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Can You Afford New Advertising Accounts?

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Can You Afford New Advertising Accounts?

Maybe Not.

A couple of years ago a Portland digital agency, once a high-flyer, closed its doors because of serious cash flow issues. Their last straw was the amount of cash they used to win and startup a large famous account — and how long it took to get any revenue from the client to offset the cost of pitching and on-boarding.

Before the first client payment ever hit the bank, the agency spent three months pitching; added staff to win the pitch; spent time negotiating a compensation and scope of work agreement while they started to develop the programming to support the client’s program and then added more staff to build the relationship — way before the agency could even get the first invoice out. The agency then had to wait over 90 days to get paid. Not smart.

7 Months – No Pay

So, at the end of the day, the agency was in the hole for about 7 months of costly work before they ever get some moolah. This time-lag does not work for small digital agencies.

Did the client care that the agency couldn’t afford to fund the client’s marketing before receiving the first payment? Of course not. According to an Advertising Age article on clients now extending their payment schedule to 120 days, they still don’t. Try this one on for size.

Mars Seeks 120 Day Payment Terms From Vendors

snickersMars isn’t alone in asking its agencies to extend a line of credit. According to Advertising Age, Procter & Gamble, Anheuser-Busch InBev, Johnson & Johnson and Mondelez have also extended their payment terms. Will client’s recognize the pain they are inflicting? Don’t bet on it. Even the ANA can’t seem to get its members to behave.

In a report published late last year, the Association of National Advertisers stated that at least four in 10 marketers lengthened payment terms for at least some marketing services in the preceding year.

“Client-side marketers need to consider what is fair and how they would want to be treated,” the ANA report said. “If the payment terms they are suggesting to their suppliers would not be acceptable to them as suppliers, a re-think might be in order.”

What Can An Agency Do?

Yes, this is a tough one since most agencies are not remotely in the driver’s seat. Why?

  • Most agencies don’t offer services that are so unique that the client can’t go elsewhere.
  • If an agency already has the account, they are at the mercy of their beloved client.
  • They are so hungry for new business that they bend over and then lose a strong negotiating position.

But, If they know that the client wants to screw them before they commit to a pitch they can… yes, this one will be hard to believe: NOT pitch.

So, keep how long it will you to get paid in mind when you decide to pitch an account and when you build a one-sided relationship like the one that Mars wants to have with BBDO.

In this case, its seller beware.

 

Does Size Matter In Advertising?

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By now we’ve all yawned at the failure of the Omnicom / Publicis merger.

Omnicom Publicis Abandon 35 Billion Merger Video BloombergHere is how Bloomberg reported the snoozer and a link to an insightful interview on Bloomberg Television’s “The Pulse” with London Advertising’s CEO Michael Moszynski. Michael manages to offer a perspective that only the English could enunciate clearly — and he gets some great PR for his agency. And… manages to also squeeze in London’s One Brilliant Idea pitch – sweet:

“LONDON is an international advertising agency built for today. We create One Brilliant Idea that can work in any media, anywhere in the world.”

Not a bad PR days work.

So Does Size Matter?

No.

But, of course, many clients like it big. Microsoft as of last week thinks that having a mega-sized agency is a must have for a major brand that lives across the globe and, I assume, a cure all for past marketing ills. From Advertising Age:

Microsoft is moving its multibillion-dollar ad and media business, indicating a fresh-start approach under newly appointed CMO Chris Capossela.

The tech giant has selected Interpublic Group as agency of record for advertising and global deployment while Dentsu Argis will handle media planning, media buying and search advertising, the company said in a statement.

You want big?

Interpublic has 43,000 employees and dentsu 7,500. Does Microsoft, a notoriously lame, directionless marketer, need an agency resource with over 50,000 scattered strangers or does it need one really smart agency that can manage some global TLC? Smart being the operative word.

Sure Microsoft (and thier new CMO) thinks MSFT needs lots of dots on a map and I know that this perspective, in addition to ego, drove a search for a large humongus agency base. But, what Microsoft really needs more than a BIG agency is A BIG STRATEGIC IDEA to help create a big, sustainable, compelling brand proposition for all of their B2C and B2B brands? You know, a Master Brand position to start and then run with. Apple, a notoriously not lame or directionless company, never went mega agency. Nuf said.

And, at the moment I think that Google is creating some of the best tech advertising. Can you name their huge agency?

But, really does size matter? That’s why I want you to watch the Bloomberg video. Michael answers the question.

[Truth be told, I sold the idea of dots on the map when I ran business development at Saatchi. So, I get that approach. But, it feels so 1990’s.]

 

Post Advertising: Big Data And Small Data

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Ten years ago I wrote a brilliant (yes, it was and is brilliant) white paper on how even big marketers like Nike and Disney fail to manage / love / re-market to their customer base. This fail still going on across industries. However, I’d like to think that understanding the value of CRM has advanced.

Below (after I force you to read my 2004 white paper “Get a Grip – The Marketing Power Of Managing Customer Relationships”) I will introduce you to one of the best posts / insights into how marketers should be starting to use big data for CRM C/O the Marketo blog.

[If you have any problem seeing the SlideShare doc below, you can find it right here.]

First My Take On Small Data & Nike & Disney

[slideshare id=13759471&doc=getagrippdf-120725210347-phpapp01&type=d]

OK, Now For Big Data and Marketo

This is without question, one of the best marketing blog posts I’ve read in a long time. DJ Waldlow’s post, “If You’ve Got It, Use It (Data, That Is)”, deconstructs his weekend experience with Fandango to illustrate how to use big data to customize / ROIize marketing. Oh, lets toss in realtime cause like big data you are becoming obsessed with this too. These are generally good things to be focussed on.

Here is DJ’s conclusion:

Big data is all the rage. The potential to do something interesting with that data to create more personalized user experiences is ginormous. However, if you don’t have the resources – human capital, financial capital, etc. – to leverage big data, start small. As described above, Fandango is using some pretty basic data they have about me to personalize my experience across channels (app, mobile/SMS, web, and email). It’s simple, yet incredibly effective.

Back to the top (ala Nike) — Big Data? Just do it. Or, at least start to think how to start to use it. I bet some of your clients are.

1 Reason To Pitch French Advertising Clients

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One of the better weekly newsletters I get is from the long-time-insight-rich-website Six Pixels of Separation. As the website says:

TWIST IMAGE PRESIDENT, MITCH JOEL, BRINGS YOU DIGITAL MARKETING AND MEDIA HACKING INSIGHTS AND PROVOCATIONS FROM HIS ALWAYS ON/ALWAYS CONNECTED WORLD.

Twist Image is a digital agency with offices in Montreal and Toronto that kicks most digital agency’s marketing butt and, as you can see, has a blog that adds value and drives agency awareness. Interesting fact… the agency website does a location lookup to personalize the home page. In my case, it knows that I am in Mexico right now. Nice touch.

Twist Image

OK, Back To Pitching French Clients

The blog has a guest feature called: Six Links Worthy Of Your Attention. This week it points to the news that the French government has dictated that management can’t email employees after work hours. In France that means after 6PM. Here is the post along with a link to the CNET News article.

French say ‘non’ to work email after 6 p.m. – cNet. “Ahh, who doesn’t want to spend their entire childhood and teenage years studying in an old school education institution that is making young people miserable, feeling inadequate and, ultimately, forcing them into a regiment of memorization of things they should never need to remember? I see this often when you look at more traditional European countries and their non-progressive school curriculums The good news? You get to graduate and become a ‘fonctionnaires,’ (if you live in France). A place that makes insane rules like this. I have a better idea: why stop at email? Just shut down the electricity for all fonctionnaires so nobody has to do anything? Alternately, you could just say, ‘hey, what if we let these adults make their own rules and attempt to find their own balance? Wow, what decade are we living in? How stupid do we think that people are?” (Mitch for Hugh).

My take…

  1. France is fucked up. I am not a small government guy but please… can’t people run their own lives? Are the French babies that need coddling?
  2. Recent press has discussed France’s issue of losing talented digital / programming / entrepreneur / creative class types to countries where they can do their thing in a pro-business environment.
  3. It must be a sign of the times when management (this means some of you) has to be told to let people live their lives. I never emailed my staff after 6PM. I am a really good, understanding, caring pro family guy. I didn’t need laws to be act like a decent person.  🙂

If French agencies are going to work at say 80% of capacity then go and get business from the French clients that need 100% agencies. Hello Peugeot. That said, you will need to have a French language website like Twist Image (it helps that they are in Quebec where the government dictates that they need a bilingual website.) Hmm… is there something about French speakers?

Bon chance!

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