Quo Vadis Agencies


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Quo Vadis Agencies

  1. 1. QUO VADIS ADVERTISING AGENCIES quot;If today, agencies are under fire, are we, the client, not as responsible for this crisis?quot; Manosh R. Sengupta, Periodically, at least once every year, a leading media rakes up the most contentious issue of agency commission. Eminent personalities, under the titles of ‘brand-gurus’ pontificate to get their bytes on media. But, the status remains quo. I wonder why no one has raised the moot point: what is an agency & who are they meant for? So, as I sit down to pen my thoughts, I am conscious of inviting a possible ridicule for trying to better suggestions from the leading personalities of the industry. But then, nearly 2 decades in a particular field does give some confidence on the subject and having had the opportunity to straddle both sides of the table, does provide insights, which may be worth considering. But first it is important to understand why I chose to cross over. It was around late '96 and early '97 that I faced a crisis. I stopped enjoying going to work. This feeling scared me. All I had done throughout my life was advertising. It was the only thing I knew and as far as I realized, had enjoyed the experience tremendously. So, all of a sudden this apathy put me in a spin. After much introspection I realized that the problem lay not with the vocation but my job. Let me explain. From a rookie to an Account Director, I've worked for some of the best agencies on prized accounts, interacting with some of the best minds in the industry. And over a period of time I realized that the clients' expectations of their agencies had evolved far beyond what the latter could deliver. The cause was linked to some very obvious developments: Advertising had changed to integrated communication and agencies had to re-orient themselves to think beyond just ads. Everyone spoke about brand communication. No one practiced it. The agencies were and still are ill
  2. 2. equipped to think beyond 'ads'. And if someone tried to do so, the environment did not encourage them.. Caught in a catch 22 situation, agency executives are encouraged to sell solutions that generate instant and sustained billing -media advertising -while all other thoughts are typically presented in a dhobi list fashion, in the last slide as 'other ideas'. Agencies are no longer about creativity but billings. And the fact that leading agencies are ranked in terms of quantity (read billings) and not quality, is proof enough. To understand why they are caught in this web, one has to look at just 2 things - the nomenclature 'agency' and the resulting business model. Let's start with the word 'agency'. An agent is a person who does something, especially on behalf of another. (Oxford Dictionary). Nothing wrong with this definition, as long as we are clear about who that 'another' is - the client or the media. And that brings us to the business model around which the agencies are structured. If we delve into the genesis of the advertising agency, it began with them starting out as agents of the media - and thus the concept of commission, which settled around a standard 15%. Over the years this model has not changed and grown to cover almost all aspects of agency revenue sources. Therein lies the conflict. How can an organization whose survival is based on commission -from the media or any other source, ever go beyond its bread and butter source. Off course, we see some exceptions, but that's exactly what they remain, exceptions. By and large, all agencies continue to survive (and I use this word 'survive' with purpose) on the % of commission derived out of media billings, which automatically skew their survival instincts towards 'ad' related solutions and not beyond. Lest I be accused of being partial towards the 'client' side, let me admit that it does take two hands to clap. If today, agencies are under fire, are we, the client, not as responsible for this crisis?
  3. 3. Let's look at reality. While the client expects media neutral solutions from its agency, when it comes to implementation, the former rarely looks beyond the mass media. A typical scenario reveals a funny but sad truth: • Brand executive calls up the servicing executive for a brief that needs to be delivered as of 'yesterday'. • The agency takes the brief and rolls out a couple of press ad options. With some luck and client 'input', the same is frozen and released within 24-48 hours. This includes, vernaculars and remote publications. • Once this is out of the system, the client asks for the 'other stuff' - outdoor, posters and off-course a leaflet. • Typically, these materials hit the market a good 7 days after the press ad. But is anybody bothered? The ad did come out on time, didn't it? The boss saw it in TOI, and the 1st hoarding to be displayed is the one strategically located en-route to his wife's kitty party venue. All this, while the entire fraternity talks of 'Brand' and 'marketing communication'. Let's be honest. How many times, as clients, have we really practiced MARCOM in its totality? Releasing an ad is the easiest and laziest thing to do. An ideal solution, for all reactive executives. The buzzword today is 'brand'. Everyone, but everyone, loves to espouse its cause. Yet when it boils down to actual activity, it always is the responsibility of advertising to deliver the goods. The fact that the Brand is a Corporations' most valuable asset is, at best at an awareness level and nothing more.
  4. 4. Oh, I can go on and on but the point has been made. And now to conclude my debate I quickly summarize a few thoughts, which I believe - though not conclusive - may well be the start point. The first step for agencies would be to re-invent their identity from 'agency' to something more suitable. Please define your role and then name yourself accordingly. Do not let a historical legacy, which has outlived its purpose, do so. This realization and action must emanate form the agency side. Once they've succeeded in repositioning their roles and thus their identity, it is my belief that the business model will undergo a revolutionary change. It just cannot be based on the commission structure if one were to de-link the dependency on media billings. Look at other service sectors, typically lawyers or auditors. Is there a learning there? Funnily enough, have you ever noticed the mood within an organization when auditors make a visit? And now contrast this with an agency visit. Encourage the client to question the agency remuneration structure. This will serve two purposes. First, the client will respect its agency more. Second, if the client is unable to raise pertinent issues that lead to alternate solutions, they will shut up. Which means, the client has to take an equal share of responsibility. They need to be clear on the expected role from the agency -is it an advertising agency or a brand communication consultant. This, in turn, translates into how the client organizations will have to view the brand and its role internally. And believe you me; this is much easier said than done. Let me end with one small thought on the role of both the client and agency. It's ‘Brand Parenting’, where the client is the Brand Father and the agency is the Brand Mother. Together we go through a process of Labour Pains to give birth to our Child, the Brand. But let me stop, because it's another story.