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Will AI Render Media Agencies Obsolete?

11 Sep

artificial_intelligenceArtificial intelligence (AI) is already reshaping how advertising is developed, planned and placed. The marketing applications being envisioned and adopted by agencies, consultancies, publishers and advertisers are nothing short of remarkable.

From the onset of “Big Data” it stood to reason that the concept of predictive analysis, the act of mining diverse sets of data to generate recommendations wouldn’t be far behind. Layer on natural language processing, which converts text into structured data, and it is clear to see that “deep learning” is on the verge of revolutionizing the ad industry. As it stands, algorithms are currently optimizing bids for media buying, utilizing custom and syndicated data to match audience desires (or at least experiences) with available inventory.

Effective, efficient, automated methodologies for sorting through vast volumes of data to evaluate and establish patterns that reflect customer behavior for use in segmenting audiences and customizing message construction and delivery holds obvious promise.

So, what does this mean for media agencies? Will they be at the forefront of automation technology? Or will they be swept away by the consultancies and ad tech providers that are already investing here?

If media agencies desire to remain in control as the industry evolves, there are real challenges that they will have to address to remain viable:

  • Re-establish role as “trusted advisor” with the advertiser community. Recent concerns over transparency, unsavory revenue generation practices and a failure to pro-actively safeguard advertisers’ media investments from fraud and from running in inappropriate environments have created serious client/ agency relationship concerns.
  • Attract, train and retain top-level talent to re-staff media planning and buying departments. The focus will need to be on bridging the gap between developing, and applying automation technology and providing high-level consulting support focused on brand growth to their clients. Presently, media agencies are not effectively competing for talent, whether in the context of compensation and or personal and career development options being offered by their non-traditional competitors.
  • Provide a framework for addressing the compensation conundrum. Whether this is in the form of cost-based or performance-based fees tied to project outcomes, commissions or hybrid remuneration systems, tomorrow’s successful media agencies will need to establish clear, compelling compensation systems. These systems will need to reflect value propositions that will differentiate them from an expanded base of competitors, while offsetting (to some extent) non-transparent sources of revenue that many media shops have come to rely on in recent years.

This will not be an easy path for media agencies, particularly for those that are hampered by legacy systems, processes and management perspectives that may limit their ability to more broadly envision and ultimately, assist client organizations addressing their needs and expectations.

Either way, the race is on, as management consulting firms are acquiring various marketing and digital media specialist firms and as media agencies raid the consultancies for personnel to build out their strategic consulting capabilities. The key question will likely be, “Which business model holds the greatest promise, in the eyes of the Chief Marketing Officer, for improving brand performance?

 

 

 

The Ad Industry is Metamorphosing

30 Jun

dreamstime_xs_83082522It was the best of times; it was the worst of times…” Most of us are familiar with the opening line from Charles Dickens in his epic work A Tale of Two Cities. Many marketers may even consider it an apt description of both the current state of the advertising industry and the challenges that they face in sustaining brand relevance and driving growth.

Phoenix risingSo, who will marketers count on to assist them with the tasks of deepening brand engagement with core target segments, revitalizing sales and profits in a low-growth environment and in differentiating their brands for competitive advantage?

Over the course of the last few years, many have opined on the viability of the ad agency model and what it portends for advertiser/ agency relationships going forward. And with good reason. Concerns cited include threats from non-traditional competitors such as management consulting and technology firms encroaching on their turf, talent recruitment and retention challenges and margin compression due to downward pressure on fees and expanded scopes of services.

It may be as some predict that management consulting firms will leverage their capabilities in the area of strategy and integration to pirate work from ad agencies and that ad-tech providers will enable marketers to take certain tasks in-house. The question remains, how will marketers adjust to this dynamic and the evolution of their agency networks to potentially include consulting, data and ad-tech firms? There are already very real challenges related to agency stewardship today due to under-resourced client marketing staffs.

The aforementioned challenges, combined with the rate of digitization and the emerging role of artificial intelligence occurring within the ad industry, certainly pose challenges for advertising agencies and could serve to lessen their stranglehold on the marketing and advertising sector. In a recent McKinsey article entitled; “The Global Forces Inspiring a New Narrative of Progress” the authors note that “disruption is accelerating.” They opine that this dynamic is raising serious concerns for many organizations relating to the question, “How long can their traditional sources of competitive advantage survive in the face of technological shifts?”

That said, in spite of these risk factors and other marketplace developments, ad agencies are doing just fine:

  • Agency holding companies have continued their aggressive acquisition drives, supporting both their horizontal and vertical integration strategies. While overall M&A activity is down from 2016 levels, WPP and Dentsu have consummated twenty acquisitions with a combined value of $700 million through the first 4 months of 2017. (Source: R3’s “State of Agency M&A report” for January – April, 2017).
  • While down from 2016’s 5.7% growth rate, global ad spending is projected to grow 3.6% in 2017 (Source: Magna Global, June, 2017). Of note, this is higher than the International Monetary Fund’s projected increase for global GDP growth.
  • Even though 1Q17 Advertising Industry gross margins fell to 44.15%, the industry itself is healthy. For instance, within the services sector, the Advertising Industry achieved the highest gross margins, net margins, EBITDA margins and pre-tax margins for the quarter (Source: CSIMarket.com).
  • Some 86% of mid-sized ad agencies are confident that this year will be better than last in terms of profitable growth (Source: Society of Digital Agencies (SoDA) survey).

Importantly, since the demise of the “good ole days” of full-service agencies and the fifteen-percent commission remuneration model, agencies have demonstrated a unique ability to not only keep up with industry changes, but to take the lead from both a thought leadership and innovation perspective. They have been able to scale, attracting more clients and deeper talent pools, they have invested in emerging technologies to deal with increasingly complicated, data driven processes and to pioneer the use of algorithms and artificial intelligence to efficiently execute deliverables ranging from digital media investment to creative adaptations… all while dealing with evolving client expectations.

Further, it bears noting that the publicly traded holding companies; WPP, Omnicom Group, Publicis Groupe, Interpublic Group of Cos. and Dentsu, had combined estimated worldwide 2016 revenue levels of $60.7 billion (Source: Advertising Age, June 2017). When one considers the pre-dominance of the estimated billing process and agency remuneration schema that includes direct labor and overhead cost reimbursement plus guaranteed profit margins of 14% to 17% or more, one must also respect the financial clout that these publicly traded entities wield.

Is there a need for near-term belt tightening to offset softer 2017 ad spending levels? Yes. Do the holding companies need to consolidate agency brands and realign capabilities to boost the efficacy of their service delivery models and generate much needed efficiencies? Yes. Will agencies need to improve their talent recruitment and retention practices, across a diverse range of specialties? Yes. But no business is immune from these challenges, including management consultants, ad-tech platforms and publishers.

The big question the industry in general and marketers will need to assess is related to whether these players will be able to boldly transform their current business models, repositioning their firms to deliver integrated, multi-specialist services in a nimble, cost efficient, on-demand manner.

Broadly speaking, all participants are facing challenges as the ad industry undergoes its current metamorphoses. We believe that it is too early to predict winners and losers or to suggest that marketers adapt an attitude of empathy toward any of their marketing supply chain partners. After all, it is their marketing spend that has built this sector into a $457.4 billion global machine in 2017 (Source: Statista, 2017). And they must vigilantly safeguard and optimize that investment.

Below is one of the closing lines from A Tale of Two Cities, one that many may not be as familiar with:

“It is a far, far better thing that I do, than I have ever done…”

With this parting thought, Dickens’ suggests that the main character in his novel and the city of France will be resurrected, rising above their present strife and “made illustrious.”

Here’s hoping that the ad industry achieves similar transformative success.

 

 

Did You Trust the Banker When You Played Monopoly?

26 Jan

Monopoly

If you were a “gamer” (in the days when board games were the norm) that implicitly trusted both the banker and the individual who controlled the distribution of the real estate properties when playing Monopoly, than this article isn’t for you.

On the other hand, if you are one who turns a wary eye toward those in control of assets, particularly your assets, then we would like to pose one question: “Do you know what happens to your company’s marketing funds once checks have been distributed to your agency partners?

In our experience, few if any individuals within an advertiser organization have a clear perspective on the disposition of approved funds once an agency invoice has been paid. The primary reason for this is that the industry still operates largely on the concept of “estimated” billing and the pre-payment of funds from the advertiser to the agency. Over the years the resulting transparency gap has been compounded by the fact that few if any advertisers require their agencies to provide copies of all third-party vendor invoices with their final project or campaign billing. Most advertisers have document retention and audit rights clauses in their agreements, but few act upon these contractual rights.

As contract compliance auditors, we review thousands of agency bill-to-client invoices as part of our hard copy vouching and testing process. In general, the lack of specificity contained on these invoices, particularly when one recognizes that there is often little accompanying back-up can be startling. For example, imagine coming across an invoice for the production of television commercials for a major seasonal advertising campaign that simply stated; “Holiday Campaign TV Production – $785,000.” Was that for one commercial or six? Were these :15 second spots or :60’s? Is this for a U.S. campaign or a global effort? Apparently, answers to those types of questions aren’t always required to process payment for that invoice… as long as the invoice amount doesn’t exceed the approved purchase order, if there is an approved purchase order.

Do you know if your agencies are abiding by the contractual guidelines for competitively bidding jobs? Do you know whether or not the agreements with the agencies in your network even requires three bids or at what spending threshold? More broadly, do you know which of your third-party vendors are actually related to your ad agency partners (i.e. shared financial interests, investors or corporate lineage)? If so, was this disclosed in advance of work being awarded to those related parties?

If you’re like most advertisers, you are billed in advance of production or media commitments being made on your behalf, or at least prior to the activity occurring. Likely, your company pays that invoice within 45 days of receipt. Any idea how much time elapses prior to your third-party vendors being paid or whether their billing to the agencies is scrutinized for accuracy? Let’s assume there are credits issued by third-party vendors or approved funds that are not spent by the agencies, how long does it take for the agencies to identify and return those funds to you? Who is involved in determining the disposition of those funds? Marketing? Or are checks cut and sent to finance?

Do you compensate one of more of your agency partners based upon a direct labor model, with estimated monthly fees tied to a contractual staffing plan predicated on the hourly time investment of specific individuals? How often to you see time-of-staff reporting from the agencies? Monthly, quarterly, annually, ever? Have those fees ever been reconciled to each agencies actual time investment? Have you ever tested your agencies time-keeping systems to assess the accuracy of the reports that may be shared with your team?

We have good news for you, news that can provide answers to each and every one of these questions. There is a proven means of closing this transparency gap and providing your organization with the processes and controls necessary to assess the disposition of marketing funds at each step of the advertising investment cycle.

It is called agency contract compliance auditing, it is an industry best practice and it will provide insights, answers and recommendations that will benefit an advertiser’s agency stewardship efforts and their agency partners’ financial management performance.

If you still have some apprehension about this complex ecosystem called marketing, consider the words of former Supreme Court Justice, Oliver Wendell Holmes when weighing the pros and cons of a contract compliance audit; “When in doubt, do it.”

Interested in learning more about safeguarding your firm’s marketing investment? Contact Cliff Campeau, Principal with AARM | Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation on how to implement or enhance your organization’s marketing accountability initiative.

 

 

 

Turnover: Temporary Anomaly or Omnipresent Reality

26 Feb

 

 

agency compensationChief Marketing Officers come and go every twenty-three months or so. The average Client-Agency relationship tenure is thought to be around three years. So has anyone really noticed that average ad agency turnover is reportedly running between 28 – 30 percent? 

In an industry where change and upheaval have become constants, the agency talent crisis has likely not received the attention that it deserves… outside of the agency community. Clearly, this is a dynamic that agencies in general and agency HR executives specifically are acutely aware and are trying to address. After all, in a service business that is highly reliant on talented professionals with diverse skill sets to create and deliver their product, the talent challenge cuts to the heart of agency sustainability. 

During the fall of 2014, Digiday published an article entitled; “Anatomy of an Agency Talent Crisis” which suggested that entry-level salaries were one of the primary challenges in attracting college graduates to even consider a career in advertising. In light of the 4A’s annual talent survey findings, which found that “most entry-level salaries” for agency personnel “were between $25,000 – $35,000,” most agency insiders understand the challenges in attracting and retaining top tier talent. 

The question, which has not been addressed is; “Why aren’t agencies paying more to secure top college graduates?” If a capable young person armed with a college degree can earn a starting salary of $70,000 by going to work for Accenture, McKinsey, Booz & Company, Adobe, Google or Microsoft then it stands to reason that advertising agencies must close the salary gap if they hope to attract their fair share of talent. As the American inventor and businessman, Charles Kettering once said: 

“We should all be concerned about the future because we will have to spend the rest of our lives there.” 

Importantly, this is a decision which the agency community owns. Their ability to pay higher salaries to attract young graduates is not hindered by the fees being paid by advertisers. Unfortunately, many advertisers have little exposure to many of the agency “worker bees” deployed on their account, spending most of their time interacting with more senior “point people” such as account directors, creative directors or senior media planners. As such, advertisers may have little transparency into the high turnover rates being experienced within the agency community. 

That’s not to say that advertisers aren’t paying a price from a learning curve perspective, which can affect the caliber of an agency’s work or the number of iterations required to generate satisfactory outputs. 

What is intriguing when looking at the fully-loaded hourly rates being charged by agencies, is that there appears to be plenty of room to increase compensation for junior to mid-level personnel. 

There are a couple of issues which impact an agency’s willingness to free up funds to address the pay scale issue. The first is the growing salary disparity between entry-level personnel and senior executives. One need look no further than the 4A’s own 2014 talent survey, which found that in the same year in which entry-level personnel were earning on average between $25,000 – $35,000, they had an agency report a $1,000,000 base salary for a Chief Creative Director position. 

Additionally, agency holding companies are growing and require resources to fuel their expansionary appetite. This growth comes largely via acquisitions of specialist agencies and investing to support in-network horizontal integration strategies which have spawned the birth of digital media trading desks and the creation of global cross-platform production hubs

Ultimately, market dynamics will force the agency community’s hand when it comes to a reapportioning or prioritization of resources to address the competitiveness of their salary offerings. Smart agencies will move to address this issue, recognizing that the lack of success in recruiting top college graduates combined with 30% staff turnover rates, is clearly not a formula for success.

Is Legacy Thinking Impeding Your Progress?

7 May

ana agency financial management conferenceEmerging media, rapidly expanding technologies, a changing tax and regulatory environment, talent shortages and a global paradigm shift where marketing is being “outsourced” to the end user. These were just some of the topics addressed by Marketers and Agencies alike at the ANA’s annual “Agency Financial Management” conference in Naples, Florida in early May.

While there may be significant issues to be faced in the near future, the marketing industry remains a significant component of the global economy whose rate of growth outstrips that of most developed countries GDP growth.  That said there are changes required of the industry’s stakeholders to better prepare their organizations’ to successfully navigate a complex landscape fraught with both risks and opportunity.

This dynamic will require a fresh approach by clients and agencies alike along with a willingness to shed the bonds of legacy thinking, which has retarded industry progress on a number of key fronts in recent years.

One of the themes to emerge from the conference is that marketing is difficult, expensive and challenging.  When combined with talent, resource and education restraints being faced by many marketing organizations there is a belief that marketers are leaving dollars on the table.  Contributing factors range from digital media value erosion to a lack of transparency into certain aspects of the supply chain such as trading desks to the absence of industry governance on the issue of cross platform audience delivery measurement.

Underlying these challenges is the fact that client-side marketers, procurement professionals and marketing service agencies are still working on evolving their relationships and gaining better alignment on how best to optimize the advertisers’ return on marketing investment (ROMI).  Central to the success of this collaborative effort is the need to build trust and mutual respect among these stakeholders.

Interestingly, marketers expressed a strong, almost universal need for the introduction of uniform controls, competitive fee structures, tighter statements of work and the use of agency performance incentives to assist in positively driving change.  One aspect of boosting ROMI is the elimination of “waste.”  Based upon our experience in the area of agency financial management consulting, we have found that an excellent starting point for marketers in this area is to clarify the roles and responsibilities of their agency partners, minimizing redundancies and identifying those agencies that are considered strategic partners versus those that provide project-based support.  This provides a solid starting point for determining  “where” to begin in terms of initiating change and inviting those select partners to be part of the process.

On the “good news” front it was clear from the results of a recent survey conducted by the ANA and presented at the conference, that the trend toward an increased level of collaboration between marketing, finance and procurement is taking seed.  Further, as evidenced by findings from a separate survey conducted by the 4A’s, the agency community has clearly begun to accept procurement’s role in the agency sourcing and contract negotiation process.

There is one area however, which has the potential to seriously disrupt marketers’ efforts to optimize their ROMI… transparency, or more specifically, the lack of transparency that permeates the industry.  This was reflected in the results of survey data from the ANA, WFA, ISBA and ACA where “transparency” was identified by advertisers as one of, if not their top concern.  The lack of clarity and in some instances, honesty surrounding issues such as data integrity, audience delivery, trading desks, reporting and financial reconciliations creates financial risks for advertisers and undermines attempts to improve trust levels between clients, agencies and media sellers.  As Mike Thyen, Director of Global Procurement for emerging markets at Eli Lilly and Company so aptly stated:

“Where there is mystery, there’s margin.”

Examples of the potential for financial leakage related to a lack of transparency included the results from the aforementioned WFA study, cited by ANA President and CEO Bob Liodice, which found that for every dollar invested by advertisers in digital media, only fifty-five cents on the dollar flowed through to the publisher.  Inherent in this single example is the lack of transparency surrounding programmatic media buying, agency trading desks and the lack of auditable outcomes in terms of audience delivery, media rates paid and trading desk margins.

Changing times require firms to evolve and innovate in order to remain relevant with their customers and to improve their operations.  When it comes to marketing, the rate and rapidity of technology driven change is such that viewing today’s opportunities through an “old school” prism is certain to create risks and limit marketers’ ability to fully leverage their investment.   Keeping an open mind, forging strong relationships between marketing and procurement, implementing controls and reporting to enhance transparency and investing in one’s agency partnerships represent key actions to be considered to successfully face the changes which are underway.

Take Stock of Your Marketing Supplier Network

26 Apr

marketing agency networkWhether viewed in the context of the marketing dollars that flow through an advertiser’s marketing services agencies or their respective roles in building an organization’s brands and driving revenue, a marketing supplier network is a valuable corporate asset.  So how much do you know about the agencies which comprise that network?

Boosting supplier visibility within the C-suite of an organization can yield significant strategic and economic benefits.  The process begins with taking an inventory of those suppliers, their corporate lineage, resource offering, skills, pricing and historical performance on behalf of the company.  Without this knowledge it will be a challenge to optimize the investment made in maintaining this network.  Constructing a database with pertinent details on your supplier organizations is a pre-cursor to assigning roles and responsibilities across an advertiser’s agency base and for determining internal oversight responsibilities.

If this is an activity the organization has yet to undertake, there is a high likelihood that there is a significant degree of overlap across the supplier base and a less than optimal utilization level within a select group of marketing agencies.  Why should an advertiser care?  Because there is an attendant cost to contracting with marketing agencies and to retaining them on the advertisers agency roster… whether those agencies are being effectively utilized or not. 

Additionally, it is quite likely that the controls that are in place vary greatly from one supplier to the next.  This begins with the master services agreement (MSA) that is in place, whether or not such contracts have been executed and or kept current and extends to the resulting statements-of-work (SOW), agency staffing plans and remuneration programs.  While there is an obvious need for customizing MSAs and SOWs by agency type, there are certain terms and conditions ranging from “non-disclosure” and “non-compete clauses” to “right to audit” clauses, “document retention” policies and “intellectual property rights” assertions which provide critical controls that should be present in each MSA.  The question is; “Are they?” Further, once an MSA and or an SOW has been reviewed, updated and executed these documents should be retained in a central database for “ready access” by authorized representatives from Marketing, Procurement, Legal, Finance and Internal Audit.

Cataloging agency costs is another important step in constructing a marketing supplier database.  Armed with a deeper understanding of agency bill rates, overhead rates, direct and indirect expenses and multipliers an organization will be able to construct agency remuneration packages that are fair to the agencies and which generate savings for the advertiser.  One of the important bi-products of this information is the ability to benchmark supplier costs across agencies and makes for some interesting comparisons for those advertisers working with multiple agencies owned by the same holding company.

Implementing a systematic marketing supplier performance review program to be followed by the advertiser’s marketing department and marketing suppliers will provide a layer of qualitative data to further assess the effectiveness of each agency and to proactively identify potential weak links within the network.  Laggards can be targeted for performance improvement actions and or replaced in the event of continued sub-par results.

Ironically, the most valuable benefit of a marketing supplier database is the role it can play in advancing an organization’s collaborative supplier management (CSM) initiatives.  Aside from boosting agency performance and marketing ROI a well-orchestrated CSM program will enhance supplier satisfaction, longevity and fuel supplier motivation to invest in the client-relationship.  In the words of former Federal Reserve Chairman, Alan Greenspan;

“I have found no greater satisfaction than achieving success through honest dealing and strict adherence to the view that, for you to gain, those you deal with should gain as well.”

Interested in learning more about supplier visibility systems?  Contact Cliff Campeau, Principal at Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation. 

 

Do Perspectives Drive Outcomes?

4 Jun

By way of background, I have spent my entire career as a marketing professional.  Of note, I have both advertising agency and client-side experience in addition to having worked in the field of marketing accountability, auditing marketing spend and marketing agency performance.  Hence, I have always been perplexed by the notion that marketing executives were thought by some to be unwilling participants in working with their peers in procurement or finance to help them better understand and assess the stewardship of an organization’s marketing investment.

I don’t believe that anything could be further from reality.  The truth is that the vast majority of marketing professionals have an inordinate sense of obligation to go along with a fiduciary duty to invest their organization’s marketing budget in a manner that will yield the greatest possible return… whether that is brand positioning, revenue generation or market share increases.  To that end, marketers and their agencies work diligently and tirelessly to make every dollar invested work as hard as possible.

Of note, many industry pundits feel as though advertising agencies have fallen from their pedestal and position of respected “partner” to that of a “vendor” who does little more than sell their wares for the best possible price to the highest bidder.  In spite of the fact that the average client-agency relationship tenure is a few years rather than a decade or more as in the recent past, categorizing an agency as a vendor unfairly diminishes the role and contributions made by both the agency community and the client-side marketers that direct their efforts.

Thus, it was no surprise to see the results from CMG Partner’s recent survey that found CMOs had expanded their roles and perspectives within their organizations, becoming something akin to a “CEO of Marketing.”  The trying times related to the global recession and the downward pressure on marketing spend at a time when organizations sorely need to drive demand generation, while challenging, have forged a stronger breed of senior marketing executives.  The report also recognizes that while the marketing profession has made considerable gains in terms of greater corporate influence, it is on “the threshold, rather than in full flower.”  The report concluded that the CMO must “not only earn his or her place at the table” but also “his or her voice.”

So how can marketing executives take advantage of the upward corporate trajectory to achieve broader authority?  One answer would be to fully embrace the use of independent third-party compliance and performance audits to improve corporate transparency into all facets of the marketing supply chain and openly share how an organization’s investment is being stewarded by the marketing team and their agency network.  Transparency and recommended improvement opportunities can help to further the understanding that other corporate stakeholders have with regard to marketing plans, processes and outcomes.  Further, independent reviews of the efficiency and efficacy of the marketing spend can benefit marketers by building peer level trust in their resource decision-making framework and the competency of their agency partners.

An independent assessment of a marketing agency’s contract compliance and performance does not emanate from a lack of trust on the part of a client organization.  Advertisers that have embraced progressive corporate governance initiatives have an obligation to ensure that the large sums of money being invested in this important area are being managed capably and in concert with the terms and provisions of the client-agency agreement.  Thus, the agency community, like any good corporate partner, should both welcome and support a client’s efforts to hold marketing accountable to the same standards that other functions within the organization are held to.  Agencies can benefit from the process as well.  Both as it relates to the independent validation of the investment that they make in the relationship as well as to use the compliance audit process to better align their resource investment and remuneration with the client’s business objectives.

In the words of Michael Josephson, one of the United States’ most sought after ethicists:

“What you allow, you encourage.”

Interested in learning more about the potential benefits of a marketing agency compliance audit?  Contact Don Parsons, Principal at Advertising Audit & Risk Management for a complimentary consultation at dparsons@aarmusa.com.

Do Agency Brands Still Matter?

27 Aug

agency brandsTimes have changed. In 1984 the average client agency relationship lasted 7.2 years. Ironically, while that may seem like a short duration, by 1997 it had declined to 5.3 years. Where do you believe it is today? Gone are the days when the advertising agency relationship was so esteemed that advertiser CEO’s were often on point for managing what was viewed as an invaluable resource. Advertising agencies once measured the span of their client involvement in decades and prided themselves on the longevity of those relationships. Unfortunately, transience has supplanted stability as the law of the land.

CEOs are seldom involved with the organization’s agency network, the Marketing function has lost some of its luster within the executive suite and according to a 2010 Spencer Stuart study, CMO’s turnover every 28 months on average. On the agency side, as holding companies greatly expanded their collection of traditional agency brands and specialty shops many with overlapping and often indistinct resource offerings the cache of the individual agency nameplates began to diminish. Add to this the trend that has emerged in numerous high profile agency reviews of the holding company offering to assemble a team of subject matter experts from across its network to serve up a “Best in Class” solution to the prospective client. While this approach certainly has appeal, on paper, aggregating professionals from companies with different cultures, philosophies, perspectives and processes has seldom proved to be the elixir advertisers and agencies alike have sought. Remember Enfatico?

Agency brands should matter, perhaps more so in today’s environment than at any time in the past. Whether they do or don’t is not what is at issue. The asset value of a strong agency brand to its diverse stakeholders can be significant. It starts with instilling a sense of belonging with the agency’s associates, which in turn leads to a feeling of pride and a passion for the work which they do, which drives employee satisfaction and reduces turnover.  Enhancing agency employee tenure is an important component in acculturating associates into the agency’s philosophy and belief systems, driving familiarity with advertising planning and development processes and creating a level of comfort and confidence among the client facing representatives with the agency’s solutions offering.  Stability and consistency in this area can greatly enhance the agency’s ability to achieve in-market success for client brands, which can transcend the environment of change and emphasis on short-term results that often permeates client-side organizations. Importantly, strong brands attract buyers.

Brands attract buyers based upon a known set of attributes which help to shape buyer expectations of what they’re getting, minimizing unexpected surprises and reducing buyer remorse. Clients that are satisfied with the agencies that their organization has bought into will invest the requisite time, energy and resources into those relationships, thus heightening the odds of success.

In the end, success, however each party in the client-agency relationship defines it is the key to rejuvenating individual agency brands and helping to stabilize a somewhat unsettled marketplace. As David Ogilvy once said; “The pursuit of excellence is less profitable than the pursuit of bigness, but it can be more satisfying.” I would contend that once excellence is achieved, profits will follow. One needs to look no further than average agency direct margins today vis-à-vis ten, fifteen or thirty years ago to prove that point.

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