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
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?
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
• 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
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.
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.