Posted by Robert Sanders on Tue, Aug 24, 2010 @ 11:26 AM
The advertising industry finds itself – yet again – at a crossroads, a confluence, a decision-point, a junction. Attention is needed. Assessment is necessary and action is required. After all, it’s been nearly 10 years since the industry was last stumbling headlong toward extinction.
Are there many reasons for concern? – Yes. Are there always reasons for concern? – Yes! It's most interesting how the “expert class” repeatedly presumes cataclysm at the first sign of economic Darwinism. Chicken Little would be proud.
Remember, not that many years ago, the Internet spelled doom for the industry. Still around – amazing. Before that, TV. Radio...
Assuming clients will continue to sell products and services, there is a reason to believe that agencies will survive this most recent report of their demise.
Agencies HAVE Changed
That said, there are indications that change is needed to stem the tide of marginalization. Agencies have expanded, purchased, and partnered their way into every market, category and discipline. They have leveraged advancements in technology to become as connected globally as their predecessors were in one office tower only a decade earlier. And have scoured the market for the best and brightest to set to work advancing their client’s brands and products.
Evidently, not everyone has been impressed by the results of this effort.
The end of advertising as we know it
Traditional advertising players – broadcasters, distributors and advertising agencies – will need innovative new approaches to respond to major industry shifts underway.
What is most intriguing about this point-of-view is that it assumes the clients will sit and wait on the ad agency and their partners to innovate our way into the future.
There is no question that the future of advertising will look radically different from its past. The push for control of attention, creativity, measurements and inventory will reshape the advertising value chain and shift the balance of power. For both incumbent and new players, it is imperative to plan for multiple consumer futures, craft agile strategies and build new capabilities before advertising as we know it disappears.
Shocking! I know! The industry will have to “craft agile strategies!” in light of this “shifting balance of power.” This is amazing to hear in 2010. Particularly from IBM who is serviced by the industries most influential agencies. After all, didn’t the industry spend the past few decades consolidating to deliver on the opportunity of integrated services, or was it convergent communication, or media-neutral communication, or whatever other iteration of the same to better measure and influence consumers. If agencies were delivering on their service promise, then churn would not be at unprecedented levels and clients would not be seeking the same service object as a decade earlier – FROM YET ANOTHER AD AGENCY.
So, where’s the rub? Change is coming. And some agencies won’t make the change… See Cliff Freeman’s recent closing as Exhibit A.
Fingers of fault can be pointed in every direction, but what can an agency do to deliver on the promise of change and better consumer insight?
Options For Change
One choice might be to do – nothing. As one CEO of a prominent agency network advised, “it’s not going to happen in my lifetime, so I’m better off spending my time on matters where I can have an impact.”
This pessimistic view might work for him and his pre-packaged retirement, but, as an industry, ignoring the issues is not a viable option.
If you are confident that agencies are on the case and see these views as a “Chicken Little” prophecy, consider one advertiser’s recent action. They terminated their agency relationships claiming the agency model to be irreparably broken. Then proceeded to underwrite the organization of its new agency – only to see that model stumble and fall. And now have folded the whole mess into yet another ad agency.
This is an extreme but not an isolated example of how client dissatisfaction has embodied itself in unprecedented levels of client churn.
Some would argue that client’s share much of the blame in these dysfunctional relationships. But these same clients –criticized by agencies – have increased the role and expenditures for their management consultants year-over-year. Perhaps as an industry we need to consider why?
Anyone can satisfy and make money off of the handful of great clients. A great agency effectively services and profits from all of their client relationships.
Perhaps A New Role is Needed
Before dismissing the end of advertising as we know it, the example of another industry’s response to similar service pressures may be worth considering. The role of the general contractor in construction resembles the traditional advertising agencies role as general contractors of business communication.
The construction industry responded to client demand for improved quality, professionalism, integrated and unbiased service management by creating an entirely new industry services category – Construction Management.
After a decade of unfulfilled promises of better creative, more integration, social media and consumer insight and tracking, clients are showing signs of an aggressive search for “Communication Managers.”
Construction management firms are staffed by experienced and credentialed industry professionals who deliver unbiased results to the client. General contractors were not and did not. Those who did not adapt have been marginalized. Agencies that continue to attempt to deliver services as general contractors have had their fate cast. Responding will require you to revisit your brand, organizational model, processes, fee structure and staffing protocols.
Time is of the essence; a recent study reported that those in the “advertising” profession rank just ahead of Used Car Salespeople in esteem. But neither that nor the changing consumer will end advertising as we know it.
Posted by Robert Sanders on Fri, Jul 09, 2010 @ 01:28 PM
A recent B-to-B Magazine headline shouted, “Desperate ad agencies scramble for business.” There is no disputing that the current climate is the most challenging our industry has experienced in memory.
The traditional advertising agency model is under attack from all sides. From the strategic side agencies are being pushed out with the increasing impact of consultants; search, procurement, brand, marketing, and of course, the big fish, management consultants. On the tactical side agencies have to compete with all types; design, internet, database management, media buying, promotion, direct, special events, sports marketing firms, corporate identity houses, two guys and a Mac, and more. This is troubled water.
A recent poll among advertisers indicates the current tenure for a marketing manager is only 9-18 months. These new Marcom Managers are younger, have less experience in advertising, are more focused on tactical issues, and recognize that they are only there for the short term. At the same time they have a wider span of control over marketing and budgets, and they want their own suppliers – people who think and look like them. Not surprisingly they don’t take advice very well from traditional agency staff that often comes across as patronizing. More troubled water.
Client turnover is among the more serious challenges within our industry. Some recent studies show that for smaller accounts the churn, or client turnover, can be as fast as every two years, while larger accounts have gone from seven years to three. Clients, these new Marcom Managers, are growing more and more impatient and are quick to question the effectiveness of their current agency. The growing percentage of project-based work has made it easier to change – click to what’s next. Yet more troubled water.
Design studios and other low-cost providers have seen revenues increase as their agency brethren have suffered. These creative firms are organized and operate tactically. They are taking business away from traditional agencies on account of price, speed and timely delivery. Many other specialty shops who often work faster, are more focused on results, and offer tangible benefits to clients are also seeing an upswing in new business. Clients are questioning the value of all the layers at the agency; account service, traffic, and all the administration. Further troubled water.
There is a renewed focus on new business, but most agencies have no system for sustained business development and few staff skilled in new business. What was done 3 years ago no longer works. The troubled water is changing everything. You have probably been frustrated by first-hand experience with all of these changes; but opportunities for new business are abundant for advertising agencies that are prepared.
We believe there is no better time to do new business than times like these; when clients are changing how they spend, when your competition is worrying about staying in business, when companies are changing agencies at an unprecedented rate, and when prospects want to make decisions that enable them to solve immediate challenges. Doing new business now is like fishing in troubled water. Most people don’t even go out – but that’s also when the pros know fishing is best. While others stay home, the smart ones go fishing.
What steps should you take in times like these? Here are six strategies we recommend.
First, make sure your firm is properly branded. Check to see if you are caught up in alphabet soup with a brand that doesn’t say anything. Clients who are looking for a new agency don’t want a “we-are-whatever-you-need” advertising firm. In fact, that turns them off and harms trust. At a recent new business conference hosted by the AAAA, every client and search consultant said “stand for something.” You have to know who you are and why you should be considered. Otherwise, you risk fading into the fog of marketing services lingo. It is better to stand for something and not be considered for one account then to stand for nothing and not be considered for any accounts.
Second, focus on generating leads. That means increasing the number of opportunities to go visit good prospects. Too many agencies only focus on winning pitches, not working to get into more pitches. Beware of the “we’ll win the next pitch” red herring. This is where an agency is busy pitching but not focused on creating awareness and relationships. Unless you are a recognized agency brand (and there are only about 10 in the US), counting on referrals and word of mouth is not a new business program. Many agencies have attempted to flip a new business switch – “we need some new business NOW! Let’s form a committee!” Few are finding success.
Third, sell smarter. Focus on the overt benefits you offer. Make it clear what you do why and how it gets results. Successful agencies do this face-to-face, not by clicking PowerPoint slides at a prospect with lots of case histories and marketing babble. Stop doing capability presentations! Instead show them how you work, specifically with their brand, and how you will impact their business. This means that you have to work hard and listen to understand their problem. This sounds simple, yet it is one of the most common problems in all client/agency relationships.
Fourth, be easy to do business with. Don’t try to sell what clients don’t want to buy. Give your opinion, offer suggestions, but be sure to give them what they are asking for. If they want the logo larger, make it larger and move on. Forget about account planning and stop trying to get clients to pay for it. If you are in a tactical position, play the tactical game better and build trust. Only then can you move up the marketing ladder and start recommending more strategic advice.
Fifth, think about growing the old fashioned way – buy growth. A cross-town merger with another firm in your market can create a wealth of opportunities. There are some good opportunities in every market. You can gain efficiencies and add new services and resources, and create more awareness for your brand.
Finally, go after the consultants and the strategic high ground by offering consulting services of your own. This requires a separate brand that is not linked to advertising or marketing. Too many agencies forget that if you’re an agency, and try to add consulting to your brand, you are still only an advertising agency –Where are my ads! However, if you are a consulting firm, then you can work at the strategic “C” level, and open up a sizable new revenue stream. This provides more opportunities for the agency side to follow once the consulting assignment is completed.
Search consultants are saying new business is slow. They’re wrong. Their business is slow. New business is heating up. The competitive landscape for agencies has been forever changed. As the economy recovers and picks up speed, you will need to adapt to win today and change to succeed in the future.
As you evaluate opportunities and challenges at your agency, never hesitate to give us a call - 800.899.1538
Image Credit: http://www.1st-art-gallery.com/Andreas-Achenbach/A-Fishing-Boat-Caught-In-A-Squall-Off-A-Jetty.html
Posted by Robert Sanders on Tue, Jul 06, 2010 @ 11:55 AM
Having started my career in the military, I’ve seen my share of crap. Don’t take me wrong, I loved my time serving! After all I spent 9 years traveling all over the world with some of the best and the brightest. That said, there are some aspects of serving that really grate one’s nerves – like having to clean out the latrines.
Working in new business is much the same. You get to work with some of the best and brightest, be highly creative, experience fun times, and relish the thrill of victory. But there are some aspects that remind me of cleaning latrines.
Here are the highlights of the things I hate about new business:
1. Letting Chaos Drive the Process (The Guy Everyone in the Platoon Hates)
This is not unique to new business, and we have all interacted with someone who never responds to requests for input into a planning document or who fails to provide clear direction early in the process. This same person tends to show up for meetings 15 minutes late, pontificates endlessly rather than attempting to understand the situation or share critical information. And then assigns responsibilities and actions not related to the outcome. The end result is often that last-minute changes are made in the wee hours of the morning of the presentation. The counter-argument is “we need to be more spontaneous” or “you just need to be more flexible” or my personal favorite is “I work better off-the-cuff.” What a crock.
2. Using Overly Complex Marketing Jargon (Or Establish a SOP to SITREP Clearly)
Marketing buzz-speak is often deployed as a defense mechanism. Box a marketing person into a corner, whether he is a brand manager or the most junior account coordinator, and rather than admit they were wrong or have no idea what you’re talking about, they’ll start spouting off impressive-sounding marketing terms, abbreviations, and jargon-laced speeches – “We need to highlight the brand USP to maximize CTR by implementing a highly-integrated cross platform SMM to generate strong ROI.” I know some former military folks who can’t communicate with civilians due to the lack of acronym commonality. That’s why it’s important to communicate clearly. The most respected people in marketing I’ve worked with have an ability to articulate a complex situation or a difficult process or a hard-to-grasp marketing problem in simple, understandable terms. Not the other way around.
3. Not Developing Presenters (Providing More than Just a Toothbrush for Latrine Duty)
Marketing firms tend to promote people with good account skills or outstanding creative credentials, and then expect them to deliver powerful presentations. Often the very skills needed to be great in client service or creative makes them terrible at delivering presentations. Yes, I’ve heard all the excuses about how times are tight and there are no staff-development budgets, but you really cannot afford to ignore building great presenters in your firm. The best presenters are coached and groomed – they’re not just born that way. And if someone just doesn’t have that ability, then don’t bring them! Would you want someone covering your back who hasn’t had adequate training? Watching a well-crafted presentation delivered poorly just kills me.
4. Focusing on the Wrong Things (Should Leadership be THAT Concerned about the Cleanliness of the Latrines?)
When heading into a new business planning session or pitch there are certain areas where we should be spending most of our time. That means the overall goal, strategy, or plan. One disturbing trend I’ve noticed is agency leaders are focused on small stuff, like which word on which slide is better. Getting a handle on new business requires among other things, a particularly strong attention to detail. However, few leaders are able to coordinate the dozens, if not hundreds, of individual details associated with new business. Although keeping track of details is a valuable skill for leaders, I think it's easy for leaders to lose sight of the big picture. Regardless of how many small details need to be handled, it's important to step back every once in a while to see things from a broader perspective. That’s why in the military you have a commander who is in charge of the overall mission and subordinates to track and execute the details.
5. Letting Your Firm Get Lazy and Fat (Why Physical Training is a Way of Life in the Military)
The worst thing about new business is how so many firms let things slide until there is a crisis, and then everyone goes nuts. The day-in-day-out work eventually fills everyone’s time, and new business keeps getting pushed to the back burner. Weeks/months/years go by with little-to-no-effort being made in new business until one day a large client decides to head across town to a rival firm. Then all hell breaks lose as the agency goes nuts trying to find new business. Suddenly outbound phone calls get made. Old prospects get hounded. And new outreach programs are thrown together. Why? As I’ve stated many times, the most important client in the firm is the firm. Look over the past year, and decide if your own marketing efforts would be representive of your best you would do for any old client. Probably not. Working and exercising your new business skills day in and day out should become part of life at your firm. They don't call new business the heart beat of an agency for nothing. By continuing to ignore your weaknesses or problems they will never get resolved.