The Advertising Agency As Scapegoat

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Stuff rolls downhill. That’s a fact.

In the past few months there’s been an anti-agency storm brewing. It’s not fair (says the guy who runs an agency). The biggest drum that has been banged came in the form of an Advertising Age article titled, PepsiCo Exec Has Tough Words for Agencies, in which PepsiCo executive Brad Jakeman delivered a presentation at the Association of National Advertising‘s annual Masters of Marketing conference in Orlando. His thoughts:

“The agency model that I grew up with largely has not changed today… Yet agency CEOs are sitting there watching retainers disappear… they are looking at clients being way more promiscuous with their agencies than they ever have… global alignment agency is a dinosaur concept… I am really worried that this model is not going to bend — it’s going to break if we don’t really think about how to innovate.”

There was more. Lots more.

In the other corner, Mars CMO, Bruce McColl took another vantage point, as reported in MediaPost‘s article, Mars CMO Accuses Clients of Imprisoning Agency Creativity. McCoy was speaking in Australia at the National Advertisers conference, and blamed brands poor work in marketplace on excessive restrictions, a lowest fees mentality and the growing world of bureaucracy. His thoughts:

“Are we creating conditions where they [the agencies] are prisoners, or are we creating conditions where they can perform at their ultimate ability and we can have mutual success? We have to free our agency relationships from creative imprisonment… The guiding principle is for them to have predictability of revenue, to make sure they are fed and can reward the best talent. I can’t understand how anyone expects to get good work from partners if they are under constant threat of dismissal. We don’t want a culture of fear and dismissal from our agencies.” 

Does anyone else smell a cage match fisticuffs in the works between these two?

There are three sides to every story (as that turn of phrase goes). Still, there’s something happening at a more macro level that isn’t being discussed. Stuff rolls downhill (and, I’m being polite, because we all know what word I should really be using in this context). Brands are under increasing pressure. The global economy is being challenged like never before. The pressure from Wall Street to increase revenue, while keeping expenses down intensifies. As usual, everyone wants a whole lot more, but they want to pay a whole lot less. This environment is temperamental. We have a globalization of communications, a digitization of industry, and the ability to understand consumers (call it data, call it analytics) like never before. So, yes, advertising must change. But always remember, change is hard. Brands have failed to keep pace with the consumers ease of technological adoption, they are left scrambling to figure out how these connections point can matter. Still blaming the agencies for not keeping pace is a poor generalization.

Some agencies have not kept pace… but they’re not supposed to.        

Some agencies should focus on television advertising, some should focus on promotional items, others might be best for radio or newspaper creative. There’s no need for them to change. There is a need for these agencies to understand their role, when there are many new and different channels to communicate with consumers. They may need to accept that the budgets of yesterday may get smaller, as brands have a myriad of new options to explore. With this, there is a newly-established need for marketing and technology to get even closer than they already are (look at the trends in data, analytics, marketing automation, programmatic and beyond). The need for marketers to modernize their organizations, and shift away from an advertising-centric model is critical. But this doesn’t require the agency business model to change, it requires the right agency partners at the table, and for brands to not get lured into the notion that their “fully-integrated” advertising agency can solve all of their problems. I’ve written this before, but you don’t want your GP being your sole care provider if you blow your knee out. Maybe you do, but I would much rather seek out a specialist. Retainers are disappearing, because both brands and agencies (working together) are not getting the results. It’s not one or the other. Global alignment should also never be considered a “dinosaur concept,” but rather the true path to a brand’s future success. Not just to gain efficiencies, but because the Internet, connectivity, digital is a global concern. Regional, personalized and customized work matters, and it will drive sales, but a global approach is equally important in a ever-globalized marketplace.

Time for innovation.

I have, thankfully, been very close to the frontline of agency innovation. For close to two decades, I have seen many new and fascinating agencies birthed into the world (and yes, I count Mirum among them). The question isn’t whether these agencies have the innovation and technology to deliver against a brand’s needs. The question is this: have brands truly committed to the process of transformation? Are they removing the dogma and legacy systems that are in place for these modern agencies to do their best work? From my side of the fence, I see many agencies that have not only kept pace with change, but have been leading, screaming and pushing from the front. This blog, Six Pixels of Separation, has been putting these ideas into the marketplace for over twelve years. Brands can say and do whatever they want. They do hold the cards, in most instances.

Still, blaming the agency for the lack of results, seems to be only real thing that hasn’t changed in decades.

What do you think?