Ex Ad Agency Executive Demonstrates the Real Power Of Social Media.

August 20, 2009

If you were not convinced about both the power and effectiveness of social media before, I am sure that after reading this post you will be. Here is an example that demonstrates just how effective social media can be when used correctly.

70,000 Advertising professionals have already been laid off in the current recession. The worst I have experienced in nearly 30 years of being in the business. It has impacted both client and agency people alike and has reshaped our industry forever! If you just sit back and consider this statistic, it’s nothing less than mindboggling. Many are talented individuals with years of experience under their belt, and unfortunately, many will not be returning to our industry.

The recession has brought into question many of our values and priorities as individuals, consumers and employees. It’s caused many of us to move from materialistic to minimalistic and reassess what’s important to us and what is not. It’s driven significant changes in overall consumer behavior and impacted where and what they spend their money on. The recession is changing the way we do business and how we manage our businesses.

Most importantly it has forced many of us to reconsider our life’s purpose and what we ultimately want to achieve during it. We have all heard the truism, “When Life gives you lemons, make lemonade.”  If you have not already heard, the movie “Lemonade” is going to be released sometime in September 2009. In essence, it’s a 30 minute documentary film that showcases the lives of former advertising professionals from the time they were fired through to how they used their dismissal as an opportunity to discover their dreams.

While I am certain that the movie itself will be of interest to you, the story behind it is even more fascinating.

  • It all started when a 37 year old copywriter from Arnold (Eric Proulx) was laid off during October 2008. (The third time in less than 10 years)
  • He started a blog called “Feed The Animals”, to serve as a venting ground and support system for other ad people who had been laid off.
  • After launch he decided to make a promotional video. The people and stories for the video all came from a call for submissions on Twitter.
  • He was going to conduct interviews himself using a handheld camera, however due to all the buzz, Picture Park, one of Boston’s largest commercial film companies sent a tweet offering their expertise.
  • Using Twitter, Proulx recruited an entire volunteer film crew.
  • He put an open letter on his blog and sent out a tweet that said “if @virginamerica got retweeted enough, maybe they’ll consider donating flights.” Not only did the airline come through, but A-level photographers also came through.
  • The film will be released free on the web even though that automatically disqualifies it from most documentary competitions.

Consistent with his overall approach, Proulx said, “I’d rather have a million laid-off viewers than 500 at a film festival!”

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Survey Finds Ad Agency Growth Strategies Missing Critical Elements

August 13, 2009

My recent survey, targeted at senior agency leadership of small to medium size agencies, found that many were missing critical elements required to deliver consistently superior results. Over two thirds of respondents disclosed that during the last three years, unexpected client turnover has caused them to miss their budgeted agency growth goals.

The purpose of the survey was to gain insight into:

  • What tools and approaches are currently being utilized to support agency business growth and profitability?
  • Do current agency business growth strategies address five specific growth pillars? (client retention, organic growth, new business development, resource management & optimization and new capability development and cross-sell)

The response profile was very interesting. 45% came from an Integrated Agency, 40% from Advertising Agencies, just under 7% from Interactive Agencies and nearly 9% from other. (Promotion, PR etc.) It was very surprising that not one response was received from a Direct Marketing Agency.

It is apparent from the survey results, that very few of the agencies who responded have a “Comprehensive Agency Growth Strategy Plan”. Most appear to be taking a more tactical approach, implementing various initiatives on an ad-hock basis, with little to no innovation. This appears to have resulted in inconsistent growth and erratic financial performance. The survey demonstrates clearly that when certain of the key elements of an agency growth strategy are omitted, (The 5 Key Pillars) it results in a direct negative impact on their ability to consistently deliver above average results.

Please take some time to review the survey detail. I am certain that you will find it very informative.

 

 

 

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Words of Wisdom from The Ad Agency Pitch Consultants

August 12, 2009

words of wisdom 2

The other day, I came across a collection of notes I had taken during various presentations, given by some of the top names amongst pitch consultants. The tips contained in them are as pertinent today as they were then, so I decided to aggregate a selection of them in one post and share them with all of you.

  • Think very carefully before deciding to defend when your client decides to put their account up for review. On average you have only a 1/18 chance of winning, so the odds are heavily weighted against you. (Dave Beals – Jones, Lundin, Beals)
  • If you believe that the client RFP is requesting excessive information, go ahead and push back, and submit what you are comfortable with. The most important thing you can do is look at the issues within the questions and adequately address them. ( Ann Billock – Ark Advisors)
  • Does size matter? It all depends. If the business being awarded is likely to overwhelm your agency, then yes it does. If the client needs an international network, yes. It’s about horses for courses. In some instances smaller can compete with big if they are able to leverage strategic partnerships. (Hasan Ramusevic – Hasan & Co.)
  • Every agency claims to have a proprietary process or philosophy. Bottom line is that there is just too much BS out there, as the agency world drinks its own Kool-Aid. Show them ideas backed by research and validate how you intend to produce results. (Lisa Colantuono – AAR Partners)
  • Do clients who ask for it really want and buy cutting edge work? Seldom does a counter a culture approach prevail. Ask more questions and try to validate their requests. If you are still unsure, then give them one of each so you are covered. (Ann Billock – Ark Advisors)
  •  Never stretch the truth when answering an RFP. If you feel that you have to in order to be competitive then pull out. Define what you cannot answer truthfully and ask the client or consultant why you were included on the list. It might be something specific you have that interests them, in which case focus there and leave out answers where you have to. (Lorraine Rojek – RCG Consulting)
  • How do we crack the clutter with our new business prospecting? The letter should address a specific challenge or opportunity. The supporting materials should do exactly that. Support the letter with a clear and consistent message based on actionable insights. The materials should also effectively differentiate your agency brand. Simple, easy to read and direct. No coffee table books, gimmicks or tchotchke! (Leslie Winthrop – AAR Partners)
  • Never include the prospects title in your new business materials unless you know it to be accurate. Titles change all the time and often many of the compiled lists are already out of date when you use them. (Cleve Langton – New Business 3.0)

Rocket science…No. Worth remembering…Yes

 

 

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Three Ad Agency Pitch Approaches That Work

August 10, 2009

New business pitch

I have often heard the question asked, “What is the best way to structure an agency new business pitch?” My answer is that it always depends on the people, the environment and the time that you have available. Here’s why…

During my career, I have been involved in and led more new business pitches than I care to remember. Thankfully, more of them successful than not. My experience has helped me identify three different approaches, each one of them being successful, depending on the circumstances.

Give me your best work.

This is the scenario where you give the pitch team, and especially the creatives’ a clean sheet of paper and say have at it. Surprise me! The downside to this approach is that it is very difficult to review work internally under these circumstances. Any comment or criticism is often taken as a personal affront and leads to defensiveness on the part of the team.

This really only works well when you have a talented team that you completely trust, and are looking for breakthrough ideas-no matter the consequences.

Second guessing.

In this scenario, the team feels that if they can second guess what the pitch leader or client wants, they will create the best work without having to endure unnecessary negative feedback or criticism. The problem with this scenario is that, in most instances, the team has not bought into the work and therefore has little to no ownership. In addition they are unlikely to deliver anything more than what you expect.

This works when you are completely in charge, know what you or the client wants, and are in a time crunch.

Collaborative excellence.

This requires a collaborative environment that includes team participation from both agency and client alike. In this scenario the focus of the combined team is on producing great work that delivers results. For this to work, there has to be an open environment, mutual respect, and cross functional team cooperation. The downside to this scenario is that it requires a considerable amount of time – more than is commonly available. 

This approach is ideally suited to situations where you have a dedicated team composed of experienced and mature people, and enough time to allow the required dialog and interaction.

 

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Ad Agency Creativity to Cash Flow. What Clients Rate as Important

August 4, 2009

 

Blank freeway sign 1

Ad agencies often do not realize just how important it is to have a full understanding of both the client’s business and personal goals. This often results in wrong or inappropriate ideas and solutions, leading to lost opportunities with both existing and new business clients alike.

Too often I have seen client briefs or new business opportunities come into the agency and everybody immediately jumps straight into the assignment. Everyone forgets to take the time up front, to understand the broader business opportunity and corporate goals. I know that agencies are expected to address and execute against specific strategies, but each one of those is judged and measured against how it contributes to overall company success.

Recently, Click Z held their digital marketing summit in Seattle. Their three guest panelists shared extremely valuable client perspectives about what they look for and expect from a digital agency. The points they raised were refreshing and the issues covered could affect all agencies as they attempt to balance growing the business at the same time as nurturing client relationships.

The fours key insights highlighted by the panelists:

  • Understand the overall business opportunity. Panelists stressed the need for agencies to keep the larger goals in mind.
  • Play well together. Focus on the common good of the company/brand versus competing against one another.
  • Solutions should begin with a business insight. Too often agencies jump right into creative without having any actionable insights on which to base the work.
  • Never get complacent. Sure you did a good job yesterday, but what about tomorrow.

 The importance of understanding the individual client’s personal goals also cannot be over emphasized. Where did they come from? What is their current role and breadth of influence within the company? Who hired them? What is their support base within the company? Are they a turnaround expert charged with turning the brand around? Are they a “shiny” individual where ego and peer perception is of paramount importance?  What are their past achievements and what previous work was created under their leadership?

Answers to questions like these can have a marked influence on your approach to the assignment. So next time, before rushing head long into the specific client opportunity. Why not take a moment to think about the client’s broader business and personal goals and how they might affect your agency approach. I am certain that you will find it is time well spent through a noticeable improvement in your agency new business close ratio.

 

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Ad Agency Cost Cutting Insanity

August 3, 2009

insanity

Over a decade ago on May 25, 1999, Tom Peters published his book titled “The Circle of innovation”. Two particular concepts he wrote about still have tremendous relevance to the broader advertising agency community. “You can’t shrink your way to greatness” and “Talent Based Enterprise”.

Every time I read the trade press I am blown away by the amount of commentary and news about ongoing ad agency retrenchments and cost cutting activities. Omnicom proudly announced recently that it had done an excellent job adjusting cost structures with year to date one time severance costs of $70 million. Publicis claims that “strict cost controls” (worldwide staff cuts) to some extent mitigated the impact of the ongoing economic malaise.  IPG reported that it had incurred a staggering $120 million in severance expenses related to 4100 employees, or 9% of its workforce.

What is noticeably missing from all the articles is any mention whatsoever about:

  • What the agencies are doing to improve client/agency value and strengthen existing client relationships.
  • Strengthening the talent on their teams to make them even more competitive, innovative and subsequently more successful.

I am fully aware that this is a time when all agencies could and should look for opportunities to cut out those excess resources that no longer contribute any value. This is also the time to make sure that you have the best talent on your team and that it is properly activated and inspired for competitive advantage. In essence, building what all agencies are supposed to be – “a talent based enterprise.”

Many years ago David Oglivy was quoted as saying, Our business needs a massive transfusion of talent, and talent, I believe, is most likely to be found among non-conformists, dissenters and rebels.” My guess is that most of these people were most recently let go as part of the “strict cost controls.”

In a recent blog posting, Seth Godin refers to it as the “Death Spiral” and suggests to readers, “Right this minute, if you still have some cash, some customers, some momentum… Instead of squandering it in a long, slow, death spiral, do something else. Buy a new platform. Move. Find new products for the customers that still trust you. Change is a bear, but it’s better than death.”

So which approach is your agency taking right now?

 

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Is The Current Ad Agency New Business Model Sustainable?

July 31, 2009

Unsustainable

Stan Rapp refers to the current upheaval in both the economy and the advertising/marketing world as “The Great Disruption”. In his opinion, what we are experiencing is not just a phase in time that will pass, but rather a permanent shake up that will forever change the world as we know it. I agree with him and believe that it will have a particularly strong impact on the current ad agency new business model.

 

The agency world in essence created its own monster. For years agencies have freely invested many millions of dollars on speculative pitch work, and the client has benefited from paying for only the work they consider to be the best. Can you imagine any other profession such as architects or engineers accepting the same terms? All based on a subjective decision with no mutually agreed criteria?

This age-old “Pitchworld” chaos is being further exacerbated by:

  • The increasing complexity and integration of marketing communications media and channels.
  • Ad agencies trying to become more digital and take a greater share of digital opportunities.
  • Digital shops trying to be more full-service oriented and look more like agencies, so as to try and win a larger share of the traditional media spend.
  • Technology providers going directly to the client and cutting out the agency.  

One digital shop has even resorted to acquiring an existing ad agency. To my knowledge this is the first time ever that this has happened!

All this effort for an ever decreasing profit margin? Agency profit margins continue to be subject to serious downward pressure as clients expect increased value for a lower fee. A great example of this was recently reported in the trade press.  Interpublic Groups’ CEO Michael Roth announced on July 28, 2009 that he expected IPG’s operating profit margin to around 7-7.5 percent for the current year. A very slim margin when you consider it from a return on risk perspective.

Something has to break. I just don’t see the industry being able to continue as it is. Consider the incredible amounts of money invested by agencies on speculative pitches with extremely low odds of success. In many instances the odds against the agency can start out being as high as 30:1 and, at best, be expected to finish somewhere around 4:1.

Successful agencies can achieve a 70% or higher success rate for a limited period of time. However, I would estimate the industry average as probably being closer to 25-30%. All of these pitches cost time and money. These costs either have to be paid for through reduced agency operating margins or alternatively, the three clients who actually picked the agency have to help fund the cost of the other seven unsuccessful pitches. Somebody has to pick up the tab for it all at the end of the day.

So my question is, how long will both private and public investors continue to put money into a company/industry that continues to experience declining operating margins with increased business risk? When is enough, enough?

I guess that’s the million dollar question we all keep asking ourselves.

 

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