30th March 2012
After all, advertising giant WPP's share price has been sliding for an entire decade, according to Brand Republic, only resurging last month. "Any reasonable investor would have hoped to see some capital appreciation in that period."
But the lack of any potential upswing in profits is a concern for ‘MarComs'- or Marketing Communications. Of the companies that were listed on the stock exchange in January 2001, a pitiful three are able to show any improvement in their share price today, adds Brand Republic.
In addition to WPP, they are Aegis Group and Creston. "Only Aegis can claim a 10% price growth in the decade and that's not enough to justify the investment over the period."
Evidence of a failing business model
The media and marketing world is undergoing a dynamic shift towards delivering a reliable model for sustainable value – a value that will go beyond the image of a slick executive with a catchy line.
After all, consumers are increasingly savvy these days, and can see through advertising hype and media spin – they are seeking trust in the networks they build – whatever form this takes.
So what are these big names trying to do to up the ante? They are turning to social media. Even WPP CEO Martin Sorrell has done an about-face on this subject – a platform he once suggested wasn't terrifically useful for advertisers, reports Business Insider.
His agencies will spend a hefty $400 million on Facebook this year, according to MediaPost, or double what they spent last year.
Jon comments: "If you can't beat em join em! Martin (excuse me, Sir Martin) has seen the light and can't fight the tape any longer. The truth is he didn't want to acknowledge social media because the margins are so bad on-line compared to traditional advertising venues because it can be measured much more accurately… RIP, your industry has refused to innovate and is now about dead! I'd suggest you set up a bridge loan at a slight discount on your stock options now, effectively buying puts on your stock!"
An erosion of trust
The industry has suffered from a steady erosion of trust. Advertisers regularly poll as among the least trustworthy professionals, scraping the bottom alongside journalists and politicians. In Reader's Digest's Trusted Brands 2012 report, advertising was seen as the least trusted institution.
But this means a business model that needs to shunt forwards to meet an urgent need to build relationships and engage with their audience. image of the marketing profession is suffering – it needs a shake up, says Marketing Week, in an article which asks if the industry can overcome its trust issues.
"Many consumers believe the profession is immoral and greedy, selling things that people don't really need – a view so widespread that a new book, Tell the Truth, tells marketers they need to be more authentic in their claims. Even within businesses the function is often misunderstood, with many departments only consulting marketers when they want to create an advert."
Who knows what lies ahead…
But these days it's the tech and ‘new media' IPOs that make the headlines and generate excitement. While at present, realising chunky profits from Facebook seems a way off, who knows what profits will be realised from social media in the future? Or if an entirely new form of advertising agency will erupt onto the scene?
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