This document discusses how advertising agencies need to transform how they approach proposal writing for clients. It argues that agencies are no longer in a dominant position and are seen as commodities, while clients now expect agencies to take a more strategic approach to brand problems similar to management consulting firms. The document advocates that agencies should frame each proposal opportunity as a "contest of one" by analyzing the client's strategic brand issues, explaining their unique approach to developing solutions, and setting principles for the working relationship, rather than just responding to clients' requests for proposals. This strategic framing is presented as key for agencies to differentiate themselves and move away from being viewed as interchangeable creative vendors.

1. Proposal Writing…
requires a transformation in
agency thinking!
Turning this Critical Agency
Document into a Powerful Selling
Tool
April 11, 2011
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2. Beauty Contests are really ugly!
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3. Beauty contest premise -- 2011
§ Client-driven
§ Minimum briefing
§ Standardized content
§ Permits simple comparisons
that don’t benefit agencies
“We know what we want;
give us what we’re asking for!” What do they want?
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4. Executive Summary – Evolving Needs
§ Client needs have evolved significantly over time
– 1945 – 1965 postwar domestic growth
– 1965 – 1990 global expansion and consolidation
– 1990 – 2011 rationalization and optimization
§ Center of power has migrated towards clients
§ Other service providers have more client “share of mind”
– Investment banks / private equity firms
– Management consulting firms
§ Agencies need to “join the party” or risk being marginalized
§ This affects how proposals need to be written
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5. Changing client needs - I
§ 1945 – 1965
– Under-penetration of
domestic market
– Opportunities for market
dominance
– Client spend mattered
– Agency relationship and
expertise mattered
– 15% commissions $$$
– Agencies were king
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6. Changing client needs - II
§ 1965 – 1990
– Under-penetration of
global markets
– Opportunities to create
global brands
– Creativity really mattered!
– Agencies created / used
their networks
– Media price inflation
windfall $$$$$
– Rise of the Holding
Companies
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7. Changing client needs – II (con’t)
§ 1965 – 1990
– Strategize, acquire globally,
integrate, take control
– Create global supply chains /
outsource
– Empower Strategic Sourcing
(Procurement)
– Enhance profits and stock
price appreciation
– The rise and growth of MBA
management consultants
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8. Consulting Positioning – performance!
Management Consulting
§ Bain. We help make companies
more valuable. Our clients have
outperformed the stock market 4
to 1 since 1980.
§ BCG. We help organizations create
and sustain competitive advantage.
We stimulate continuous growth for
our clients
§ McKinsey. We help leaders make
distinctive, lasting and substantial
improvements in the performance
of their organizations
§ Fees: 5x multiple on salaries
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9. Changing client needs – III
§ 1995 – 2011
– Rationalize, benchmark,
cost-reduce, optimize
– Incentivize C-Suite execs
– Upgrade internal resources
(ex-consultants / MBAs)
– Further empower
Procurement
– Experiment with media and
agency relationships to
lower costs
– Create profit predictability
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10. Agency Remuneration ‘per Ad’ 1992-2010
Farmer
&
Company
Clients
-­‐-­‐ Income
per
FSU
(1992-­‐2010)
$400
Fee per Farmer Standardized Unit (FSU)
(Constant $2010)
$350
Income
per
FSU
($
Thousands
2010)
$300
$250
$200
$150
$100
Source: Farmer & Company clients. Farmer & Company measures agency workload in FSUs. 2010
1990 1995 2000 2005
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11. Agency Positioning? -- Unchanged
Management Consulting Advertising Agencies
§ BCG. We help organizations create § #1. We work not for ourselves, not
and sustain competitive advantage. for the company, not even for the
We stimulate continuous growth for client. We work for Brands!
our clients
§ #2. We create ideas for our clients
§ Bain. We help make companies that people want to spend time
more valuable. Our clients have with
outperformed the stock market 4
§ #3. We energize businesses
to 1 since 1980.
§ #4. The work. The work. The work.
§ McKinsey. We help leaders make
distinctive, lasting and substantial § #5. Creativity. Agency of the Year
improvements in the performance
§ #6. We’re special…..
of their organizations
§ #7. It’s all about us!
§ Fees: 5x multiple on salaries § Fees: 2-3x multiple on salaries
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12. It’s harder to make a difference today
Problems Needs
§ Overcrowded marketplace § Smarter brand strategies
§ Increased power of the trade § Smarter media choices
§ Price sensitive consumers § Thoughtful SOWs, aligned to
brand problems
§ Consumer cynicism & fatigue
§ Appropriate, experienced
§ Media confusion
agency staffing for SOWs
§ Ad hoc Scopes of Work
§ Limited perspective of in-
house client people
§ Agencies as upgraded
strategic partners
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13. Fast Food -- Hamburgers
Share of Stores vs. Sales per Store
(Millions USD)
$2.000
$1.900
McDonald's
Average Sales per Store (Millions)
$1.800
$1.700
$1.600
$1.500
$1.400
Wendy's
$1.300
$1.200
$1.100
Burger King
$1.000
5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000
Number of US Restaurants
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14. Creativity: often a feeble weapon
§ Both Burger King and Wendy’s
are failing
§ Their agencies are failing with
them
§ The client problem is
strategic, not creative
§ Advertising creativity alone
Red wigs do not cannot make a sustainable
a Lovemark Make! difference for a strategic
follower
§ Apple is no longer competing
in the same business as PC
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15. The Dilemma
§ Agencies weakened by
years of fee reductions
§ Agencies “out of the loop”
and untrained in strategic
thinking
§ Partnership with clients has
been hijacked by clients
– “We know what we want;
just show us your stuff!”
– Overspecified RFPs
– Creative execution at the
lowest price
– Commodity
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16. A recent RFP introduction (actual quotes)
§ “We believe we are well-qualified, given our extensive
experience in building global consumer brands for X, Y, Z”
§ “We have creative firepower”
§ “At Cannes last year we were the number X network in the
world and the number Y U.S. agency”
§ “What has been particularly striking to us is the similarities
between our two companies’ cultures”
§ “So, if the first test of a good agency-client relationship is
shared values and beliefs, we are off to a good start”
§ “You will get our very best people.”
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17. Give them more than they ask for!
§ It’s not just about
creativity and cost
§ It’s about strategic
brand problem-solving
– Identify the problem
– Design a performance
improvement program
– Create growth and
profitability
§ Make the RFP a
“contest of one”
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18. “Contest of One”
§ Frame the RFP
– Analyze and describe the
brand problems as you
understand them…
– Tell them how you will work
to provide solutions…
– Describe your M.O…
– Tell them your expectations
for the relationship….
§ Then give them what they
ask for in the RFP
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19. Every RFP needs to be framed
Up Front Introduction
1. Background – situation analysis
2. How we work to assure solutions
3. Principles of a Working Relationship
RFP
4. As an attachment to your Up Front Introduction
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20. 1. Background – situation analysis
§ History, history, history
§ How the brands ended
up where they are
§ Current competitive
situation of the brands
§ Challenges facing
management
Needs to be unique,
insightful, correct
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21. 2. How we work to assure solutions
§ Not just “we’re smart
and creative”
§ Modus operandi
– A structured,
institutional response
– How does the agency
add value in the way it
structures its
relationships?
– What’s the logic and the
connection?
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22. Modus Operandi – POV (examples)
Work M.O. Economic M.O.
1. “Media first” strategies 1. Alignment of resources to
SOW
2. Aligned Scopes of Work
2. Clear resource standards
3. Marketing
for type of project
experimentation
3. Project remuneration
4. Use of SOW disciplines to
approach
manage changes in SOW
4. Organized for integration
5. Measurement of ongoing
results 5. Economies of Scale
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23. 3. Principles of a Working Relationship
§ Concept: The relationship should exist to improve brand
performance through marketing communications
§ Concept: Each party has defined roles and responsibilities
§ Conduct of the relationship – the mutual commitments:
– Mutual commitment to improved brand performance
– Mutual commitment to a healthy partnership to achieve the goal
– Marketing experimentation as the basis for finding the path
– SOW management commitments: planning, tracking, review
– Agency resource commitments: how calculated
– Relationship efficiency commitments: briefing, ad approval, etc.
– Fee setting commitments: how it will work
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24. Agency Transformation
If the Agency deliverable is improved client performance, then:
§ Requires proactive Client Service & Planning
– Manages (not just services) the relationship
– Accountable for results
– Integrated responsibilities
§ Creative ideas are imbedded in the work as part of the
quality – creativity is not the agency’s product
§ Fee is calculated on the basis of defined agency outputs
§ The billing multiple is part of the pricing scheme
§ Defines the level of agency value-added.
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25. Beauty Contests – in closing
§ Become the only
contestant
§ If you’ve got it, flaunt it
§ Have a unique point of
view that is clearly
expressed
§ Win (or lose) on the basis
of your unique approach
§ Then…give them what
they’re asking for
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