Insights

Is Your Advertising Agency Underpaid?

Peter · March 2, 2019 · Leave a Comment

This post is about the underpaid advertising agency. As in, your advertising agency is probably underpaid – or under managed. Or both. Believe me, they are connected.

To be cute, this post is about the three P’s…

Profit, Process and Podcast.

Don’t forget to scroll down and listen to the podcast. In the meantime…

I recently had the opportunity to meet with Michael Farmer, author of Madison Avenue Manslaughter. Michael’s is a disturbing must-read book on the business of advertising agencies. Michael covers the reasons for the advertising industry going from high profit to low profit. From being paid almost too well (as in the 15% commission on media) to underpaid for its value (as in cost-plus or fixed fees). Mega-point, agencies do not know how to manage SOW — scope of work. I urge you to read the book.

To further one of Michael’s major points, I recently got an email newsletter from him where he discusses the “agency of the future” – a subject I have written about. Michael points out, and titles his email, “The First Step for The Agency of the Future: Become a Well-Run Business”. His point:

Much has been written about the “Agency of the Future.” It is integrated, digital, efficient, agile, analytical, creative and effective. It is adaptive and reflective of clients’ needs. It is completely transformed. It walks on water. However, the Agency of the Future cannot be created unless it first becomes a well-run business that generates the necessary financial resources.

So, Is Your Advertising Agency Underpaid & Undermanaged?

You are undoubtedly underpaid. I am not going to belabor this unfortunate point. However, other than charging correctly for your work (a yikes if I ever heard one), I suggest that many agencies are simply undermanaged.

Or, poorly managed. Or, without a sound process. A process that goes from the master business plan to execution. [Read more…] about Is Your Advertising Agency Underpaid?

Your Advertising Agency Will Get Fired

Peter · February 16, 2019 · Leave a Comment

One of the tenets of my business development system is the understanding that your advertising agency will get fired by virtually every one of your project work and AOR clients. This means that you better be out there finding your next set of clients because your current clients will sooner or later walk out the back door.

To get even more painful, we all need to get over the disastrous track record of agencies that wait till they get fired to get fired up about running a new business/sales program. The standard, awful, message is that the agency was too busy working on its current clients to run a solid business development program. You know, the horrible saying… “we are like the shoemaker who can’t make shoes for his kids.”

I’ve written in the past about why advertising agencies get fired – right here. This post expands on that review. But first, here is a key finding I wrote about a couple of years ago:

Why do advertising and digital agencies get hired and fired? A key reason for getting fired (other than the new Marketing Director’s need to look active; and an agency’s failure to keep up with the rapid pace of change) is very often the very same reason clients hire agencies in the first place…

It has a lot to do with interpersonal chemistry according to Darren Woolley of Australia’s TrinityP3, a leading global advertising agency search consultant and client advisor. I love this point: “It’s all about the relationship.”

Why You Will Be Fired & How To Stop It

There has been a bunch of research about the primary reasons that clients fire agencies. While getting fired is somewhat inevitable, I think that agency management must be very cognizant of the reasons and manage their agency and staff accordingly.

The smartest, most aware agencies get fired less frequently.

Let’s walk through the reasons you will get fired. I’ll be brief because I believe that most of these can be managed down without a huge effort.

It’s Much About KPI’s and Return On Investment

I counsel all of my agency clients that return on investment, the client’s investment in their marketing programs must yield a positive and calculated sales return on every dollar they spend. Obvious, right? That said, it is amazing to see how many advertising agencies cannot calculate ROI based on a client’s KPI’s (Key Performance Indicators). Some agencies do not even ask about key performance metrics. [Read more…] about Your Advertising Agency Will Get Fired

3 Thoughts On Advertising

Peter · February 12, 2019 · Leave a Comment

Actually 4 Thoughts On Advertising

Here are some thoughts on advertising driven by four recent reads.

What If There Was No Advertising?

Imagine a world where all advertising was erased from the environment. That means no more escalator, or bathroom stall ads; no more behavioral retargeting; movies and tv shows without commercials (oh, that’s Netflix); no outdoor boards on Montana highways, and on. Hard to visualize? Maybe (um not), to help, here is a series of “ads” that have been erased. Check out Jorge Pérez Higuera’s photo series Public Spaces.

Back to reality.

But, First The Good Old Days & ROI

I am having a drink tonight in my town San Miguel de Allende with Michael Farmer whose book, “Madison Avenue Manslaughter: An Inside View of Fee-Cutting Clients, Profit-Hungry Owners and Declining Ad Agencies” is the most informative and insightful book on the reasons for the demise of the good old days of advertising. Michael covers the advertising world from the high-profit Mad Men days to where we are today (much less-profit). Today’s ad world is strapped by client jitters, the quest for low-cost advertising services and way too many advertising platforms that equal an ever-increasing workload.

I suggest you buy the book and listen to Michael’s interview with Jack Meyer’s on MediaVillage. From the interview:

Jack Meyers: Last week we talked about the deterioration in agency-client relationships — fee cuts, shorter relationships, in-house agencies, etc. You said that agencies were downsizing and liquidating their capabilities — becoming less capable of helping their clients solve “brand growth problems.” You predicted that this would lead to financial problems for the holding companies. This did not paint a very optimistic picture of the industry. Where do you think things are headed?

Michael Farmer: There’s a difference between where things are probably headed and where they could be headed. In a funny way, I’m still optimistic about the potential for a turnaround in the industry. As long as advertisers have performance problems — stagnant brand performance, for instance — there are attractive opportunities for problem-solving partners. The question today is whether the current leaders of advertising agencies and holding companies will transform their operations and help them become the problem-solvers that their clients need.

We will not return to the good old days of 15% commissions on large TV, print and radio buys. Today we are paid by the hour and seem to need to run Instagram at a 24/7 pace.

However, it does not have to be gloom and doom. As I have written about over the past few years and council my agency clients… we need to, as Michael says, address the core need of our clients and that is sales growth – not mindless Instagram posts. In the case of 2019’s ability to track much of what we do, that means addressing Return On Investment. Yes, you better be creative art directors, media planners and database experts. But, you have to be able to recognize sales opportunities, have the time to find solutions and deliver ROI.

Advertising Is Back! Y’all. I Hope.

From a Business Insider article.

2017 was a trying time for ad agencies, with issues ranging from transparency and brand safety concerns to the looming threat of consulting firms coming to a head last year.

But the prospects for the advertising industry look a lot brighter in 2018, according to new research issued by UBS.

The investment bank surveyed 350 global marketing executives and 500 US CFOs and has predicted that ad agencies will bounce back in 2018, buoyed by a growth of 4-5% in global advertising spend.

The recovery in 2018 will be driven by a number of factors, UBS analysts said, including large advertisers increasing the scope of work with creative agencies and big sporting and political events driving increasing spend on brand media.

This is particularly interesting, as it runs counter to the trend of advertisers doubling down on direct advertising in recent years, where they have prioritized marketing strategies that drive measurable results.

Advertising Agencies, Nerds And Digital Marketing

Peter · February 11, 2019 · 1 Comment

This is a post about advertising agencies and the ongoing move to digital marketing and as a result, the need for more nerds. In this case, I mean a single-minded person that is highly focused on a technical field, like mobile advertising; programmatic media, database marketing or, well you get it. Stick with me on this one.

There is some personal history here and yes, the name dropping is important. I am trying to make a point and can use all the help I can get.

History

I “discovered” digital marketing in 1994 when I came home to the U.S.A. from Saatchi London where no one had a computer on their desk. I returned to work as Business Development Director at Saatchi & Saatchi Advertising New York and as it turned out, it was my 16th and last year at the agency.

My eventual move out of advertising was stimulated by my discovery of and fascination with the new world of interactivity via CD-ROMs and a life-changing conversation I had with Ted Leonsis who, at that time ran Florida’s Redgate Communications. Redgate was very early digital agency founded in 1987. I found Ted through the 4A’s Michael Donahue another early digerati (you could say this word then without cringing). Using my Saatchi credential, I met with Ted and he told me two very interesting things. One, his company had just been bought by America Online and two, this advice,

“Get the hell out of advertising, it is going to die. Move into digital.”

Well, after the meeting I did two things – one a mistake and the other, the smart one: I listened.

The mistake was that I didn’t buy America Online stock (its stock rose 600 percent in 1998). Had I, I might be sorta near (well, kinda near) where Ted wound up. Today, he is the owner of Washington D.C.’s Capitals, Wizards and Mystics. [Read more…] about Advertising Agencies, Nerds And Digital Marketing