When global advertising behemoth Publicis announced its latest financial results, the picture was not a pretty one.

The company had been forced to write down 1.4 billion Euros, most of which was attributed to its digital business Publicis.Sapient.

While it’s difficult to pinpoint a single cause for this massive loss, Publicis has stated that a decline in big projects was a major contributing factor.

The Publicis write-down can be seen as a harbinger for change in the way the big agency ecosystem operates around the implementation of enterprise products, such as Oracle, Salesforce and Adobe. These CRM, Marketing automation and content management systems are perfect for this market. They all promise to solve problems for mainly big businesses and, as big enterprise brands themselves, the perception is that they are a low risk buy.

But are they?

Oracle, Salesforce, Adobe and other big solutions-based software packages like them are now all around 10 years old and have been renovated – but not rebuilt – many times over. And therein lies a big problem. They are all now so complicated very few people can implement them without pain. However the big consultancies and agency groups love this type of product, and the clients who engage them have deep pockets and are prepared to take a long time on the project.

Even so, once the implementation phase is complete, the clients expect an ROI – and that can take a while.

Often there is a real sense of “never again” but more importantly the next generation of tools is just so much better. The next generation of digital manager is not going to accept the old-world order. No new world digital company has ever used one of these products. The CMS tool that Washington Post licenses is so much better, the marketing automation is better – in fact it’s all better and easier to implement. The good old days are not coming back.

Also the Internet seems to have created an environment where you are either really big with massive unassailable scale, or you are small – a niche player really good at one thing. So in publishing you have Facebook and the niche publications – there is virtually nothing left in the middle. Look at the plight of Fairfax.

It’s nearly impossible for an agency to have dominant scale. Everything makes it difficult, the costs of training, the nature of the new age knowledge worker, the pace of change all reduce the ability to really scale. While these big agency groups have grown through acquisition it’s getting harder to sustain, particularly when your flagship acquisition hits the brakes – like Sapient.

On the advertising side, there has been a massive growth in Internet advertising but nearly all of this has gone to Facebook and Google.

Agencies don’t do well in this environment. First the media agency deals don’t happen. It’s all above board for everyone to see. There is also no leverage for the agencies, primarily because many clients have taken the work back in-house and have discovered massive efficiencies over the work delivered by their agencies.

The Ad-Tech sector is interesting. None of it is profitable. Even Salesforce, which has been around for a decade, does not appear to be able to make money. Despite reasonable retention levels, SalesForce spends half its revenue on customer acquisition and faces a decline in many of the key metrics.

The advertising fraud issue is now starting to get some traction. The numbers seem to vary but for the sake of argument lets say around 50% of display advertising is wasted on some kind or fraud – i.e your ad never seen by a human. There is no one with a stake in this issue that has any interest in seeing it fixed. The fact is display volumes drive revenue for everyone in this ecosystem. So don’t expect anything more than “we are doing everything we can”

In an epic rant, one of the founders of the founders of Basecamp writes about the endless focus on growth.

This focus has impacted the entire advertising ecosystem. The big agency groups have acquired everything they can. Through global pitches they offer unsustainable pricing. When you work with a big agency group you get strategy and design people involved in every meeting, primarily because global procurement people negotiate rates for people doing the work. So, you find the programmers working at $90 per hour and crazy hours.

So where does this all end? Badly it seems.

About a week ago the CMO of P & G made a speech about the murky ecosystem.

“We’ve come to our senses. We realise there is no sustainable advantage in a complicated, non-transparent, inefficient and fraudulent media supply chain.”

He went on to talk about the new rules for digital advertising because right now, only 40% of all advertising dollars are reaching the consumer, the rest lost to intermediaries and waste.

Look at this another way. Agencies, whose fundamental job is to look after their clients’ money, have been caught wasting 60% of the budgets they are given. Clients are complicit but they have the money and are never going to take the blame themselves.

So the next 12 months in Australia will be interesting. The services ecosystem will have a shakeout as the bigger projects disappear. The software vendors here are already looking to Asia for their next sale because they can’t get the growth here anymore. The media agencies will be punished by their clients. The clients are going to have to recalibrate the way they pay their agencies because if you are not paid to care you won’t. There will be a shakedown of the ad-tech ecosystem.

Who is going to benefit? Well it’s going to be anyone nimble and smart enough to deliver solutions that simplify the life of the customer. Every time one of the big companies merge, 100 new niche market businesses spring up as the redundant staff look for the next thing. This is the future and it’s not so bad.