10 ISSUES IN 50 MINUTES
This rapid-fire session will feature a panel of industry thought leaders to discuss and debate key issues. Issues are:
- Compensation to digital agencies—why is it so high?
- Reducing agency compensation overall
- Are agencies being commoditized?
- Integrating traditional and digital work
- Best (and worst) practices in the pitch process
- Client-side "bad behavior” and suggested corrective actions
- In-house agencies—benefits and challenges
- Where do multicultural agencies fit in?
- Agency innovation—what is it and how is it measured?
- New and future agency models
Moderator
Bill Duggan Executive Group Vice President
ANA
Panelists
Michael Burns Managing Partner
The Burns Group
Jack Haber Vice President, Global Advertising & E-Business
Colgate-Palmolive Company
Joe McCarthy Chief Executive Officer
Publicis New York
Eve Reiter Vice President, Global Agency Relations
American Express Company
Mitchell&McCue quick take on three of the 10 issues.
With regard to reducing agency compensation overall:
Harking back to Peter Drucker’s 1954 pronouncement that marketing and innovation are investments and everything else is a cost, we believe that an indiscriminate reduction in total agency compensation is short-sighted. Of course, it sounds like a good idea, but in actual practice it can often lead to a degradation of the effectiveness of total marketing spend. Squeezing compensation dollars impacts support levels, both in volume and level of talent, thus causing “working” dollars to be less impactful. And we have to agree with agency panelists who contended that agencies have contributed to this problem by not adequately holding their ground to overly aggressive client demands. It is fine to “share the pain” when times get tough, but only if concessions are properly memorialized, so that compensation levels can be restored when stability and growth cycles return.
With regard to whether agencies are being commoditized:
Again, in many ways agencies (with the help of client procurement departments) have contributed to this type of thinking and current state of affairs by allowing themselves to be categorized and benchmarked as such. Any self-respecting agency should say, “We’re better and we deserve more than your average benchmark. Recall that you picked us because we were superior to the competition.” On the other hand, clients need to make sure agency partners don’t get complacent. They must insist on a differentiated service offering that yields the desired results.
As expressed by panelists, agencies need to think about themselves as a brand, build on their unique cultures, and protect the intellectual property which resides in their human talent and creativity.
With regard to client-side “bad behavior” (and suggested corrective actions):
We fully support the following client “good behaviors” cited by the panel in the new business pitch process:
- Not including agencies, especially incumbents, with no chance of being selected
- Being respectful of everyone’s limited time
- Full process transparency
Mitchell&McCue also believes that clients need to disclose an approximate budget for the proposed work, and that agencies which are not selected should retain the ownership of their creative work. In the final analysis, clients are not entitled to pay nominal fees in order to obtain or own phenomenal ideas.
Bill Duggan cited a study where agencies claim that fully one-third of their time is wasted because of bad client behaviors, most particularly poor briefings and multiple layers of approval. Once again, we agree with suggestions made by panelists as follows:
- Briefs which are brief and "on-strategy"
- Obtain proper feedback from both parties to improve the process
- Limit number of client decision-makers and involve them early
We would add that agencies typically do not have an execution problem. The wasted time and effort encountered takes place at the beginning and at the end of the process, and on both the client and agency side. Not only do clients need to improve the formulation and communication of their requirements on the front end, but agencies also need to improve the way that these are filtered through the relevant agency departments. On the back end, agencies must streamline the selection and quantity of work that they present to clients, while clients must accelerate the ultimate work approval process and reduce the number of revisions. Both sides must work together to continually refine the process and eliminate non-value-added steps.
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