What do you do?
"We're a PR firm".
"We're a social media agency".
"We're a motion design studio".
"We're a CG studio".
Good luck. You're done.
The creative industry is evolving, and is doing so in an unprecedented way.
Where is it going? We'd all like to know.
But before we get there, let's take a look at where we came from.
The last two decades were exceptional. It was easy to start and run a small, say 5 — 25 people creative firm. The Internet was unsaturated, and abundant in opportunity. Nearly-free capital was plentiful, and so were the marketing and advertising needs.
Businesses that were focused around the "what" were doing pretty well — the "what" was sufficiently novel to gather some interest, and there were not too many people offering this or that.
But these days are over, and it's time to grow up.
High-availability capital is largely gone. Investors, with some exceptions, like the AI hype, are careful. The inflation soars, interest rates are higher, and markets are way more lousy.
If you look at space tech for example, 2021 was at a crazy high in terms of investments, but the following two years of free-fall, resulted in the all-time low of over a decade. The outlook ahead is far from rainbows and unicorns.
How is space tech relevant to the creative industry? Directly — it is not. But it illustrates a broader trend. If you run a creative firm, you know that 2023 was fissed for everyone. Now you have one more piece of a puzzle to understand why.
What also changed across the last few years is availability of affordable and accessible professional education. Around 2018, the Internet landscape started undergoing a massive transformation, with a blossom of education platforms, youtube channels, creators, courses and private communities.
When the Covid pandemic hit in 2020, not only were masses drawn to consuming that education, but more importantly, so many people joined as educators.
And that's exactly why we're seeing today a flood of fresh talent on the market, big on quickly acquirable digital skills, but often missing deeper perspective provided by traditional education.
Just look at it — copywriters, music producers, UX/UI designers, 3D designers, animators, editors, VFX artists… you name it. They keep storming the digital space, pushing their freshly-acquired hard skills like never before. And they start their firms.
On the surface it looks great. Democratization fiesta and shiny, punchy visuals to "elevate your brand".
But here's the issue. A few, actually.
The visuals they produce look better than ever, but often lack substance, originality and depth owed to the process of working through real-client scenarios.
And, since the last few years brought the invention of remote or hybrid work, the process of priming up-and-coming talend through soaking expertise from their senior studio peers — kinda evaporated.
When they start their firms, it's not centered around the problem-solving expertise, business insight or market understanding, but the "what" of hard skills.
That's how the bottom of the market is flooded.
I agree that we live in the era of abundance. But my perspective is that abundance of opportunity has been replaced with abundance of products and services.
That takes some processing.
So where is it all going?
In a very interesting direction.
Last year was tough all across the board, but not equally for everyone.
The larger and most established firms had to trim the fat, but being able to secure remaining high-profile contracts, they were relatively fine.
I believe that this is the only place on the market, where horizontal positioning, centered on the "what", may still work for a while. There is still a place for "The Mills". But it does not mean there ain't challenges. While focusing on staying relevant will be of a strategic importance, tactically, these firms will have to embrace more agile approach to operations.
At the bottom of the market, the super small firms either shifted or adapted, feeding off the bottom of the barrel.
Finally, small-to-medium creative firms.
From what I'm seeing, these guys took the strongest blow. Why? Because as the market shrunk, the scarce high-profile jobs were taken by the best, and the lowered budgets favored good-enough and the least expensive.
And the last year is not an exception. It's the new normal.
What other trends are shaping the reality?
On the one hand, brands are becoming agency-avoiders and tend to build in-house teams, while agencies in general are on the fall. On the other hand, the bottom of the market is flooded with solopreneurs and micro-firms providing next-to-everything for next-to-nothing.
And that's exactly why being "a motion design firm" or "a creative studio" doing pretty things won't cut it anymore. To stay afloat and stay relevant, creative studios will have to go past their comfort zones, taking smart decisions and making bold moves.
So, what should we do?
While there's no magic bullet, let me leave you with 3 directions, that should help.
Much tighter and more considered market positioning, stepping beyond the creative, and ideally adding a layer of business problem solving capability.
Leveraging understanding of the trends — not the creative ones, but macro trends in business, media, culture and entertainment. Sensing where the attention is going and capitalizing on it. The playing field is level here. Which is both good and bad, depending on where you are.
Leading with vision and confidence — this flows from the above two. Better understanding plus business mindset, once demonstrated, will be attractive to brands big and small, and can result in fostering deeper relationships.
That's quite a bit to process, I know.
Till the next one.
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