David Tiltman (WARC)
25:30, Michael Farmer
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StatAgency fees halved while workloads doubled over 35 years, driving a 75% fall in the real price of agency services after inflation.WarningAgency pricing eroded by about -2% in fees and +2.3% in workload every year for 35 years - too small in any single year to trigger alarm.PrincipleThe Scope Metric Unit turns every deliverable, from a Facebook post to a TV ad, into one comparable unit of creative work.StatThe price per Scope Metric Unit at Ogilvy UK fell from $435,000 in 1992 to about $110,000 today, well below Farmer's $175,000 estimate of its true worth.StatA comparably staffed Ogilvy creative department went from producing 360 ads a year in 1992 to about 15,000 ads today.WarningAdaptations eat 40% of agency hours and fees - exactly the work AI can automate - yet automating half of it and cutting fees 20% would put the office out of business.Quote"It isn't a very good business strategy to accept a random fee for an unknown quantity of work and then to downsize to make a margin." - the mechanism behind three decades of agency decline.WarningHolding companies kept cutting agency costs for twenty years after the surplus from the old 15% commission era ran out in 2004 - cutting muscle, not fat.PrincipleFarmer blames four parties for agency decline: holding companies, procurement, CMOs, and agency CEOs.StatSince 2009, 40 of the top 60 advertisers have grown at about 2% a year - roughly half the nominal GDP growth rate of 4.7%.StatPrivate label has opened price gaps of 25-40% against big advertisers, whose own reported growth is mostly price increases, not volume.WarningThe CMO doom loop: stalled growth triggers a shift to cheap media and agencies, which locks in low growth until the CMO is replaced in about three years and the cycle repeats.