I asked a real Mad Men man, a senior exec at the Association of National Advertisers, and a long-time playa in the industry, about the current state of the advertising industry. Most importantly, “what do advertising clients want?”
Here are some answers that should be digested and could impact your agency’s business strategy no matter your agency size. This is Part One of my interview. Stay tuned for Part Two.
Michael Donahue is a Senior Director at the ANA (check out their member list); he was a long term EVP at the 4A’s (their digital futurist) and EVP and board member at Saatchi & Saatchi Advertising Worldwide. He even invented the Creative Brief format that the 4A’s uses. Decent creds, huh?
He was also my boss for a while. Yes, I have some stories.
Peter: Let’s talk a little bit about the clients and what they’re looking for today from their advertising agency partners. What are the top, let’s just keep it simple, three marketing communications related pain points that marketers are experiencing today? Can you give us an overview of that?
Michael: Number one is how to take advantage of the digital transformation. Somewhat surprisingly in 2019, many marketers are still trying to do that and are not up to speed. Some are trying to move forward faster by creating in-house agencies that develop digital strategies and executions.
Number two is that marketers would like to go back to the future and have their agencies be able to do everything within one agency.
One of the reasons smaller independent agencies or even bigger independent agencies that are full-service agencies are getting more assignments from the big marketers is because they like to have it all under one roof. Another way to say it, sorry, is that the client would like just to have one throat to choke.
Peter: So, what I’m hearing is that a major issue is, how do you manage multiple agencies with multiple programs and points of contact?
Michael: It is definitely a major issue, and it’s an issue that marketers wish they didn’t have but they do. Some marketers would like to bring it all in-house. Others like to have best practices-groups. And there are also new models developing, especially with Procter & Gamble where they are bringing agencies into their own Cincinnati headquarters from different holding companies and trying to do it all under their roof. So, there are all kinds of new models that are developing at a very very large CPG level and the large holding company level.
Peter: To add to that, Google has created spaces within Google HQ for the agencies as well. An interesting hybrid model. I’ll call it in-house plus out-house. What is the third-largest issue?
Michael: The third-largest issue is one that both agencies and marketers face. How much do clients pay their agencies? We are now close to 40 years away from the commission system. That was a good model because it reflected the growth from the ’50s to the ’70s and early ’80s and it was a very simple system.
Today, marketers are trying to pay agencies as little as they can.
The big agencies haven’t done a particularly good job of trying to identify the value they bring, or that they used to bring when people like Peter Levitan and Mike Donahue were valued by their clients as contributors to the overall marketing plan, not just getting ads created. It is difficult for many of today’s advertising people to understand that you and I had seats in our client’s boardrooms. Many of these chairs are now being filled by representatives from the consulting agencies.
Peter: Let’s move to a question a lot of agencies ask me. How do clients find agencies? What is the process these days?
Michael: That’s a really good question. It often simply boils down to what is common sense.
I believe what clients do is simply go on the Internet to perform a search, and / or they’ll hear from friends in the business who are not competitors.
Dominos might reach out to General Motors and say, “We’re looking for an agency to do XYZ” and General Motors will say, “Well, here are some things that I can share with you because we don’t compete.” In this case, word of mouth and reputation is critical.
Many marketers reach out to agency search consultants. These consultants are hired by marketers when they believe they need to best evaluate their current agency or at worst, fire them. Here is my list of advertising agency search consultants and how to work with them.
Peter: What about mid-size and smaller agencies – how are they found?
Michael: I don’t think that the smaller agencies are good at advertising their own skills and sales propositions. It is the shoemaker’s children thing. Thst just doesn’t make sense, common sense and business sense.
Peter: Well, I agree. I have a client base of mid to small agencies and I certainly see that lack of agency marketing. I’m amazed that agencies sometimes are not even searchable when a client is in the process of searching for a new agency. They’re just not in the places that clients look for agencies. There are certain lists, directories, and so forth that an agency needs to be in. too many agencies simply do not put themselves in the client’s shoes.
I’ll tell you an interesting fact. One of my best-read blog posts is a list of advertising awards plus my take on what an agency should do to win an award. If I’m a client and I’m trying to figure out who is good, I often need third-party validation.
Michael: Oh, sure. Absolutely. Well, your awards point’s a good one, which is why the ANA has a massive awards program in Brand Activation called the Reggies, which are the number one Brand Activation award ,and it’s been that way for a long time.
Peter: Last point. I’m going to ask you a kind of complex crystal ball question, but I’m going to hope you can give me a simple answer. I know you’ve been to a couple of major ANA conferences recently where major marketers have spoken. Is there a sense that a recession is coming?
Michael: There is a belief that there is a recession coming, but when you dive down into the marketer’s business, there is nothing there that would indicate that’s happening. And with each passing article that a recession is around the corner.
However, I see numbers from the marketers that put the lie to that. Procter & Gamble, for example, is doing better than they have in years across the board for a variety of reasons. And they’ve raised their prices, which if a recession were coming, would probably not be something they would be doing.
Remember, Come Back To Read Part Two Of The Interview
While you are at it, give me a shout if you want to grow your very own advertising agency. I learned how to make it happen from Mad Men dudes like Donahue, sitting in client board rooms, At Saatchi, building a company that Microsoft bought and running my own agency.