Bloomberg reported this week that Apple’s dedicated ad agency went through a significant round of layoffs. The agency axed people responsible for creating the ads, the heart of the agency.
It might have been the most significant story in advertising for years. Well, at least since 1984.
Many people believe that “1984 “, the commercial that introduced the Apple Macintosh, is the greatest commercial, ever. It was aired only twice – first, in some obscure markets on December 31st, 1983 (and, in a deliberate move, at Boca Raton, where Apple’s arch enemy, IBM PC headquarters is situated) to qualify for the following year’s Clio awards. Its second televised airing, and only national airing, was on January 22nd, 1984, during the third quarter of Super Bowl XVIII.
It was conceived by ad agency Chiat/Day and directed by Ridley Scott, who directed Alien and Blade Runner. The commercial was an allusion to George Orwell’s famous novel, Nineteen Eighty-Four, which describes a dystopian future ruled by “Big Brother.” Big Brother, being IBM. The commercials concluded with a witty voice-over intoning “On January 24th, Apple Computer will introduce Macintosh. And you’ll see why 1984 won’t be like 1984.”
Steve Jobs and Apple CEO John Sculley were so enthusiastic about the commercial that they purchased two 60 second commercials on the Super Bowl. However, when they screened the commercial for the Apple board, it unanimously hated the commercial, hands down. Sculley, too, got “cold feet” and asked Chiat/Day to sell off the airtime.
When Apple co-founder Steve Wozniak heard about it, he offered to pony up half the cost himself and run the commercial anyway, on the condition that Jobs would kick in the other half. In the end the board relentted and Chiat/Day resold one 60-seond slot to another advertiser and kept the other.
In 1995 Chiat/Day merged with TBWA, a more traditional Madison Avenue agency, best known for its artistic Absolut vodka ads, to form TBWA/Chiat/Day. As the Apple brand grew, the need for a dedicated team became more evident. An offshoot of the original Chiat/Day called TBWAMedia Arts Lab (MAL) was born.
The relationship between Apple and Chiat/Day remained tight all the while, especially between Jobs and the agency’s creative leader, Lee Clow. Apple was considered “The best brand in the world” by many, with its iconic advertising. It had won the “Creative Marketer of the Year” award at the prestigious Cannes Lions last year.
As I pointed out 4 years ago in this space, Apple had been building a high-quality internal agency, staffing it with some of the best people on Madison Avenue. I predicted that it could become a threat to TBWA/MAL. As relationships became strained with the external agency, Apple began moving campaign development to the in-house unit.
Tor Myhren, the highly regarded Grey creative director, joined Apple and was in a position to control the assignments and dole out the work as he sees fit. Apple hired additional talent from top agencies like Wieden & Kennedy. MAL kept making ads for some products, but it had to compete against the company’s own in-house team on each campaign. And, that competition was made even tougher when Apple added Nick Law, another well respected creative director from R/GA and Publicis Groupe.
In-housing is the most significant trend affecting agencies in years. The ANA reports that, currently, 4 in 5 marketers have an in-house agency, compared to only 50% 5 years ago. They are siphoning revenues from agencies because projects that were once the purview of agencies, have been moved in-house.
Almost every agency activity is fair game these days – media planning and buying, package design, production or search. Everything – except brand creative. Up until now there was recognition among brand owners that external resources are far better at inventing brand building ideas than the in-house agency.
Apple seems to believe that it can use internal resources to come up with great ads. And, with the kind of talent that they have assembled, they are probably right. The question is, whether other advertisers, especially the big ones, would be tempted to mirror that model.