Advertising agencies have always had an interesting relationship with the independent contractor. While the prestige of an agency is usually derived from its past work, and therefore from its talent, often agencies don’t feel that their current in-house talent has what it takes to get the work done for certain clients. Enter the freelancer. The role of the freelancer is determined by their area of expertise. Some freelancers work in the creative departments, as copywriters or art directors. These contractors are typically brought in to handle a specific kind of campaign or individual ad with which the agency has very little experience. For example, if an ad agency wants to run a social media enabled campaign but has only ever dealt with traditional media, freelancers with social media experience will be brought in to bridge the gap. Freelancers also get brought in to handle account problems. Expert pitchers with lots of experience, or at least a great reputation, with certain client industries will be brought in to help a shop land a major account. For example, an agency looking to land a new account in a prestige category, such as an automaker, might bring in a freelancer who is considered an expert at handling automotive clients to ensure that their pitch is top notch.
This relationship raises a lot of complex questions, though, which is why it is so interesting. When a client buys a pitch that was made with heavy input from a freelancer, who will leave the agency’s employ after the pitch is won, have they actually bought good work, or have they bought snake oil from an expert salesman? On the flipside, if an agency has the perfect campaign for Ford, but a lack of prior car experience could put up a roadblock, are they wrong going outside to get the help and support they need to make it the last mile? Some agencies have even started taking this thinking to the extreme. Why just hire these experts when your in-house talent is not up to the task, when you could hire only experts for projects on a case-by-case basis?
One such agency is Hub Strategy, a San Francisco based outfit whose business model is built around a small account team at its core, or hub, with contacts in the creative world that they can contract to serve their needs on a campaign-by-campaign basis. In a talk at Wharton, Evelyn Neill of the agency Doremus described a potential look for ad agencies in 2020 where the main purpose of the agency was to generate big ideas and outsource the creative work to freelancers. She called this model a “big brain” agency, and said it was the direction Doremus was already trying to go. Victor and Spoils is following a similar thought, becoming an ad agency that works with crowdsourcing, using a community of 7000+ people, to produce its creative work. Depending on the kind of project they are working on, they either pick a member and provide them with a private brief for the work they would like, and pay him or her accordingly, or they put up a public brief and let individuals and/or teams compete to win the brief. The individual or team with the winning concept gets paid by V&S.
On its face, this seems like a pretty nice way to do business. By reducing overhead, the agency stands to make more money on any given account. Similarly, using freelancers gives the agency management less heartburn over not having the funds to support employee wages should a major account decide to part ways. Freelancers also offer flexibility in the kinds of work that an agency can do by giving them the ability to change their size and expertise depending on what the work demands. A very similar model to this actually already exists in a different industry. It’s how they do things in the movie industry, and in that comparison lays a warning for the future of advertising should more and more agencies take up this model.
The first thing to consider is how talent gets attached to projects. For the sake of simplicity when going through these comparisons, I’ll start with a little terminology. In film there are two types of people who work on any given movie project. They are referred to as above the line and below the line talent. This comes from an accounting department divide based on how people are compensated. Grossly over-simplifying things, above the line talent are paid on a project to project basis and are paid either in a lump sum upfront, a percentage of the gross income of the film upon release, or a combination of both. Below the line people are paid on either a day rate or an hourly rate, depending on the nature of their job. In more practical terms, above the line talent will be people whose names you recognize, or whose positions you probably recognize. The lead and chief supporting actors and actresses, the director, the producers, the director of photography or cinematographer, the editor, the composer, and so on. The below the line talent are people and positions you probably won’t recognize, like background character actors, extras, best boys, and key grips.
For a major Hollywood feature, the first step, after developing a compelling story, is to start recruiting above the line talent. Producers, with input from the studio executives, start looking at who might be right for the project. This list is based on who is generating a lot of buzz, who is likely to be available, and who is within the price range of the film’s budget. This kind of thinking definitely makes sense. Film productions are costly operations and everyone involved wants to know that they have done everything they can to make each project a success. Naturally, they want to put the best people on the project they can afford: bankable stars, reliable directors, and famous composers. Basically, they want proven talent.
Proven talent is an attractive concept. They have the experience and the know-how to make great work. They have a track record that proves they can do what they say they can do. They don’t require any special training. A big problem with this is that it hurts the industry’s ability develop new talent. It is exceptionally hard to find work in Hollywood if you aren’t an established talent. The same will likely be true, if not worse, in advertising should the industry head towards a freelance-heavy creative structure. In Hollywood, established talent gets attached to projects that take months, if not years, to complete. Advertising takes weeks to several months, depending on the scope of the project. This means that top talent is available for even more gigs than in the movies, making even less opportunity for an expanded talent pool. This will inevitably lead to a pyramid structure for talent where the top art directors, copywriters, and producers gobble up 90% of the work creating a stark distinction between those who have “made it” and those who haven’t. This system can work, as the entertainment business has been proving for years, but it does come with its drawbacks.
One big problem, which I touched on in the previous paragraph, is that it creates incredibly high barriers to entry for new employees. In order for an industry to remain healthy, it needs a steady influx of new people coming in with the desire to learn the trade and who bring their own perspective to the work. The most obvious reason for this is that a certain number of people are going to retire each year, or change careers, and there is a need for people to replace them. Logically, if you concentrate all of the industry talent in a small number of people, make it next to impossible to break in, and then take some of those talented people away each year, the number of experienced, talented, and knowledgeable people is going to decline.
There are subtle reasons to fear this fracturing of the industry as well. With no effective way for young hopefuls to get work, they are going to fail to get the hands on training that they would have gotten from working on projects under the watchful eye of an executive creative director in the traditional agency setting. The opportunity to pass on years of experience in the industry from senior employee to junior employee is an important part of cultivating top talent. In the film business, this has limited the ability of gifted directors to make a break into mainstream projects. To become a film director, you often start by studying film in some capacity at school, and then working a related job, such as cameraman or editor, hoping that someone will recognize your visual sense and give you a chance. At the same time, working directors are generally too busy to pass on their knowledge to anyone on the set with them, so aspiring directors don’t learn much about how to be a director other than what they can observe on set or in the editing bay. Not surprisingly, this makes producers reticent to hire first time directors because they have very little real world experience in what actually goes into directing a movie, music video, commercial, etc. Alternatively, an aspiring director could try to self-finance an indie film and get it on the festival circuit, which could open doors to lots of other projects. This can work, but can also get your pigeonholed as an “art-house” director, which can limit future career options. Also, the movie could turn out to be complete garbage because the director doesn’t really know what they’re doing, having never had the mentorship of a working professional outside of school. In short, when there isn’t a way to pass on the tricks of the trade to the younger generation, there is a risk the work will suffer.
Admittedly, advertising often also expects even junior employees to come in and hit the ground running, taking on real client projects with real deliverables, and little mentorship in the traditional sense. But senior members of the agency also vet that work before it is passed on to the client, and through that system of feedback and revision the junior copywriter, art director, producer, or even planner, learns from their superiors. Finally, when it is very difficult for new talent to enter the field, you run the risk of creating an echo chamber for the established thinking and don’t allow for a different perspective that shakes up the industry and takes it to the next level. Would advertising have been as quick to make use of social media, mobile, or content driven strategies if there weren’t people entering the conversation to break the mold of TV commercials and print ads?
Aside from cultivating the next generation of talent, there is also the matter of getting people interested in the industry in the first place. Since there is so much less for those who haven’t “made it,” the risk increases for anyone trying to get into the field. In advertising right now, if you want to get into the field, there are a multitude of ways that you can get your career going. You can study communications in college, you can go to a portfolio school, or you can do internships at agencies, amongst others. This gets you in at an agency, where steady work and interesting clients build a professional portfolio that leads to advancement, headhunting, and status as a leading mind of the field, if you’re clever and work hard. Without that career stepladder in place, in a future where everything is freelance, there is a greater financial risk in pursuing the field. Sure, once you have won an award or been featured in AdWeek or on Fast Company, you can switch over to freelancing and not struggle to find work. For everyone else, especially the entry-level talent, those doors are hard to open and the paychecks become few and far between. There are hundreds, if not thousands, of struggling actors in Los Angeles and New York who prove that living from short term contract to short term contract in hopes of breaking in is often a life of day jobs, relative poverty, and quiet desperation. This forces new talent into the position where they have to balance low current income and low likelihood of employment against theoretically high earnings if they make it.
Most talent oligarchies, such as Hollywood and professional sports, are fields where successful careers come with some additional appeal beyond money. They often come with fame and glory, mass media recognition for one’s achievements, and access to aspects of society that others do not have such as exclusive clubs, parties, clothing, and events that otherwise would be unavailable. This encourages people to pursue the field despite the incredible difficulty of garnering success. The same cannot be said for advertising. Actors are beloved for their work, where advertising often sits near the bottom of respected jobs in the United States. This will drive away a lot of people just on principle, and even the people who decided to risk it, plenty will work hard, see no results, and feel pressure to give-up on their dreams and go do something they can actually get hired doing. Again, mainstream entertainment makes this model work, but do we really want advertising to look like they do? How much potential is wasted on people who never get the break they deserve because the industry is so messy with how it acquires talent?
If, as I theorize, moving towards a predominantly freelance creative climate for advertising concentrates more and more work on the top level, highly respected, and probably Cannes award winning talent, then less and less will be available for everyone else. So far, I’ve talked about how this affects the ability to recruit, train, and keep rising talent, but there is another trend that generally follows this move: the death of the yeoman creative. Not everyone can be Helen Mirren or Christopher Nolan. Some people will always be consistently good but never great. Most TV shows are shot by these work-a-day talents, and plenty of ads are crafted by them too. One might imagine that culling this relative mediocrity in favor of only hiring the best would be a good thing for the quality of the work. Hell, it’s one of the reasons I gave at the beginning of this post for why you would hire a freelancer in the first place.
However, in this case, the truth is counterintuitive. This system will start out producing better work. In the film industry, when the studio system gave way to the contemporary talent agency driven system there was a period sometimes called New Hollywood, where directors and actors of the highest caliber ruled over the production decisions of all of their projects, and artistry and narrative excellence were the driving forces in filmmaking. This led to some of America’s most critically respected films, such as The Godfather, Dog Day Afternoon, and Taxi Driver. However, the greater creative control led to artistic excess and ego driven vanity projects. As a result, the impact of expensive blunders became greater, to the point where Heaven’s Gate’s failure at the box office actually destroyed United Artists. While this kind of thing is less likely to happen in a client driven environment like advertising, when you are working as a freelancer in such a rarified atmosphere, each project you work on you stake your reputation and potential future career on its outcome. It makes sense. Why would they hire you for your expertise if you can’t produce the goods? In Hollywood, this means that a single bad movie can tank the career of even the most untouchable shining star. Despite the massive success of The Godfather and Apocalypse Now, Francis Ford Coppola’s career was effectively cut short by the disastrous One From the Heart. Despite being canonized as one of the greatest American directors of all time, his career has since been limited to self-funded art-house films made from the money he earns from Coppola branded wines. Ultimately, this means that risk aversion will begin to creep its way into the industry as creatives fear for their future with every project, and will become increasingly unwilling to take risks, especially large risks, for fear they will destroy their career if it backfires. So in a bizarre way, yeomen ad men are the backbone of the industry. Having lots of good work around allows for an environment where great work can come from big risks because consistently good work supports an agency, and the agency supports the creatives so they can feel more secure about pushing the envelope with their work.
Another thing that comes with the death of the yeoman creative is that it will cause the per project fees of the top tier creatives to go up. It’s basic economics, really. By switching to freelancers and cutting out all the middle to low-end creatives, the market has created scarcity where it didn’t exist before. This drives up the price point for the value the remaining creatives offer. These top shelf talents were in demand anyway, and could ask for high prices as a result, but many other factors kept their wages somewhat in check. For example, the threat of being replaced by young, rising talents that can do what they do, but cheaper, keeps wage inflation down. Some become partners, named or silent, at their agency and switch to profit sharing over wages. Others reach a limit to what existing agencies can support and, driven by ego and possibly greed, strike out on their own by making a new, independent agency. In this freelancing dominated theoretical future, none of these avenues exist anymore, so there just becomes a small pool of power players with fewer threats to their supremacy, which will naturally drive prices up. Again, looking at Hollywood as an example: under the studio system, star actors like Bing Crosby were under long-term contracts that paid them around $400,000 (or just over $6MM, adjusted for inflation) every year. That’s a lot of money. But under the modern system, star actors like Leonardo DiCaprio make $39MM a year, or more than six times as much. Taking it back to the advertising world, this means that while the agencies would get more freedom with how they take on client work, they wouldn’t necessarily see a total decrease in cost per project. Their overhead would drop but the per project fees would rise, and how the economics of all of that would finally shake out is hard to predict. In the movies, however, the combination of these market forces and an increased desire for spectacle have driven budgets through the roof.
All this volatility has also stripped away one of the attractive features of advertising for a creative, artistic person: stability. Stability is one of the most attractive features of working at an advertising agency over working as an artist. Advertising is art in the name of commerce, and what you get when you sell-out like that isn’t necessarily a huge payday, but a job that you can actually plan your life around. In the current environment, working at an agency provides steady paychecks and consistent work, whereas trying to make it as an artist requires lots of struggle, living commission to commission, and hoping that you are both talented and lucky enough to get raised to the level where you can make good money off of your work. In a freelance driven advertising world, creatives are put in a position where they are facing the same soul-crushing struggle. This makes advertising look significantly less appealing to the artist. Many in the industry see working in advertising as a necessary evil that gets them paid to do what they love, make cool stuff. But why would they put up with the evil if they are going to face the same challenges trying to make it as an art director, copywriter, or producer as they would trying to make it as a graphic artist, author or journalist, web developer, or moviemaker? Especially when, in the latter option, they don’t have to feel like a corporate whore.
Similarly, advertising provides the ability to plant yourself and live a fairly normal life. When you are just starting out in advertising you often move from company to company every two or so years, as the industry’s system for promotion rewards changing agencies. This is nothing compared to the vagabond lifestyle of a dedicated talent in a freelance driven field. In college, I worked on the production end of things for several theater productions, and as a result I met a lot of people who were very serious about a career in the theater. One thing I picked up from these people is that if you are serious about making it on the stage, you have to move around a lot. Not simply switching companies every one or two years for better opportunities, but moving from city to city every three to six months on the trail of each new job. One girl whom I’m friends with on Facebook “lives” in Los Angeles but over the last two or so years has posted about shows she has worked in D.C., Marin County, the Midwest, and her home city of Los Angeles. Granted, advertisers travel for business. Planners do in-home ethnographies. Creatives travel for pitches. Still, advertising’s travel is all short term, which allows for the building of a home life and the development of long-lasting friendships in a way that isn’t as possible when you are spending a three month production cycle developing Death of a Salesman in Poughkeepsie, nine months in eastern Europe for a film’s principle photography, or two months in New York making YouTube ads for Unilever. Not everyone needs this stable lifestyle, but I’ve always considered it one of the major perks of advertising over other creatively driven pursuits.
Lastly, agencies that outsource all of their creative work really stretch the limits of what the client is actually buying. Clients often start by building a list of agencies they would like to hear pitches from, which is based on a mixture of the agency’s past work and past client experience. Already, we have a break here because, if the creative isn’t in-house, that past work and experience is just the freelancers they brought on for that specific project. Then, when the client gets the pitch, it is a representation of what they expect to be the barebones of a large campaign for their brand. However, if the talent brought in to pitch isn’t in-house, there is no guarantee that the creative that pitches will be the same creative that makes the ads. This concern is already there with specialty freelancers as it is, but will only get worse as talent shifts away from being employees and towards being contractors. If the agency has no meaningful history and no clear connection between the pitch and the work, what is the client even buying when they select an agency? What is the point of an agency with no creatives? Maybe they focus on brand strategy and account planning… but doesn’t that just make them a full-service market research firm? One thing the agency could provide is the ability to know the talent that’s out there and pick the right people for a given project, being the middleman so that the client companies don’t have to do their own creative recruiting. That exists in Hollywood; it’s called a talent agency. Is the future of agencies to be like William Morris and CAA? I hope not, since the studio/talent/agent relationship, and related power brokering, in Hollywood is legendarily sleazy.
All of that being said, I want to make it clear that I don’t hate Hub Strategy or Victor and Spoils for experimenting with the fundamentals of agency structure and pushing the envelope on how different organizational models can change how we think about doing advertising. I actually think it’s an important part of the advertising industry’s constant need to remain agile and evolve as their business moves forward into the uncertain future. Freelancing is great for those who can make it work, and serves a valuable purpose even in the current climate, but when taken to its extreme, the all-freelance model could have serious negative consequences. This is all speculation, of course, but I would wager that if more and more of the industry heads towards outsourcing creative work we will see a limiting of the gainfully employed talent pool, high barriers to entry for new employees, rising talent fees creating top-heavy compensation in the industry, a decrease in stability, and possibly a complete change in what an agency’s function is in the market. Mainstream entertainment and professional sports have both proved this pure meritocracy of rarified success can work… but given the choice, should it be a model advertisers actively pursue?