Claire Beale on Advertising: The best agencies get creative in hard times

Here's a tale for our times. You might call it a tragedy. Unfortunately, it's true. Our story begins in a big London ad agency. Despite the darkening economic skies outside, there are fresh flowers in reception, free croissants and cappuccino in the agency caff and a Dunkirk spirit in the boardroom.

It's an agency that has good reason to be chipper about recession. Its principles are focused on doing the best work, not making the most money. So, not surprisingly, it often does both. Then one morning the agency's chief is called to a meeting with one of their biggest clients, a global brand, a household name. The client and the agency have history: great advertising, award-winning creative work, work that sells things.

But the client's in straits. His business is being gnawed by recession and he's thrashing around for help. He needs fresh strategic advice, a credit crunch-beating marketing plan, advertising that will hard-sell fast. The agency's chief flexes his muscles. He knows he's got the best people and the best insight to give his client the best chance. They're in this together, and together they'll survive.

Unfortunately, what the client thinks he needs most of all is money. He asks for a 40 per cent reduction in fees,backdated to the start of the year. Suddenly the agency is in trouble. It's not the only one. Stories like this are being played out in meeting rooms across adland. Advertisers are starting to squeeze their agencies hard. And it's raising some fundamental questions about the shape of the entire business. Where does a creative industry go when its work is seen as something that can be traded like a commodity, negotiated upon retrospectively, reduced to a numbers game?

The answer seems to be to use your creative skills more creatively, to generate revenue streams beyond the traditional advertising model. Which is exactly why the companies that were last week officially anointed adland's best in class for 2008 are challenging the definitions of what an advertising agency actually is.

Take Mother, unveiled last week as Campaign's Ad Agency of the Year. Mother produced a movie, wrote a play, published a comic and made some great standout advertising.

Or Beattie McGuinness Bungay, an agency that has also stretched the definitions of creativity into iPhone applications, airplane liveries, book publishing, all without compromising its ability to deliver some fantastic advertising for clients like Carling, Wall's, Ikea. How about Bartle Bogle Hegarty: proud owner of a ready meal range you can buy in Tesco, a rape alarm brand stocked by Marks & Spencer, and also creator of some of the best advertising in the world.

These are agencies that are applying creative thinking to more than just the business of communications; these are agencies that are using creative thinking to change the communications business. These are advertising's visionaries and they're poised to use the economic crisis to drive through a radical overhaul that will redefine the industry and establish a new financial model for adland.

For recession, they read opportunity: the chance for all of us – personally, commercially, socially, politically – to change. And for creative thinking to lead that (positive) change.

The best agencies will use the current fee negotiations to introduce new payment structures that allow them to share in the risks and rewards of brave advertising. And the best agencies will explore ways to retain intellectual property rights for their work, or launch their own brands in partnership with clients, or create content that people will pay to see. By doing all of this, they will be better equipped to deal with those advertisers whose own response to recession begins with an attempt to screw their advertising agencies.

And what about those advertising agencies without the vision and the confidence? Well, back-dated fee reductions won't pay the bills and in what is essentially an over-supplied ad agency marketplace populated with too many undifferentiated brands, some will die. Which, actually, won't be such a tragedy.

Best in show: Frank (Mother)

*When a line of cocaine costs less than a drink, persuading young people to steer clear of drugs is an enormous challenge. But not too big for Pablo, the drug mule dog.

He's the star of a new campaign by Mother (ad agency of the year, see above) for Frank, the drugs helpline. And, through the voice of David Mitchell, Pablo takes us on a harrowing but humorous trot to meet drug users and dealers.

While it's not going to get substance abusers cleaning up, this ad does a brilliant job of making Frank seem approachable and unpatronising.