Obituary for Brand Advertising Agencies

August 11, 2009

 

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For years now clients have been encouraged by ad agencies to spend billions of dollars every year on brand advertising campaigns. Ostensibly in an attempt to drive sales. In his book “Obsessive Branding Disorder”, Lucas Conley refers to it as “The illusion of business and the business of illusion.” The digital world has helped to dispel many of these illusions, and hence brand advertising as we know it is no longer effective. The king is dead, long live the king.

Today we all live in that “Global Village”, where we are all continuously in contact with each other. It is almost impossible for a brand to create a brand perception that is different to that of the brand reality. Even if a brand claims to have incredible reliability, actual consumer experience will determine how they perceive the brand and how they describe the product to others.

There is not brand in this world that can outspend the consumer. Think about it for a moment. All those consumers are able to communicate their perceptions/experiences online at no cost whatsoever to themselves personally. The combined effect is exponentially bigger than any brands ad budget and far more credible from a consumer perspective too. Consumers have been empowered and they are speaking up.

Real brands do not need to shout out claims of who they are, nor do they need brand advertising to create their brand image. These brands earn their reputation through continuous innovation, great products and outstanding customer service. They continuously deliver on their brand promise. Their reputation is earned over time and acts as a beacon for new customers, helping simplify their purchase decisions. Today the brand experience determines the brands reputation.

In order to survive, let alone prosper, brand advertising agencies need to move quickly and change their business model, if they want to retain their long held role as “Brand Stewards”.  Recognizing this fact, Ogilvy & Mather evolved from “Brand Stewardship”, referring to it now as “360 Degree Brand Stewardship”. Today brand stewards are constantly tracking and listening to customer and consumer feedback. They have mastered the digital tools available and are always aware of what the customers think, are asking for, or suggesting.

No longer does a role exist for the traditional brand advertising agency. The king is dead. Long live the king. There is, however, still a role for a competent brand steward. It’s up to you to make the changes necessary if your agency wants to take on this more complex role.  

 

 

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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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Take My Ad Agency Growth Strategy Fundamentals Survey.

July 20, 2009

take surveyTake my ad agency growth strategy survey and in return I will share with you the survey results on completion.

If you have been following my blog, you will know by now that I am of the opinion that it takes much more than just new business growth to consistently drive above average agency growth and profitability. To be successful you have to minimize client churn, stimulate organic growth among existing clients, win new business, optimize your internal resource allocation and develop new capabilities on an ongoing basis.

I thought it might be insightful for all of us if we were able to get a snap shot of current agency growth/development activities and experiences across the industry.

Please take just 5 minutes of your time to complete the survey.

CLICK HERE TO BEGIN  

 

The information is confidential and we guarantee that we will not share any information specific to an agency or individual.

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Social Media Deception… Warning to Ad-Agencies and Clients

June 30, 2009

deceptiveDeceptive practices by inexperienced agencies and clients, within the social media space is embarrassing, distresses the brand, undermines trust, and discourages participation. It is also illegal and can create significant liability and exposure for both parties.

I have cautioned before against ad-agencies that know little or nothing about the social networking space, parading as experts in the field. If you do not know the rules, then do not play the game. Social media is inherently a very transparent medium, and it is that very transparency that will lead to you being found out.

This not only applies to the work that agencies do on behalf of their clients, but also to initiatives that are designed to promote the agency itself. (Albeit that there is not that much exposure here, given that there are so few agencies that understand it’s critical role in agency new business development).

There is no excuse for either giving the client poor advice or alternatively agreeing to be an accessory to the act. The fallout from deceptive social media transgressions is often immediate, very public and incredibly damaging to the brand and the agency alike.

Yesterday, the blog site, thecustomercollective.com broke news of a scandal involving Kohl’s company and agency staff and their recent activity on the Kohl’s Facebook Fan Page. Apparently both the VP Marketing for Kohl’s and the a Group Director from McCann Erickson Advertising were masquerading as helpful consumers and sharing stories on how much money they had saved while shopping at Kohl’s. (Both agency and client staff are able to participate in the Facebook discussions, as long as they disclose their close relationship with the company)

This is by no means the first instance of this happening. I am certain that you will all remember back to 2007 and the widely publicized news story that was covered on national media. The CEO of Whole Foods was embarrassed when caught praising his own company and bad mouthing his competitors, using an anonymous alter ego on the finance boards. Not even a year later Burger King was publically humiliated for their mis-use of social media.

This is a lesson to both agencies and clients alike. Every one of your actions across the full spectrum of social media must be completely transparent at all times. Failure to adhere to this the most important tenant of social networking can result in serious, costly and embarrassing consequences.


Six common mistakes agencies make when new business prospecting.

June 9, 2009

images-5With the market environment being as tough as it is right now, new business prospecting has never been more difficult. So if you are going to spend the time and money doing it, make sure that you avoid making some of the mistakes that most commonly occur. Here are six of them to avoid:

  1. Materials are too big. If you are going to use targeted direct mail, then try to avoid oversize packages. Previous thinking was to make it big both for impact purposes and to make it too large to throw in the trash can. That approach no longer works.
  2. Toys, tchotchke and expensive gifts. In addition, avoid toys and tchotchke as they usually add no value, are probably too “cute” and are basically just “tacky”. Avoid iPods’ or other expensive gifts as most companies have a policy not to accept gifts above the value of $25. Sending “stuff” is a bad idea. I was recently shown a new business package sent to a senior female marketer that had a thong included with it. Needless to say, that agency has no chance any time in the future.
  3. Too much information. Do not try and win the business at this stage of the game. Be concise and make every word count. Make sure you clearly articulate the message you are trying to deliver. Think about how much time you spend reading what you get and use that as your gauge.
  4. Too Generic. This is almost a follow on from too much information. Avoid a lengthy description of your agencies history. Absolutely do not include a detailed description of your proprietary process, your agency philosophy and laundry list of capabilities. Personalize the communication. Make sure you do your homework, have a point of view, and can quickly demonstrate your value proposition that specific client.
  5. Lack of attention to detail. You would be amazed at how many prospect communications go out with spelling or grammatical mistakes in them. These do not instill confidence in a prospective client’s mind when they consider you as a possible custodian of their brand.
  6. Failure to follow up. Believe it or not, one of the biggest mistakes agencies make is telling the prospect that they will be following up and then failing to do so. The chance of the prospect getting your communication and immediately jumping to respond is slim to none. Even if your communication has piqued their interest, YOU are going to need to be the one to follow up. So many opportunities are lost in this way.

 

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Performance based compensation the new trend for ad agencies?

May 12, 2009

6a00d83451db4269e201156f632c16970c-200wiThe trade press is all a buzz about the new trend towards to pay for performance compensation. The recent article on Coke and their approach seems to have everyone watching to see what happens next. The reality is that this is nothing new and both clients and agencies alike have been wrestling with concept for as long as I can remember.

While many clients feel that they should pay only for results, and many agencies lament the fact that they are not compensated anywhere near where they should be for those brand building ideas, there is an old adage that comes to mind. “Be careful what you wish for because you might just get it!”

While the concept appears to have a lot of merit, the success or failure of such an approach relies on the ability of the two parties to align the goals and most importantly measure outcomes. The best scenario is one where both agency and client alike get bonused on the same outcomes or results.

My experience has taught me that a balanced compensation program that provides a measure of ongoing funding on a monthly basis, combined with an incremental bonus program based on results, is the best way to go. Almost none of our client marketing leaders are remunerated on results only, so in my opinion it follows that why should we? That said, how do you go about agreeing on the goals and adequately measuring them?

Aligning Goals:

The first change that needs to happen is that the setting and aligning of goals must become a collaborative process and not an edict from the client. This often requires a big change in mindset, especially with large client companies who have been used to calling the shots.

With aligned goals comes aligned strategy and shared risk, which is accomplished once again through a collaborative process. This is often another big change for many client/agency relationships. The agency needs to have the ability to debate the go to market strategy and a certain amount of influence in the final outcome and implementation.

Measuring Outcomes:

One of the most difficult areas of agreement is the measurement of outcomes. In many instances the agency’s ability to impact final sales or results diminishes fairly early on in the marketing/sales process. How can they be accountable for issues like; product out of stock, poor distribution, product quality issues, pricing, sales force inadequacies etc.

Add to the above measurement issues and verification of them, and you find yourselves with a complex matrix that is often hard to implement, and can cause unnecessary aggravation and strain on the relationship.

I am a big proponent of a balanced performance based compensation approach – however I am also cognizant of the problems that can result from it. My advice is:

  • Go in with a positive attitude
  • Be pragmatic, ask the tough questions up front
  • Make sure you are aligned on the shared goals and shared risk
  • Agree on the agency’s role and ability to influence strategic go to market decisions
  • Define expected results and how they will be measured. Benchmark current numbers whenever possible
  • Achieve bonus together or lose it together. Do not bet the whole farm on it.

Good News Bad News!….at any time 30% of clients are looking for a new Agency

January 8, 2009

imagesI first heard this statistic while attending a AAAA‘s New Business Workshop in Chicago this year. The room was full of mainly new business types, who were encouraged by the statistic, and confident that they could attract some of that 30% to their agency. While it was good news in this environment, as a seasoned agency CEO I could not help but also feel a little panicked.

That means on average 30% of my existing clients are currently open to other agency approaches!

I did not know if I wanted to stay and hear more or leave immediately and start focusing my attention on my existing clients.

Unfortunately, most agency leaders believe that new business is the silver bullet to success and the cure to all evils. If you focus on winning new business you will ultimately succeed. In reality, that could not be further from the truth. We all tell our clients that CRM is important, and that it is far easier to get additional business from your existing clients than new clients. Yet once we have a client on board, we too often quickly take them for granted and become order takers.

Proactivity against the account soon diminishes. The top minds in the agency disappear over time as they get assigned to new business pitches and settling in newly won clients. The relationship becomes stagnant and within a fairly short period of time the relationship becomes stale.

 It’s no wonder that the average agency-client relationship is 2 years.

Trying to reduce your churn in existing client business is just as important, if not more so than new business development. The agency can have a stellar new business year, only to find itself treading water, as the hard fought new revenue only goes to replace the business that has walked out the door.  When you add the cost of getting that business in to the equation (new business strain) the agencies bottom line probably took a hit. Even worse is that in most instances you are most likely funding your new business efforts off the back of your key client accounts. Lose one of them and you have your worst nightmare.

Proactively minimizing existing client churn is one of 5 key pillars upon which to grow a profitable agency. To do this successfully you need to:

  • Develop a key account plan for your top 3-5 clients every year.
  • Train your account service staff to be both farmers and hunters.
  • Ideally hold agency-client business reviews twice a year or yearly at minimum. Each time make sure you tell them something new about your capabilities.
  • Have a plan to deliver pro-active thinking against their business at regular intervals.
  • Allow the agency team the time and resources every year to make sure that they are keeping up to date with the industry and competitive environment.
  • Align your key success measures with those of the client. If possible, link at least part of your compensation to their compensation/success.
  • Make sure that your contribution value is recognized at as many levels and departments as possible.
  • Invest against areas that are perceived as valuable by the client versus your internal perspective.

If you can minimize churn you can then focus on organic growth. The next critical pillar on which to grow a profitable and successful agency.