by Paul Arnold
I spend my time facilitating workshops with agencies and clients around the world. Here are some key themes I seem to be observing and hearing:
Trust has evaporated – The relationship between client and agency has shifted dramatically over the past decade.
This is due to a mix of both being ‘let-down’ in the past and also the ‘decoding’ of communication (which means clients believe they know how to ‘do’ communications).
This is leading to an increasing trend for clients to move many communications function ‘in-house’.
Execution devoid of thinking – Such is the contagion of digital ‘always on’, that agencies are often reduced to becoming just production lines of execution – often devoid of any real strategic thinking.
People have no time to think. Everyone has their ‘heads down’ trying to feed the hungry monster of digital. People on both sides are rarely applying critical thinking. No-one is asking, “Why are we doing this?”
I know of very few people (including Senior management) who are really enjoying working in agencies at the moment. Where’s the mental stimulation of solving complex problems? Where’s the fun (so often necessary in creatively stimulation environments). Where’s the debates and banter? All I see are people rushing around or wired into their computers, zoning-out in mass isolation.
The devaluation of creativity – With AB testing, algorithmsand improved targeted messaging, it’s easy to dismiss the role of creativity (e.g. If I can target a mother who has had a car accident, then merely saying ‘Volvo’s are the safest cars’ is enough to catch her attention – so why do I need Van Damme doing the splits?).
But this misses the key point. In a world of decreasing and fragmented Brand budgets, creativity is a critical competitive edge as it leverages the power of the media spend. It can make a $2m budget feel like $3m (and weak creativity that just follows past precedent will make that same budget feel like $1m).
Critically in a world of over-stimulation, creativity is THE vital ingredient to cut-through the cacophony of noise that bombards our senses every-day.
Furthermore, the work by the IPA (amongst others), has shown that creativity not only builds brand values, but it also increases sharing.
That said, the ‘science’ of communications will never replace the ‘art’ of creativity. The reality is a data driven, deconstructive approach to how comms work is always rearwards facing. Take all that evidence and all you ever produce is derivative communications. The very art of creativity is about breaking the code and doing new work that is unexpected.
Sure, AI may help deal will low value ECRM/social media postings, but brand building will still need to be in the hands of gifted creatives rather than machines or diagnostic tools.
Lack of added value – The perceived added value from agencies is rapidly disappearing.
I often say, if all we are is a production house, then we are like the printers down the road. How do you think you would react if they called you up and said, “Hey, could you share with us your business plans? Oh, and whilst at it, that brochure you want us to print? We have a better idea for you!”
You would no doubt retort, “Just print what we told you to and make sure they are delivered by 4.30 tomorrow – Oh and remember you promised to do it for me for a 10% discount on last year’s rate!”.
No wonder agency finances are in a real pickle. It’s a downward spiral. Since clients feel they are not getting the ‘value’ from their agencies, they are allowing Procurement to slice their budgets to pieces.
Furthermore, since agencies are increasingly part of a global network, their invisible bosses in HQ are demanding the same if not higher margins (especially as the stock market is increasingly questioning the comms industry as a stable and transparent place to invest in).
Thus, local MDs are forced to reduce their largest cost – staff – often by over-promoting younger, more inexperienced staff. The result is these people often do not have the skills or experience to add any real business value.
They have little influence or authority over the client, and end-up just being ‘post-people’ running back and forth between Client and creatives. Thus, no surprise when the brand team feel a lack of added-value and want to cut the fee even further.
Yet the sad reality is the client is facing the biggest challenges both within their own organisation (where marketing is being asked to step up and ‘show them the money’) and also struggling to negotiate the right strategy is a very confused, constantly changing new media world and changing consumer expectations.
So, Clients need Communications’ Consultants more than ever – and if agencies cannot deliver this, they will have to seek answers from other Consultancies (ironically at much higher rates).
So, what can we do about it?
The answer is simple but difficult to implement – ADD REAL BUSINESS VALUE. There are five immediate strategies for this: Focus, The Balance sheet, Proving Effectiveness, Revaluing Creativity and Training.
Focus – The simple answer is ‘focus only on the important’ and stop doing the unimportant. Less is always more.
Too many pieces of comms are being produced unnecessarily. The agency and client need to reduce the amount of executions produced and serve what I call ‘filet steak’ pieces of content that serve their customers’ needs rather than the ‘popcorn’ messages that clutter and confuse. (As my grandmother used to say, “If you have nothing worthwhile saying, say nothing”).
With so many messages now, it’s even more critical to be brutally focused on what our brand stands for and its benefits to our customers.
Agencies and clients are like magpies, chasing any bit of glittering new technology/media opportunities. Just because you can, does not mean you should.
Some brands warrant some forms of activity and other brands need other activities to connect with their potential customers. As someone once said to me, “I don’t want a relationship with my toilet cleaner!”
The Balance Sheet – In ‘Grow’, Jim Stengel raises a great point about how Brand is driving the value of a company. In the old days, an organisation was valued primarily by its tangible assets. Nowadays, we are seeing the value of an organisation becoming increased valued by its intangible assets. The key intangible asset is ‘brand’.
If a CEO wants to build the value of their organisation, THE most effective way of doing so is building the brand.
So, who are ‘experts’ in brand building? Communication agencies. We are missing the real point of communications – rather than helping to devise big brand building ideas, we are clogging up the airways with meaningless topical bits of ‘engagement’ which last a nanosecond before being replaced by another brands pointless chattering.
Only this week another major brand (Lloyd’s bank) announced a reversal in social media spend. The IPA, as well as How Brands Grow, suggests brands often grow through increasing its user base. This lends itself to broadcast media that reaches new people (rather than social media that is primarily seen by current users).
Proving Effectiveness – The IPA advertising effectiveness awards and the Global Effie awards are fantastic testaments to the power of communications in building business.
They prove time and time again that strategic communications drives brand growth. In the board room the focus is always about return on investment – where ROMI wins-out over idea or insight.
All agencies need to invest more time proving to their clients that their work is generating real business growth (We need to be business people – who just happen to wear advertising suits).
Revaluing creativity – Our whole ‘raison d’etre’ is to be business consultants who solve their business problems through the power of creativity. Without creativity we do not exist.
Indeed, as we move into VUCA situations (Volatile, Uncertain, Complex and Ambiguous), rational thought no longer provides the answer. We need lateral leaps to find new solutions.
You only need to look at where the main Management Consultants are investing-in to see that they are also realising that we need to find new ways of thinking. The trouble is, left brain, logico-deductive cultures of most organisations will not allow creativity to thrive (including these Management Consultancies). It needs a completely different cultural space for creativity to germinate – that is why agencies can do what they do – and client based in-house teams find it more difficult to re-create that same level of creativity.
So, rather than creativity (and creative agencies) being an outmoded concept, it is actually more important than ever. I think the brief every agency needs to be working on is ‘How to convince clients of the real added-value creativity brings to their business’.
Training – We need to properly invest for the future of our industry by training-in the skills to becoming proper business consultants (as training is significantly cheaper than hiring-in the skills).
Key areas include training in Business (e.g. a mini MBA), Strategic Planning, and how to evaluate the effectiveness of a campaign.
So, in conclusion, if agencies carry on the way they are, they are destining themselves to becoming a low value, commoditised category (‘The colouring-in department’), allowing a new breed of consultancies to attempt to add the creative spin that builds true company and brand value.