Aloha from New York, New York, the town so nice, they named it twice. (Credit: David Letterman, we think).
The argument about agencies and the value that they bring to a brand is one that's been around for a while, yet seems to be getting louder by the day. What's bedeviling about the conversation is that it feels as though brands look at agencies as vendors as opposed to partners. True, a brand does, in fact, pay for advertising services—and it would be foolish to think that cost isn't a consideration—but, man, does it seem like things are getting a little out of hand. (And it's not just ad agencies feeling the pressure. Production companies are also getting pinched).
Ad agencies, and especially those that have a track record of consistently high-quality work certainly command the premium dollars, pounds, euros, yen … whatever.
"If you want Michelangelo, you pay for it," said Kim Wijkstrom, a former agency executive who most recently served as CMO of OneMain Financial. "The Pope wanted the best creative director at the time, and he didn't get it for free."
What's been hanging over agencies are two main issues: the "p" word (procurement) and the dreaded acronym RFP.
In what many would consider a race to the bottom, these two forces continue to squeeze already fragile agency ecosystems. The margins are thinner than ever, payments now arrive in four months instead of 30 days and the cost to even pitch business is now sometimes not even worth it. Plus, some brands, as we recently learned, want to take creative ideas in a pitch for themselves, even if the agency doesn't win the work.
Of course, it's clear that we are in a new "normal" and agencies need to adapt as best they can, but brands need to give a little bit, too.
"We've reached an inflection point, and both parties have a choice to make: Peer into the abyss and go for more competitive advantage at all costs, or decide that we have to build each other's businesses in a responsible and sustainable way," said Mars head of global media and agency vet Robert Rakowitz.
It's safe to say that Rakowitz is a voice of reason (having worked in an agency helps here), and hopefully, this thinking becomes the rule instead of the exception. Yet, according to Crossmedia CEO Martin Albrecht: "The industry really is at a breaking point because clients don't see the value, period."
Part of this lies with the declining trust that, according to an ANA member survey is at "an all-time low."
But money talks. As the industry makes its way to Cannes to celebrate great creativity, we're reminded of a panel that Wieden + Kennedy did last year with KFC. Indeed, the range of work the agency has done for the brand stands out, but we were was particularly struck by the results: years of same-store growth, which is a big deal in the QSR category.
And there are plenty of examples of why agencies perform more than simply a "service." For years, we've talked about how an agency exists to solve problems for a client. That's never changed—and it never will change. But building brands is harder than ever, and the solution isn't needlessly eviscerating budgets or stealing ideas.
Again, this isn't advocating for anything other than sensibility across the board between agency and brand partners. This is a very complex issue, and we're not trying to be cavalier about it. But if procurement or a CFO had gotten in the way of the Pope, we could have ended up with Dogs Playing Poker on the ceiling of the Sistine Chapel, which would have been a branding nightmare.
In other news this week …
The U.S. Army shuttered its marketing division and is headed to Chicago.
Deutsch launches another fake movie trailer for Taco Bell Nacho Fries.
Agencies are making a pledge for equal pay.
Sung to the tune of The Simpsons theme song: “Ikeeeeeeea.”
Go ahead, sue your friends when they don’t show up for drinks.
IHOP follows up IHOb with … pancakes.
GroupM named new leadership.
Gillette takes its campaign to combat masculine stereotypes global.
Johannes Leonardo debuts VW’s (sort of) mea culpa.
A tip of the hat to Deloitte in naming a new chief well-being officer.
Some Cannes contenders for Glass Lion and Innovation.
As always, we invite you to visit our sister site, AgencySpy for other bits and bobs (British term) in the agency world.
We wish all of you a fabulous week-before-Cannes weekend and we’ll see you back here next week.
Warm Regards,
Doug Zanger
Senior Editor
Creativity + Agencies
