Marketing needs to shed old skin to grow
Published on 02/14/2000 under Ad Management
I hired an experienced copy-writer the other day who had been let go by the agency for which he had labored for more than 16 years. This particular agency had 20 employees three years ago; today, they’re struggling to hang on to six.
My own agency went through similar shrinkage four years ago, shedding 70% of its work-force in less than 15 months. I’ve seen other, even larger firms go completely out of business in recent years.
So what’s going on here?
A year and a half ago, I wrote about the difficulty of sustaining agency-client relationships—about how big, sophisticated advertisers were ripping through new agencies in 12 months or less, moving on to the next punching bag in hopes of magically better results. (See Marketing News, Aug. 17, 1998, page 6.) At that time, I placed at least part of the blame on advertising trade publications and their fascination with agency-client relationship problems. It seemed every breakup or rumored breakup was glorified by ad trade mags the way supermarket tabloids skewer the crumbling marriages of Hollywood stars.
But that isn’t the whole problem, of course, because I was writing about agency client relationship problems as far back as 1993 (see Marketing News, Sept. 27, 1993, page 11). I didn’t even mention the trade press in that earlier column. In ’93, I attributed much of the problem to “transient managers” who were just passing through and cared only about short-term results; it’s hard to maintain a long-term relationship with managers who know they will only be staying in the client-sideliaison job for 18 months or less. If they’re going to leave their mark on the company’s ad program, they’ve got to do it fast.
Agencies, on the other hand, are trying to convince fast-track managers to stay the course for maximum impact and return on investment. It matters not that agency peo-ple are generally right about the importance of continuity because fast-track managers are often one-track-mind managers, and agency people who resist are seen as part of the problem—an obstacle that can be easily eliminated.
I just finished a book with a great title but precious little useful information: The End Of Marketing As We Know It, by Sergio Zyman. If you can get to the final chapters, you’ll discover a few interesting nuggets about how and why he changed Coca-Cola’s agency relationships. The primary change was bringing marketing responsibility in-house and using agencies as creative suppliers. (In the case of Creative Artists Agency, he used a creative talent firm instead of a traditional ad agency.) His point was that marketing strategy is too important to be delegated to an outside firm, and even though I’m essentially an agency guy with a considerable marketing background, I have to agree with him on this one. Clients shouldn’t be delegating strategic marketing to outside companies. They should, however, be encouraged to bring in outside marketing advisers to help them think through critical issues.
But one thing is perfectly clear to me as we enter this new era: The old agency models are no longer valid. Many clients no longer wish to select an “agency of record” and entrust their entire marketing-communications program to one company. Increasingly, they are reserving the right to pick and choose the outside suppliers they work with for any given program. They might even choose to have an in-house group for certain activities. Take Web site maintenance, for example: The Internet is changing our business in more ways than we can describe, just like the personal computer did 10 years earlier. Many companies are learning that Web-site content is king, and keeping up with content demands is a full-time job for a small army of technologists.
So with all this movement and change, does that mean it’s all over for agencies?
Not if they’re willing to change.
One fundamental change I have embraced in my own company has to do with “project work.” Years ago, I thought that projects were undesirable and agencies should only pursue on-going, full-service relationships. “Agencies can’t be cost-effective on projects,” my reasoning went. “It’s like firing up a Mack truck to drive to the convenience grocery store down the street.” And for large, full-service agencies, this argument still holds true. They must seek ongoing relationships with large advertisers willing and able to define significant programs, allowing the agency to “staff up” to handle the anticipated workload.
But what if a client isn’t willing or able to identify a large volume of future work and commit to a relationship with a single firm? New models are needed, that’s what. Here are a few examples of the models you’ll see more of in the millennium ahead:
Creative boutiques. Marketing strategy is determined in-house. Creative execution is farmed out. Copy is sometimes provided by the client, which makes fast-turnaround layout and production possible.
Contract personnel. They look like real employees, but they actually “belong” to a third-party personnel firm. You pay more per hour, but you don’t have to officially increase head count, and you can scale back more easily and quickly.
Project team agencies. They function just like larger agencies, but there’s no big agency bureaucracy or overhead. Can provide marketing counsel, copywriting, creative execution and even media place-ment. Lead time will be a problem if several clients call at once.
Virtual agencies. Services are coordinated by one individual with a network of experienced freelancers. No overhead to speak of, but communications can be tricky.
These are a few of the emerging agency models. I’m sure we’ll see others as the explosion of Internet services continues to change paradigms.
To me, the main consideration is strategic vs. tactical. You should have good sources for strategic counsel (What? Why? When?), and you should have affordable, creative sources for execution (How?).
Agency managers who hope to survive and prosper in the 21st century will be the ones who can adapt to your preferred method of obtaining those services.