What Happened to the Fun?
By Mike Carlton
Now’s the Time
For many in the advertising agency business, the past few years were terrible.
The Great Recession had taken a significant economic and human toll. Tens of thousands of talented people were driven from the industry. Agency red ink gushed. Venerable agency brands disappeared. And to make matters even worse, agencies received a smaller slice of the client spending pie.
But now things are looking up. The business cycle has turned. The good news is that clients are loosening the purse strings. Agencies are getting busier.
All is well again…or is it?
While the worst of the economic downturn may be past, few people are saying that the fun has returned. And this industry is, or should be, driven as much by fun as by money. The passion for, and the excitement of, the big idea is what made the advertising agency business great in the first place. And the principal source of fun.
If that fun is lost, just what does the future hold?
What’s Happening, and Why?
It is clear that what happened was not just a temporary economic disruption. Some fundamental shifts in the role of the advertising agency, and the definition of just what is an advertising agency, are underway.
There are no easy answers. All we know for sure is that the “tried and true” business models of the past just don’t work the way they used to. But generally accepted new models have not yet solidified to replace them. So we find ourselves today in a kind of no-man's land. The way of the past is over. And the way of the future is not yet clear.
Not a fun place to be.
The purpose here is not to lament what is happening. Rather, the objective is to explore the opportunities this change is presenting. There is the urgent need to persistently question conventional wisdom. To recognize that we are now plowing new ground. To apply serious creative thinking to the role of the agency, and the business models by which it serves the needs of marketers.
Only by this process can each agency find the right future for itself. And the fun its people deserve.
A Brief Look Back
Some say what we’re experiencing is a hangover from the excesses of the past. Others blame it on the explosion of technology. Or the recent impact of government dysfunction. Maybe so. Yet it appears that many basic shifts that are now so evident had their origins some time ago. They just became abundantly clear recently.
Let’s take a look at some of the paradigm shifts and relationship changes that are upon us. And some difficult questions they raise.
Some Paradigm Shifts
1. Audience Fragmentation
Audience fragmentation, which is really a social phenomenon celebrating the uniqueness of each individual, is with us for good. Yet, many agencies continue to do their best work, and receive their highest compensation in direct relationship to the size of the audience.
In the age of one-to-one marketing, can the traditional mass audience based business model endure?
2. Fast Response
So, no matter how intellectually sound the idea of long-term brand building is, the need for fast response is increasingly irresistible.
Yet, brand building is essential, too. Thus, are fast response and brand building mutually exclusive? They shouldn’t be. So how to accomplish both simultaneously?
3. Media Consumption Patterns
There is no surprise here. The magnitude of the change is crystal clear. So are the successes of agencies – including ad-tech providers - and advertisers that have embraced new technologies and practices.
Yet the economic backbone of many agencies continues to be creating, producing and placing TV spots, print ads and websites. So, how to transition to a business model that will successfully reward the agency for both traditional and non-traditional media?
And, what will the future look like for agencies that are unable or unwilling to adapt to this sea change?
4. Non-Craft Clients
In this environment, their thinking can be more tactical than strategic. Often, they (and their procurement departments) view what agencies provide as commodities. Cost can become more important than value. And, frequently they do not grasp the power of creative leverage. Nor value the long-term benefit of a strong brand position.
With this mindset, is it any wonder they can have difficulty understanding that the agency can be a lot more than a vendor?
Successful relationships require mutual understanding. And, the understandings that have been the historic foundation for agency/client relationships are changing.
1. Agency Status
The question therefore is, does the name agency truly reflect the character of the relationship with many clients? Is “agency” still an accurate descriptor? And, should it be?
And perhaps more importantly, should the growing number of ad-tech firms, which are recipients of client spending that used to go through traditional agencies, be seen as just a different kind of agency? Or something entirely different?
But, today many clients just want agencies to solve problems. They don’t see them as partners. Are agencies kidding themselves when they describe themselves as such? And is the term partner actually offensive to some clients?
3. Stuff Factories
Many clients, as well as agency people, now see the primary role of the agency as a stuff factory. In this environment, will it be difficult to return to the big idea high ground agencies so long enjoyed? And is it even possible or practical to ever regain that position?
Have agencies irrevocably moved down-market?
4. Brand Architects
So, what may be replacing partnership, agency status and the stuff factory mentality is the recognized need for building brand architecture and pragmatic problem solving. Clearly, good agencies have always solved client brand and communications problems. But, there are no generally accepted business categories of brand architect or problem solver.
Have agencies entered new categories of business? And, does that demand new names? And, if so, what should it (or they) be? And, how will that be communicated to marketers?
There is no question that clients have diverted large sums of money that used to go through agencies to new types of marketing service providers that do not call themselves agencies.
Some Things to Think About
If clients are viewing their agencies differently, how do some of the traditional characteristics agencies value measure up? For example:
1. Full Service
And does full service embrace all kinds of ways of connecting with the customer? Or does it just mean all kinds of advertising?
2. Agency of Record
With clients increasingly moving away from exclusive agency relationships, are agencies unrealistic in expecting much client loyalty? And if so, how can an agency successfully function with a client using multiple agencies for the same brand?
3. Bill Paying Accommodation
If the client views the agency as a vendor, brand architect, or a problem solver, what is the risk/reward equation for the agency in handling client buying and bill paying? What does it really cost in time, focus, hassle and plain old money to provide this accommodation? Could those resources be put to better use for the client?
Is there a better way to handle client bills? And if so, what is it?
Some Strategies Worth Considering
Against this changing environment, innovative agencies and ad-tech firms are trying a bunch of new strategies. Here are a few:
1. Consumer Centricity
But for an agency to be truly consumer centric, it must wean itself away from primary economic reliance on traditional ways of communicating with consumers. This can be a gut-wrenching change. For it requires a business model that adequately rewards the agency for the creation and implementation of ideas that can employ a broad range of both traditional and non-traditional consumer connections.
2. Niche Positioning
The secret here is identifying what your agency can do better than any competitor, and then focusing on it with intensity and gusto. What is important is demonstrable superiority in the chosen niche. This concept can be very powerful.
The real test of niche positioning is being able to say no to other tempting, but spurious, opportunities.
The cure is to breakdown internal organizational barriers. This is not just moving people around, but an ongoing commitment to finding better ways of working together.
It also requires an agency staff with high self-confidence and self-esteem. For only confident people thrive in an environment free of bureaucracy.
This means using a rifle rather than a shotgun. It is doing a few things very well, rather than doing many things without much distinction.
5. Talent Driven
This also means smaller, but more highly talented and motivated agency staffs.
And, demographic and economic patterns indicate that we are already facing a severe agency talent shortage. This is happening sooner than almost anyone expected.
6. Low Cost Provider
This will take an enormous amount of business creativity.
7. Exit Unnecessary Services
Often agencies continue to provide services that have outlived their need. If it isn’t competitive, it should be retired. This is seldom easy, but relentless pruning is vital to an agency’s long-term health.
Manufacturers and large service industries have pioneered sophisticated process quality management programs. Many of these can be applied to agencies. It makes sense to use these techniques.
9. Ad Hoc Structure
Plus, flexibility in the organization’s structure can be a big help in attracting and keeping top-flight talent.
10. The Entrepreneurial Spirit
Harnessing this power requires innovative leadership, management and compensation programs.
11. Strategic Relationships
But, enduring strategic relationships don’t happen overnight. They take significant effort in planning, recruiting, and sustaining.
12. Collegial Management
However, the benefits don’t always come easily. To be fully effective requires real skill and dedication on the part of senior managers.
There are a lot more creative strategies than these. This is just a good starting list. No agency uses all. And many are not right for each agency.
The Value of Discovery
Discovery has never been needed more than today. Agencies must become more innovative in how they conduct their business. There must be a growing commitment to the kind of ongoing experimentation that is absolutely essential to remaining competitive in today’s changing marketplace.
This is kind of like a R&D function – essential to the enterprise’s future.
The agency that can be as creative in how it views its own business, as it is in the work it does for its clients, is the agency that can move securely into the future.
The Importance of Fun
In recent years, we’ve heard too many agency people say, “This business just isn’t fun anymore.” What a tragedy!
Work should be fun. If it isn’t, why do it? Life is too short to spend our working hours in dullness, tedium, frustration and fear.
But as a wise man once said, “You can’t have fun if you don’t know the rules of the game.” How true! Whether it is a game or a business, when you do not understand the rules, you cannot possibly perform well.
And, if you can’t perform well, you can’t win. Nor can it be much fun.
Maybe the reason so many agency people are not having as much fun today as they used to, is that the game has changed, and so have the rules. Yet, it looks like many are still trying to play by the old rules.
Anyone playing today’s game with yesterday’s rules is doomed to disappointment.
The new game of the advertising agency business is with us. It is not necessarily better. It is also not necessarily worse. But, it surely is different. And it will never again be the way it used to be. There is no going back.
We believe that today’s new game of the advertising agency business can be every bit as challenging, as exciting and as rewarding as the old game. Maybe even more so.
The real secret is to understand how the rules have changed, adapt our strategies to them, and then play with all the creativity, skill, daring and vigor we can muster.
That will be fun!