How Ad Agencies Can Help CMO’s Succeed.

September 9, 2009

CMO innovation

With an average tenure of only 17 months, CMO’s need all the help they can get, not only to succeed but to survive. There has never been a better opportunity for ad agencies to step up and take on the role of strategic partner!

There is not a CMO out there right now who has not already cut his overhead costs as deep as realistically possible. For the past 18 months or more, their game plan has been batten down the hatches and unload as much overhead as possible, as they try to survive the economic recession.

Well, the game is changing and changing quickly. The C-Suite is already shifting its focus from cost cutting to recovering market share and top-line growth. This shift is starting to put increased pressure on these CMO’s as the corporation looks to them for growth leadership.

To be successful they must be able to understand both current and potential customers better than anyone else. The next critical step is to take those insights and translate them into unique and powerful new products and customer experiences. Finally, and perhaps most importantly, they must create more effective and efficient ways to market their products or services. Communications innovation is absolutely critical to achieve success and who better to provide that innovation leadership than the right ad agency?

While breakthrough product innovation is a fundamental requirement and remains an essential component of every company’s go to market strategy, there are many communications innovations that are equally as powerful and effective.  It could be as simple as innovating the customer experience, discovering new customer segments or needs, innovative pricing or new payment options or leveraging networking and building a brand following and community.  

The opportunities are out there and the time is now! Whether you are the incumbent agency or one that is looking for an opportunity to break into that new client, there has never been a better time than now. However, a quick word of caution.  Do not go rushing in without doing your homework and armed only with traditional marketing ideas and solutions. To succeed you will need to demonstrate exceptional insights, creativity and media/channel delivery innovation.

This is your opportunity to establish your rightful place as a valued strategic partner. Focus your approach on how you can help the CMO recover top-line growth and avoid the temptation to deliver another one of those presentations about how talented your agency is. Remember Radio WIFM (What’s in it for me?).




CMO’s Have A More Positive Outlook. Are Ad Agencies Prepared and Ready?

August 27, 2009

CMO outlook

According to the July 2009 “CMO Survey” by Duke University’s Fuqua School of Business and the AMA, CMO’s are looking more hopeful coming out of a gloomy recession. The question that comes to mind now is, do ad agencies have adequate resources to take advantage of this upturn?

59% of the marketers who responded to the survey claimed to be more optimistic about the current economy than the preceding three months. A full 47% reported being more optimistic about revenues from end customers, however, they remain concerned about lagging customer spending.

While increased CMO confidence is great, the big question is just how will their optimistic attitude affect their spending behavior? According to survey respondents, their biggest increases in spending over the next twelve months will be online marketing at 9.5%, followed by new product introductions, CRM and brand building. While overall marketing budgets are expected to increase slightly, respondents reported that they plan to slash traditional ad spending by nearly 8%.

 Customer priorities


While this is clearly good news for some agencies, it may be less so for others. No matter what your agency discipline however, these numbers are a great barometer for agency management as it relates to which capabilities to focus on and invest in. Agencies have in the recent past trimmed down their resources significantly, almost to the point where they have little to no spare bandwidth to handle any proactive or developmental work.

 While online is a very broad category and could probably have been predicted, growth in other areas like new product/service development, CRM and brand building could potentially be big opportunities for agencies of all disciplines.

 Those agencies that have both a plan and the resources to help develop these potential opportunities will benefit from the upturn. Those who are caught by surprise are likely to miss the boat.  





Delivering profitable ad agency growth … a client’s perspective

June 1, 2009

As agency leaders we know that we must be effective at profitably growing our agencies if we are to continue to be successful and retain our positions… Clients are motivated to partner with agencies that add value to their business and can help them succeed. While they want the reassurance of an agency that is stable most are not concerned with our profitability. In fact most see us as too expensive and over paid for the perceived value we offer.

The current poor economy has exacerbated the situation and put our client colleagues under even more pressure than usual. Management expectations are even higher for them to cut costs, be more effective with less and produce sales. Yes sales, not just positive brand awareness. Add to this the fact that a poor decision on their part could cost them their bonus, a possible promotion or even worse their job. It should therefore be no surprise that most clients are more conservative than ever and want to operate as far as possible under the radar screen.

A recent AAAA CMO survey highlighted some interesting client perspectives that I feel you should be aware of when planning your current agency growth strategy.

  • 93% of CMO’s  have identified cost savings with over 37% of those planning to reduce marketing costs by over 21%
  • 49% said that within the next 6 months their Ad Budget would be lower
  • 68% of the CMO’s  who responded had already identified agency cost reductions
  • 48% intended to achieve their cost reductions through reduced agency compensation
  • 58% intended delaying or eliminating currently planned projects
  • 44% planned on altering their channel mix.

I am not sure about you, but my reaction was initially one of doom and gloom. That of course does not help as our growth targets remain the same notwithstanding the economic environment.

Here are my suggestions about how to succeed in the current economy.:

  • Add value versus battening down the hatches. You cannot save your way out of this situation. Whether its existing clients or new business opportunities, find where you can add value. Proactivity and agility are imperatives.
  • Solve business issues: Bring them ideas and work that will help them solve real business issues. Show that you know their business, you share their concerns, and that you have been listening to them.
  • Ground your ideas/work on actionable insights. Analysis alone is useless, you need to go the extra mile and find those key insights that can help support your suggested actions
  • Recommendations with proven ROI. Only present ideas and recommendations that have a clear and as proven as possible ROI. Demonstrate that you have researched the idea, and done your homework and that the risk is limited and success is most likely. Demonstrate how you will DRIVE SALES.
  • Consider all available channels. 44% are planning on altering their channel mix. Look at what they are doing now and consider alternative channels that may be cheaper and more effective. Social media is hot topic right now however, measurement and associated sales are difficult to track.
  • Innovation within boundaries. Yes, they are looking for innovation, however, risk tolerance is low. Make sure that you strike the right balance. For most this is no time for courageous risky ideas.
  • Build measurement and metrics into all you do. If you can measure it you can probably sell it.

Clients don’t really want to fire their ad agency

May 10, 2009

bobs…unless you give them reason to.

I have been in this business now for well over 20 years, and I am still amazed at how paranoid we agency people are about being fired by our clients. After having this discussion with many clients during the course of my career, I can tell you that the last thing they want to do is fire the agency. That is of course unless you have given them a reason or most often many reasons to consider doing so.

Most clients invest an incredible amount of time and effort not only choosing their agency partners, but more importantly educating them about the business, the product, the company and its policies and procedures. The last thing they want to do is go through that process all over again.

If you then add to this the fact that the procurement department is becoming more and more involved in the selection/negotiation process, many clients will tell you that they would prefer root canal treatment. In fact, during a recent discussion with the CMO of a very large client, she told me that she was currently putting up with sub-par client service from her agency to avoid a review.

So why all the paranoia? It seems like we both want the same outcome – that being a long term stable relationship. Yet the current research shows that over 50% of new client relationships do last past the 2 year, mark and 75% do not make it past 4 years.

One reason is that CMO’s have never been under more pressure to produce results in such a limited amount of time. With an average CMO tenure of 18 months right now, most of them know that they have 9-12 months at most to move the needle, or they are out. Sales are mandatory and excuses are seldom acceptable. It’s never been more about results.

I thought it might be helpful to give you two quick checklists. One covering tips on what to do to keep clients longer, and the other listing indications of when you should anticipate being headed for trouble.

Tips to help you keep clients longer:

  • Clarify expectations, deliverables, compensation and measurement at the outset
  • Staff the account with the resources that are both covered by the fee and provide client value at the same time (as determined by the client)
  • Present work that is innovative within boundaries, yet has the best chance of producing results. Support all proposals with actionable insights
  • Continue to be proactive, looking for new ideas to help them succeed. Remember other agencies are approaching them all the time
  • Minimize client service churn, and make sure that you conduct 6 month client/agency reviews
  • Avoid surprises such as cost over runs, agency errors, poor execution etc.
  • Look for co-marketing or partnership opportunities whenever possible. OPM (other people’s money) helps make budgets go further and your agency more valuable

Indications that you are at risk of losing a client:

  • Change in CMO or company leadership. 75% of new CEO’s conduct a review
  • Constant churn in client service and other key agency team members.
  • Product underperforming in the marketplace with poor sales
  • A constant stream of agency errors, arguments over cost estimates, and a client team who tells you that they hate the client
  • Reactivity and no proactivity. An agency of order takers.
  • Little to no senior agency leadership involvement/relationship with client senior management.
  • Another client roster agency kicking butt on the account while your work continues to produce unremarkable results.
  • The coup de grace … the trade press says your work sucks and the client seems to lack direction.

The work ad agency clients ask for versus the work they buy

April 29, 2009

ad-agency-424Just like the client companies we work for, we too need to make sure that we are growing a profitable and sustainable agency. If we do not ,we will not be around long to service them. A key factor in being successful at this is developing and selling work that the client wants to and will buy.

How often have you heard a client say or read in an agency RFP the sentence…

“We are looking for fresh thinking and bold ideas. We want to shake the category up and stand out as a brand. We want a partner with unusual curiosity and a keen desire to challenge the status quo.”

For my part, I have seldom heard anything different. So, excited by the opportunity, the agency rushes back, tells everyone that this is a no holds barred assignment and that we expect only the best and most innovative work from them.

Usually three to six weeks later (depending on the generosity of the client) the most talented people in the agency descend on the client to unveil their epiphany. Three concepts are presented. The reco is the one that the agency loves and addresses the challenge square on. Concept two is good but not quite as good, and if you are a prudent agency, the third is the responsible one that will do the job but may not generate any fireworks or awards. The client picks the third and the team returns to the agency disillusioned. The CEO returns frustrated by the amount of money spent during the pitch prep searching for that Holy Grail. Sound familiar? I am sure it does and it should not be surprising.

Our clients need for managing risk in order to survive is far greater than that of an agency person.

It is the client that ultimately takes the hit for a failed risky idea and ultimately takes the hit from a career perspective. Yes, it may pay off but what if it does not? Surprised? You shouldn’t be. You have to consider the dynamics/culture in which your client operates.

I am sure that you have heard the statistic that the average tenure of a CMO today is 17 months. In essence that means that if they do not show positive results within 6-12 months of arrival they are doomed.

What you may not know is that in a recent CMO survey conducted by the AAAA’s ,only 21% of CMO’s claimed to have a good relationship with the CEO.

Is this an environment that promotes significant risk I ask you? In my opinion, not very often.

So the next time you are asked for “ground breaking work” I suggest:

  • Assess the client culture and environment for the apparent appetite for risk. Past behavior is often an indication.
  • Right now given the economic environment, everyone is keeping a low profile and avoiding being picked up on the radar screen. This is not likely to change anytime soon.
  • Brief the agency and deploy resources accordingly. You will only lose money chasing work that has little or no chance of seeing the light of day.
  • If you do propose innovative new ideas that require taking a risk, do everything you can to support those ideas with whatever real world proof of concept available to you.
  • Present the solid, get the job done concept first. Get them comfortable in the knowledge you have a good workable solution. Then take them to the higher risk solution supporting with proof of concept along the way.

We agency types often lament the fact that some of our greatest work lies dormant in a job folder somewhere because the client chose the lesser concept. Keep in mind that a significant amount of costly hours (money – your money) also reside in that folder, with no chance of ever being re-couped

So why not produce work that the client can buy and save both of you time and money along the way.