No doubt you’ve seen the TV series Mad Men – the beautifully realised soap opera set in the 1960s on Madison Avenue, New York’s traditional ‘advertising district’.

Over the past few years, it’s been hard to avoid the sleek style and seductive storylines of this award-laden show, and especially its chisel-jawed hero: the brooding, bed-hopping, whisky-swilling, creative genius Don Draper.

When I started working in advertising nearly 30 years ago, agency life was still sort of like that, if perhaps not quite so glamorous.

I remember, on my first day in the agency, the account director sitting in his office in a light grey suit, smoking a pipe. The agency’s most important client was Bell’s Scotch Whisky, at the time the UK’s best-selling blend, but that didn’t account for the agency’s alcohol intake. (Bell’s had become a huge Scottish success story, marshalled from its Cherrybank HQ in Perth by its endlessly energetic and much-feared boss, Raymond Miquel. A fitness fanatic, Mr Miquel frowned on mixing business with pleasure – unless your idea of a good time was falling in a steeplechase and completing the race with multiple fractures in your arm, which he did.)

I guess the agency’s drinking culture sprang partly from ‘client entertainment’, partly from the special licence afforded to other creative industries like journalism, and partly from Scotland’s general macho society. Throughout the 80s, my creative partner and I probably went to the pub most days, under the delusion that it would make our ideas better. What it mostly made was our scribbles indecipherable the following, foggy morning.

I don’t remember there being that much sex – but there was a lot of sexism. There was a woman to type copy and a girl to make coffee, and on Friday all the men would go to the pub at lunchtime and not come back, while all the women stayed at the office and answered the phone, I believe.

Why am I telling you this? Well, this year, our agency had a Mad Men themed Christmas party. With every ‘Brylcreem bounce’ and vintage frock flounce, it brought home to me just how much the advertising business has changed – mostly for the better. But, it also made me realise how Scotland’s creative agencies have struggled manfully – and mostly for the worse – to adapt.

When I started in advertising, Scotland’s two biggest agencies – Halls and Rex Stewart – employed about 500 people between them. Today, all of Scotland’s ad agencies put together probably don’t employ that many staff. In the past year, a number of well-known creative businesses in Scotland have folded. Most others have been quietly down-sizing and making redundancies or, at best, avoiding hiring or investment (which, in an agency, is more or less the same thing). Indeed, so many agency people are on the market that being a ‘consultant’ has become a code word for ‘unemployed’.

How did this happen? When did a lively, competitive, creative market start to turn into a cottage industry?

‘It’s the economy, stupid’ may well be your first thought, and you’d have good grounds for thinking so. In any downturn, marketing spend is an easy target for finance directors looking to cut costs without the heartache of reducing headcount. Indeed, with ‘Plan A-is-for-Austerity’ still being talked up in Westminster, the mood of the public is being talked down. Sluggish demand will make marketing investment decisions more difficult – even if the Eurozone crisis doesn’t push British banking and consumer confidence over the edge.

And yet, new figures from the Advertising Association and marketing research organisation WARC suggest that, in 2012, advertising expenditure in the UK will grow by 3.8%. (That’s compared to the OECD estimate of 0.5% growth for the UK economy.) Obviously, there’s a shift towards digital, but even the classic ad medium TV is expected to grow revenues by 2% next year.

So, if the advertising market remains buoyant, what’s the real reason Scotland’s agencies are struggling?

It would be hard not to recognise that the structure of the advertising industry has changed dramatically in recent decades.

From the dawn of the industrial era to the early 1990s, advertising wasn’t really a creative business – it was a commission business.

A short fictional-but-historically-accurate example may clarify. In Mad Men, the agency works on commission: they get paid 15% of the cost of any advertising they place. (If they book a $1 million TV campaign, they get paid $150,000 – not by the client – but by the TV company.) So, it’s the little fat guy with glasses who runs the media department, not Don the creative genius, who delivers the income that pays for all the agency’s creative services.

Until the early 1990s, almost all agencies were commission agencies. It was a weird system which had a number of odd side-effects. Firstly, there wasn’t a direct connection between the hours worked and what the agency earned: the idea you came up with in the bath or the pub could be worth a lot of money. Secondly, the agency didn’t get paid unless the campaign ran – or get repeat business unless the advertising worked. So, despite appearances to the contrary, agencies needed smart, effective processes to make good decisions happen fast. And, finally, the commission system allowed clients to see agency services as free. Senior clients could consult the agency on strategic issues – and outsource tedious marketing admin to the agency – without apparent cost. So, agencies used to be both well-connected and well-staffed.

The commission system broke down in the early 1990s. The little fat guys with glasses broke away to become ‘media independents’ – offering low commission and refunding the difference to the client. The old Don Drapers of this world had to start charging fees for their time, and stop drinking at lunchtime. And, since few companies like paying fees, clients sought alternative sources of advice and started in-sourcing their own marketing admin. And, of course, agencies got smaller and made less money.

The most common complaint I hear from clients is that Scottish agencies lack critical mass – they are too small to have the depth of experience and range of resources major clients need. But it is a self-fulfilling prophecy.

Take Portland, Oregon. There can be few places on earth less likely to produce one of the world’s largest independent advertising agencies. But that’s where Weiden + Kennedy came from. Admittedly, the agency expanded globally on the heels of Nike – also from Portland, Oregon. And that’s the point.

American agency networks spread round the globe on the back of US brands and the Coca-colonisation of world culture. But, there just aren’t that many Scottish brands. Moreover, larger Scottish-based organisations often source their ‘strategic creative services’ outside Scotland.

To return to a previous example, Bell’s Scotch Whisky isn’t marketed from Perth any more. It isn’t, to the best of my knowledge, even marketed from Scotland. Indeed, most major brands of our national drink are marketed from London or, internationally, even further afield. The reasons are pretty straightforward. For many Scottish brands, Scotland itself is not a particularly important market and, globally, Scottish cultural cues may not be key to consumer motivation. For instance, in emerging markets, the appeal of Scotch may be more to do with the superficial ‘Loadsamoney’ status than deep heritage.

And yet, the state of Scottish advertising is merely symptomatic of a deeper weakness in Scottish business. We have all the hard infrastructure of a first world economy – the rail, road, air and digital communications. But it’s soft infrastructure we need – the personal connectivity that creates mutual opportunity.

Unless Scotland’s CEOs start to take a serious interest in where their marketing monies are being invested, Scottish advertising will continue to head south. There is a well of Scottish talent waiting to be explored. But, without commitment from Scotland’s most senior decision-makers, Scottish creativity and Scottish jobs will – to quote Johnnie Walker – ‘keep walking’ out the door.

A version of this article appeared in The Scotsman – Scotland’s national newspaper.