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Advertising

I always worry for people who hire Max Clifford. Not because he isn’t an effective publicist. He clearly is. It’s just that when someone you’ve never heard of engages Clifford, you know that Max has immediately become the story. It is a bit like that with Robert Jay of Leveson Inquiry fame. And I mean fame. He’s the star – the Perry Mason, the William Garrow, the guy in the John Grisham novel. Jay’s voice, his whiskers, his encyclopaedic grasp of dates, documents and potential misdeeds are Leveson to most of us.

So I felt a bit uncomfortable last week announcing Mutual Decision TM, AAI’s proprietary new pitch system. Pitches belong to the clients who want new agencies, and the agencies who want new clients. So why is a mere consultant launching a rival to the tried, tested, and traditional way of doing things? You know, RFIs flying out to dozens of agencies, more chemistry meetings than chemistry classes at school, a brief inviting five or six agencies to compete for the Golden Apple by preparing a free campaign, more iterations by the finalists, two rounds of research and three to four months entertainment for all.

The truth is, it may be the traditional way of doing things (albeit a relatively recent and substantially flawed tradition), and it has been tried often (not least by us, I confess), but it has tested badly. It is unnecessarily long drawn-out. It is nakedly exploitative. It is seriously expensive, not least for the client in terms of time and opportunity cost, and especially for the pitching agencies. Nor is there any evidence that a creative contest is a reliable way of developing the campaign the client wants to run tomorrow. Estimates vary, but most experts would settle for less than 20% of pitch creative going live.

Worse, there is still less evidence that this jamboree is a good prelude to a long and synergistic relationship. My analysis is that the process is too one-sided to segue naturally into a balanced partnership. Also in the four cases out of five when the winning shop’s creative has been turned down, the relationship kicks off with creative tension, probably exacerbated by the inevitable hassle over remuneration.

Mutual Decision TM is a new way of doing pitches, which is far more likely to find the right agency for the client, and the right client for the agency. It should deliver a productive relationship from a standing start. It is also much fairer, faster and less costly.

Sometimes you cannot afford to wait for the newsmakers if you believe in change. I very much hope that clients and agencies will choose to adopt our new way of doing things. That would be a win/win. OK, you’re right. If that happens, it will be a win for us too!

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It was my favourite quote of last week, and regular readers will know how much I would like to see the infamous fee system (resource packages/FTEs) bite the dust – if only we can come up with something fairer and better. The fee system not only encourages inefficiency. It also has nothing to do with either deliverables or outcomes. It is purely an input measure, and encourages agencies to use bigger teams, at higher percentage utilisation, for longer periods – for no intrinsic benefit.

Intellectual heroes like Tim Williams of Ignition Group out of Salt Lake City (www.ignitiongroup.com) have been beavering away for years now, looking for new solutions, alongside innovative clients, agencies, and indeed consultants like ourselves.

But the quotation in the headline did not come from adland. It was from Lord Neuberger, the Master of the Rolls (Britain’s second most senior judge), and he was talking about solicitors. He said, ‘Businesses that base their charges simply on costs do not deserve to succeed, or even survive……Rather than treating time as the commodity which is being sold, we should be adopting an approach where skill and experience are the commodities which are sold’. And of course he is right – in the generality, and about any industry, like ad agencies, which was misguided enough to ape the solicitor’s business model.

Remuneration is back in the headlines – but for different reasons. The 7th May edition of Advertising Age has a disturbing article by Jack Neff on “nonworking media spending”, variously known as non-productive marketing spending. It is apparently a scourge which mighty advertisers like Unilever and PepsiCo are committed to reduce in favour of “working media”. The wasteful stuff is creative development and content creation. Working media spending is the money spent to run that content.

“Experts” have calculated that the target maximum for so-called nonworking media should be around 15%. To show how scientifically this figure has been arrived at, Mr Neff was told that it related to the old 15% commission level!

So the very companies that have been trumpeting the need for top level strategic and creative input from their agencies are now allegedly trying to reduce creative and content costs and devote the saving to media and other delivery mechanisms. At the zenith of the space era, this would have meant NASA spending more on rockets and less on the satellites and space stations they were propelling outside the earth’s atmosphere. Misguided lunacy, in other words.

The splendidly named Jordan Bitterman, SVP Social Media Platforms at Digitas, says that so far from reducing nonworking media to 15%, ambitious companies in the digital arena should be looking at raising it to 50%, because earned media, followed by owned media consistently drives purchasing well ahead of paid media.

In a related development, several heavy-hitting companies (Miller Coors, Sprint, Bank of America and GM) have recently moved to a dedicated holding company model. Why? Was it for greater strategic advantage and creative firepower? I think not. Industry commentators are convinced it has been to drive even tougher remuneration deals. I bet they are right.

To return to the top of this piece, the wretched fee system has a lot to answer for. As long as charging for inputs is the default setting, the agency world is super-vulnerable. Lord Neuberger is even more on the ball than he imagined.

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When you consider that without advertising there wouldn’t be a press, it’s ironic that advertising itself gets such a poor press.

Anyone, like me, who has spent a lifetime in the ad business is used to reactions from outsiders ranging from bewilderment to outright hostility when you reveal your day job. Even in the world of sales and marketing – the overall ecosystem we inhabit – there is scepticism and little love for agency people.

I believe we should all show how proud we are of our profession. Advertising has always been a crucial player in industry, business, commerce and indeed government communications:

• You can’t launch a new product or service without advertising
• You can’t increase market share without advertising
• You can’t move into a new segment, a new market or a new country without advertising
• You can’t sell cars
• You can’t promote destinations
• You can’t offer financial products
• You can’t tell people about retail offers

We have the IPA Effectiveness Awards (and similar schemes round the world) to demonstrate conclusively that advertising works. Even if that wasn’t so, legions of advertisers show with their increasing budgets how convinced they are that advertising is an investment, and not just a cost.

We have talented people in the business, as I am reminded at almost (!) every agency meeting or pitch I attend.

Initiatives like the Marketing Academy and NABS Speed Mentoring are a welcome reminder that the business continues to attract great new talent.
Advertising has also produced folk who have subsequently achieved greatness in other fields: David Puttnam, Alan Parker, the Scott brothers, Alec Guinness, F Scott Fitzgerald, Dorothy L Sayers, James Patterson, Kenny Everett and so on

British agencies continue to perform heroically – and well beyond the 4.5% of world adspend we represent – at Cannes and other international awards. We gave the world planning and cheeky creativity.

But it is now in 2012 that I particularly want to celebrate advertising. A mixture of technology and ingenuity has seen a game-changing advance over the last few years:

• A complete new digital way of talking to consumers, with almost infinite data to match
• Screen convergence
• An astonishing breakthrough in mobile communications, with tablets supplementing the advances already achieved with mobiles and smart phones
• An important role in supporting what we are learning to call responsible or moral capitalism
• Corporate and Social Responsibility at a new level – not just in messaging, but also in important areas like casting

As far as I am concerned it might be called digital, mobile or CRM, but it’s still advertising.

Being a banker has lost its lustre. We have to wonder why, say, lawyers, civil servants or even senior marketers and other client executives should have higher status than adpeople. After all clients need agencies to be successful. Thank you Ed Vaizey for giving us a pat on the back at last week’s IPA President’s Reception

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A very Happy New Year to all my readers. Apologies for the long radio silence. Two reasons: the festive season of course, and some massive editing sessions, with the deadline approaching fast for “DECIDE. Better ways to make better decisions”.

I thought it was an unusually quiet holiday period. In recent years there has always seemed to be either a natural disaster, a major terrorist outrage, or both. But 2012 has happily come in like a lamb, apart from some very lively weather – notably here in the Channel Islands, where the gales threatened to blow us all into the sea.

I have always been a fan of Radio 5 live, which has been my main source of news. It has been one light news day after another. Maybe very little was happening out there. Or just maybe it was a function of the station’s move to Salford Quays. Is it just me, or has the station suffered a fall in standards? Apart from losing some favourite presenters, and being assailed by a cadre of mournful newcomers from Northern Ireland and the North West, my least favourite innovation has been doing the phone-ins in front of a studio audience. Nightmare! Both callers and presenters grandstand to the tittering audience. Might have been a breakthrough in 1957, but I predict it won’t be a hit.

New Year is a good excuse to make predictions, so here are my top 5, in no particular order:

1. Obama will have a surprisingly rough ride against whoever emerges from the chaos of the Republican caucuses, primaries and so on
2. Cameron will be far more assertive in 2012, with much less looking over his shoulder at his Lib Dem ‘colleagues’
3. The worldwide banking system will withstand the huge pressures it has been under, and stock markets will have rallied substantially by mid-year
4. There will be the first signs of the – long overdue – reintegration of major creative and media agencies
5. England teams in Rugby, Football, Cricket and the Olympic Games will disappoint and frustrate their legions of fans by substantially underperforming

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There’s an article in the new issue of Ad Age (5th December) “Tightened policies on conflicts box in agencies, clients”.

I was surprised, frankly, to hear that the situation in the US has become tighter. My experience in the UK and internationally has been the opposite. I think that the old paranoia about conflict (on both sides) has significantly reduced. There are a number of factors at work to explain this:

1. There are certain sectors – pharmaceuticals, travel, music, financial services – where lack of current market experience is a positive disadvantage. It was a real shock to learn that it was Marriott’s sensitivity about pitching agencies that gave rise to the story
2. Far more assignments are now effectively projects, or short term. It makes little sense for either clients or agencies to become too precious if the job on offer is not a long term alignment
3. Most of the big FMCG players have become enlightened enough not to worry too much about potential conflicts unless they are in the same product class or close sector
4. Senior marketers now seem to be to be more open about their strategies in this digital age. Once you start engaging consumers in dialogue, it is hard to be secretive about the end game
5. Media agencies – largely because there are far fewer major players – have always managed conflict. Essentially their situation is not too different from that of the magic circle lawyers and leading auditing firms.
6. If it’s cool for media agencies to erect Chinese walls, why wouldn’t it work on the creative side of the equation? The big groups run a multi-agency strategy to allow them to cover a wider spread of clients, and I see absolutely no sign of client challenge to that. Groups are allowed to handle competitors, provided they keep them in different – albeit sister – shops
7. Most important of all, the increasingly short-lived span of client/agency relationships makes it impractical for agencies to be too self-denying in the area of conflict. Nor can I see any reason why clients – who are the moving force behind account shifts – would expect any greater degree of siloing than has been the industry practice over the last two decades

Perhaps the US market really is going in a different direction. Or maybe Ad Age has just got it wrong.

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In my book: agencies that are tough and resolute, as well as strategic and creative.

You may have seen today that Coca-Cola is reviewing the Pan-European Diet Coke account. The press has reported that the company has made the decision to move away from the agency of record model, “and build the brand’s links with the fashion world”, by hiring a combination of content agencies.

Campaign have also made the link with the “Liquid and Linked” presentation made this summer at Cannes by Coca-Cola’s VP of Global advertising strategy and Creative Excellence, Jonathan Mildenhall. Ironically the incumbent on the Diet Coke account was Mother, the agency Jonathan worked at prior to moving to Atlanta.

Why have I highlighted one company’s agency review? For two reasons:

1. Because it is Coca-Cola we are reading about: the world’s leading brand – worth $72bn as Interbrand’s #1 brand again in 2011 (a brand value in excess of McDonald’s and Apple combined)
2. Because I do worry about the ability of agencies to fight their corner, when both clients and consumers are becoming ever more feisty and powerful

It doesn’t need this blog to point out that the agency business is both hyper-competitive and increasingly fragmented.

There are hundreds of greater authorities than me on the dire global economic situation – which has worrying implications for an industry that employs directly and indirectly millions of mainly very clever people around the world.

I worked in agencies for 20 years before my long stint as a consultant. I retain a huge affection for the business, and a deep respect for the magic and productivity that can come from the business partnership that we call the client/agency relationship.

If Coca-Cola and other front rank marketers feel that they can do without the “agency of record model”, I do worry. That model is what I have always believed agencies – at least the big players – were for.

The clients are calling the shots. The consumer is in charge. I think it’s time for agencies to make some big decisions.

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Once you start taking decision making seriously, it becomes second nature to follow a sensible process:

  1. Clarity on your goal
  2. Best data and intelligence – and keep
    looking for more
  3. Frame – and if necessary keep on
    framing till the problem is well and truly defined
  4. Structure the most viable options for
    solving the problem
  5. Identify upsides and downsides in each
    option
  6. Reward / risk analysis, ensuring that
    you are not swayed too much by the attractiveness of an option if it has a
    dangerous downside
  7. Make the decision, having carefully
    balanced upside reward and downside risk
  8. Communicate
  9. Implement

But nature abhors vacuums and also nine point plans. What’s missing?
Learning and feedback. Being painstaking and systematic about making a decision and executing
it can take time and sap your energy. It is easy to forget to track what
happens next. It is equally easy to fail to take the learning on board and give
feedback to stakeholders, team members, bosses etc.

It follows that one of the most common decision traps is what we call
“Condemned to repeat the experience”. Refusing to learn from mistakes. Not
tracking success and failure or doing it less than honestly. Our name for this
trap is itself a corruption of the famous quote from American philosopher
George Santanyana: “Those who cannot remember the past are condemned to repeat
it”.

Good examples of this decision trap:

  1. Evenings out when we over-indulge. This can have lasting consequences – ask Rick Perry, Governor of
    Texas and hopeful of securing the Republican nomination until this week when he
    ran into problems counting beyond two. See www.youtube.com/watch?v=FcPjmiGwMTc
  2. Australia’s batsmen at Newlands yesterday when they failed to learn from the fall of the first
    couple of wickets and collapsed to 21-9 before a last wicket stand took them to
    47. Don’t you just hate it when that happens?
  3. All punters – except the most experienced and systematic
  4. Agencies who lose too many pitches
    while under-servicing their clients

And while we are talking about advertising, Santanyana had a quote for that too:

”Advertising is the modern substitute for argument; its function is to
make the worse appear the better”.

Surely not George.

 

 

 

 

 

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Having written in yesterday’s blog post about consumer conversations – and the ones a brand owner wouldn’t want, I came across this brilliant headline. It’s above an essay by Belgian digital creative Sam de Volder in a book I thoroughly recommend – Digital Advertising: Past, Present and Future, edited by Patrick Burgoyne and Daniele Fiandaca from Creative Social.

The headline is hard to beat as a summary of the tension between companies that still put out old fashioned irritating, foghorn advertising, and advertisers that actually seem to relish giving the consumer something to like. De Volder has a term for what the sympathetic advertiser offers. He calls it “Branded Utility”.

Sam’s examples:

 • Nike+

• Ikea providing trolleys that carry multiple trays in their cafes

• H&M’s virtual fitting room

• Fiat eco:Drive

• BMW: free audio books

I could also add from the current crop:

• M&S and most of the supermarkets, with their imaginative complete meal offers, which are also great value

• Sky Plus: how civilised not only to be able to record two programmes, but to time shift the end of a programme to make time for supper

• NatWest: however cynical we have all become about bankers, they do seem to be making changes that help

De Volder makes one other simple but persuasive point – in traditional advertising it is the brand owner conducting the orchestra. Whereas in digital advertising it is the consumer who has to make the first move. If they get no reward response……no dice.

We are back to our preference for conversations over being shouted at. Advertising imitates life. Funny that.

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Everyone agrees that it is all about consumer conversations now. Command and control is dead. 

It is not enough nowadays for advertisers to do a segmentation analysis to calculate optimum target audience, use media planning to maximise reach and frequency, engage the account planners on unearthing insights, and entrust the creatives with developing an ad campaign to boost sales. (Isn’t that how it was supposed to work?) 

Today’s brand owners are data rich. They are monitoring social networks, chats, blogs and emails. They can observe web surfing patterns and what is happening at point of sale. They get daily feedback on what consumers think about products, service, price, packaging. 

Dialogue has replaced monologue. The consumer has almost as much say on the Five P’s (product, price, place, promotion and people) of marketing as the marketing department. 

So why am I telling you what you already know? Because I have a nasty feeling that while some of the mega brands have well and truly grasped all of the above, hundreds of brand owners have not. What is my evidence? Just sit down for an evening and watch the ads on ITV or any of the other commercial channels. 

Are there still brands inventing problems, which they then attempt to solve? Can you still hear brands shouting commercial messages at the consumer? Are there any campaigns out there appearing at such a frequency that the agency and their client must be relying on a high irritation factor making the brand name unforgettable? 

Look. You know the answer to those questions! 

Bertrand Cesvet, the Chairman of Sid Lee, is a clever man. His 2008 book Conversational Capital (written with Tony Babinski and Eric Alper) is as eloquent account as I have seen on how to create word of mouth that works. He actually tells you how it is done. He talks about the engines of creating conversations: myths, icons, initiation, rituals, over-delivery, tribalism, endorsement. 

He has coined two proprietary techniques – one fairly obvious, the Exclusive Product Offering (EPO), the other more intriguing, the Relevant Sensory Oddity (RSO). The EPO individualises and personalises the service or product experience. Think iTunes or the multiplicity of choice at Starbucks. 

The RSO is all about synaesthesia – appealing to more than one sense, often in a quirky and surprising way (please see my blog post on 9th October “Uncommon Sense”). Good examples: the shopping experience at Abercrombie & Fitch, or the annoyingly slow delivery from a Heinz Tomato Ketchup bottle or Guinness tap. 

How much conversational capital is being created on TV most evenings? Here’s my challenge: watch long enough to pick out three promising examples. I will lay a bet now: that will give you time to write down the names of twice as many brands, which are still delivering unreconstructed hard sell, annoyance or assaulted senses and sensibility. As a brand owner, would you relish the consumer conversations that such an old fashioned approach might stimulate? 

Let’s face it, the editing facility provided by TiVo or Sky Plus is used by viewers to eliminate the ads. Ever wondered why?

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This is where consumer decisions meet marketing decisions. 

Definitions vary. The First Moment of Truth (FMOT) is either when you put a product in your trolley, or when you check it out. The Second Moment of Truth (SMOT) is when you eat it or use it. In a bar FMOT is the bar call, SMOT is the ‘cheers’ moment. 

Research has shown that shopping lists overwhelmingly consist of products, not brands. Also that just over 75% of in-store purchase decisions are on impulse, and that it takes between three and seven seconds to choose the item you want. 

For those of us who spent the best years of our lives planning ad campaigns, these stats are pretty depressing.

Nor are they very reassuring for a veteran pitch consultant. All that time and process to find the best agency in the world, and Mrs Cameron in Notting Hill chooses an own label yoghurt in 5 seconds flat. 

Even Professor Spence must shudder. Some of the best minds in Oxford have advised the wine company on the shape and weight of the bottle, the design and colour of the label, even on the flavour and nose of the wine itself……………and Mr Osborne has selected half a case of Chile’s finest at £4.99 a bottle. 

But that’s how it is with decisions. You can be very influential in the ones you contribute to yourself. But a stressed customer in a hurry and a cash flow crisis can decide against logic and reason, and your best laid plans are frustrated. 

None of this means that marketing and advertising decisions do not need the greatest care, and informed inputs. 

Of course it is worth finessing product formulation and packaging by building in sophisticated calculations on how it impacts on the consumer’s taste, touch, sight, smell, and hearing. It is everyone’s task to make the product deliver at both FMOT and SMOT. 

Traditional and digital advertising and marketing communications are as vital as ever to set up the desire. 

Just as long as we never forget that the real consumer isn’t in a focus group or lab. She’s left herself just three to seven seconds to load her trolley with a brand (yours, someone else’s or an own brand). 

Marketers have to make their decisions with all the limitations of  consumer decision making in mind. 

So why don’t they invest more money at or near the point of sale? Good question. Those clever people at P&G have upped their spend by four times.

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