Let’s Hear It for Madison Avenue’s Makeover!

Social media has turned us, I regret to say, into relentless, dour critics. In the advertising industry, every misstep is pounced on and amplified. Dove, Pepsi, McDonald’s and their agencies are pilloried for trying and failing. Misjudgments, mistakes and tone-deaf efforts are treated as capital crimes.  I’m as guilty as anyone, having written a long critique of ad agency management in my recent book, Madison Avenue Manslaughter, and in writing these weekly pieces. Whatever my (and our) good intentions might be, non-stop criticism is soul-destroying. It makes us tiresome and grumpy.  At a certain point in time, we need a shift of focus, from the negative to the positive — from Madison Avenue’s Manslaughter to Madison Avenue’s Makeover. Continue reading

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Why working / non-working ratios no longer work for advertising

As an industry we love our terms. Usually they are TLA (Three Letter Acronyms) like ATL, BTL and TTL. Or RFP, RFT and RFIs. And marketing technology digital buzz words are making this even crazier.

But there is a concept which has recently made a prominent return to the industry and yet it is totally outdated and no longer relevant. That is Working and Non-Working Spend. The reason for the sudden resurgence is a combination of management consultants who are pushing Zero Based Budgeting, not so much to drive marketing performance and return on investment, but more as a marketing investment framework to reduce the marketing investment and therefore budget.

The second source is the increased activity in investments in traditional consumer package goods brand companies by private equity and venture capital, and their use of the term to inform the market that they have magically discovered the investment strategy to turn the flagging performance of these entities around by simply reducing non-working spend and improving the working to non-working ratio.

In fact, as I write this, it seems so self-evident that you wonder why the schmucks that owned the business before it was bought by these clever investors had not done this already. Why wouldn’t you reduce non-working spend. After all, if it is non-working why are you spending anything on it anyway? Continue reading

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The dangers of pitching your agency on a regular basis

Do you work for a company that routinely has you take your contracted agencies to pitch every three years? Is this mandated by finance or procurement? Or is this something that the marketing team believe is the best option? We know that many organisations have a habit of going to pitch every three years, just as we know that in every switched on agency there is a new business person who marks down the date of your last pitch with a note to call you in two years and six months hoping to get on your next pitch.

But here is the thing you are missing. It is highly likely that while you have justified this practice as being good governance and due diligence, it is possible that you are wasting significant amounts of money and possibly doing damage to your corporate reputation, along with the performance of your brand and business. Now you may think this is counterintuitive advice coming from a company that you may associate with pitching, but the fact is pitches are less than 10% of the strategic management consulting we do and secondly it is the other 90% of work on marketing and agency roster performance that has informed this opinion. But let me explain as to what we have observed. Continue reading

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The Other Opioid Epidemic: The (Brief) High from Chasing New Business

The agency CEO asked me not to use his name.  He wanted to talk privately over breakfast.  “You know, this new business thing is getting to be a problem, he said.  “We’re addicted to falling in love with our next new client, and the one after that and the one after that.  They will solve all our problems.  We’ll do great award-winning work, be well paid, and loved in return … and all the industry crap will disappear.  We’ll pour our heart and soul into winning them.  They’re coy; both flirtatious and distant, making us want them even more.  We’re no better than lovesick teenagers.  And when it goes our way, and we get together and have a wonderful first year, it’s true love … before it turns to crap.  We hate the crap.  We would rather be in love.  That’s why we love new clients and everything it takes to win them.”

Are agency-client relationships becoming loveless marriages that end up on the rocks?  Do the divorced partners, free of the ties that bind, become serial daters, falling in and out of love so often that “commitment” sounds boring and dated — something that was done by their parents in another creative era?  If brands are the children of agency-client relationships, what will happen to them as they’re shuttled from one relationship to another? Will they grow and make positive contributions?  Or, more likely, will they underperform (as they are today)? Continue reading

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Managing Marketing: The essential role of business innovation beyond being a management fad

Dr Lee Styger, Director of the Executive MBA at Sydney Business School, University of Wollongong, discusses with Darren the importance of innovation in businesses, but innovation that is based on developing and delivering enhanced customer experiences, rather than being yet another management fad. Transcription:

Darren:

Welcome to Managing Marketing. Today I’m here with Lee Styger who is the Director of the Executive MBA at Sydney Business School, University of Wollongong and it’s a great opportunity because we’re going to be discussing a hot topic, which is innovation. Welcome, Lee.

Lee:

Thanks, Darren.

Darren:

Except that it’s not a hot topic, is it? Because everyone’s talking about it from the boardrooms down to the grassroots or the factory floor but there doesn’t seem to be a lot of innovation actually happening.

Lee:

What we discussed in the Green Room – we’re old enough to look at the history of management fads from business process re-engineering, total quality management, all of these things and about every 18 months a new one comes around and I think innovation is currently one of these perceived magic pills by leaders all around the place.

You say innovation; by what measure? How are you doing your innovation? What is innovation? What does it mean to you and your customer? What happens? You’ve got a department for it that ticks a box for it on the annual report.

Darren:

I think I measure fads by the number of consultants that are pushing the particular service because certainly my LinkedIn feed over the last three years has suddenly bloomed with people giving advice on how to become more innovative, which I think is an interesting promise because from my perspective innovation is at the very core of a business culture isn’t it, or not?

Lee:

It should be or not. Now, where do you go with this? It’s about core. I sat in a meeting recently when we were looking at a little bit of re-engineering of an organisation and the team brought in to do this were all describing themselves and their strengths. Not once did they mention customer.

So, we’re going to innovate our own strengths to create a super team with no connection to customer. If you’re going to innovate, if you’re going to change, if you’re going to do anything new, exciting, who are you going to do it for? And if it’s about business then it’s got to be customer.

Darren:

Absolutely.

Lee:

And good old Deming told us that all of those years ago and somewhere along the line we’ve lost it.

Darren:

We said before it’s either core or it’s not except that it was also Edward Deming who said you don’t have to change after all there’s no mandate to survive. If you don’t want to change just prepare yourself for business death

Lee:

The inevitable.

Darren:

And yet you see so many companies (Einstein’s definition of insanity) that are doing the same thing over and over again in a market that is being disrupted by technology. Technology is disrupting the economics. It’s disrupting the business processes and therefore disrupting categories, and yet it seems like Boards and the C-suite for a lot of companies are absolutely paralysed in the face of change.

Lee:

Yeah.

Darren:

So, why? Continue reading

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How TrinityP3 is helping optimise marketing performance through technology – 3 case studies

Technology platforms, both martech and adtech, provide marketers with the opportunity to be more effective and efficient in their marketing. But technology is said to be moving at click speed and the investment is significant. It is important when investing in marketing technology solutions that the marketer has defined objectives and has a clear view of what success looks like. But, more than this, it is important to take into consideration the current processes that the technology is intended to support and the cultural appetite for change.

We have been involved in helping companies select new technology platforms and tender for new vendors, but we have also worked with organisations that have legacy systems and platforms that are under-performing or not performing at all, and have provided a diagnosis and options for consideration. Also, we have reviewed our clients’ current technology stack to identify optimisation opportunities and assess the organisation’s technology transformation. Each time we bring a totally independent and expert perspective to the process. Here are three case studies of the work we have undertaken providing solutions to marketers’ technology challenges. Continue reading

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Don’t Count Out the Holding Companies – At Least Not Yet

The latest holding company news, gleefully reported in the trade press, shows a shortfall in WPP’s first half 2017 growth rates, with forecasts of lower long-term growth in coming years.  WPP’s share price took a dive.  Campaign U.S. headlined “Sorrell under pressure to streamline WPP as FMCG clients cut back on marketing.”  Panic!  WPP is not the only holding company affected by advertiser spend cutbacks, but Sir Martin is highly visible, and he takes most of the industry flack.  How concerned should investors be?  Don’t count out the holding companies yet.  They have not played all the potential cards in their hands.

Holding companies have been visibly with us for the past 30 years, and during that time they have pursued Three Big Growth Strategies:

1) Acquiring marketing communications and research companies;
2) Setting and enforcing aggressive portfolio company budgets, requiring agency revenue and margin growth through business development, cost reductions, and other efficiencies; and
3) Selling “holding company relationships” to give clients a broad range of agency services across media disciplines – required because their individual agencies did not integrate across disciplines.

There are other holding company initiatives, of course, like providing back-office services for portfolio companies (travel, accounting, IT, etc.) but the Three Big Growth Strategies have dominated their activities. Continue reading

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Managing Marketing: The importance and the difference in marketing to women

Kylie Rogers, Managing Director of Mamamia Women’s Network, and Lauren Joyce, Head of Broad, their strategic consultancy, talk with Darren on how women are driving commerce today, and why marketers may be missing out on this dominant audience by not marketing specifically to them in the way they want to be engaged.
Transcription:

Darren:

Welcome to Managing Marketing and today I’m here at the Mamma Mia Women’s Network with Kylie Rogers, Managing Director and Lauren Joyce, who’s Head of Broad, which is the strategic consultancy here at Mamamia. Welcome.

Kylie:

Thank you so much for having us, Darren.

Darren:

In actual fact, I should be saying thank you for having me because coming here to Mamamia, as soon as the lift doors open and I saw all of the pictures on the wall and all of the people and the energy I could tell that this was a very different place to work.

Kylie:

I appreciate your saying that. Sometimes in the furore of your working week you forget the energy that really does exist in this place; it’s very progressive. It’s almost tangible.

Darren:

It’s palpable when the doors open. I think that’s why I walked in a bit confused; it was like being hit with this energy and noise. There are workplaces where there are people screaming but it was just this energy that is happening here. It was very exciting. Continue reading

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Are you benchmarking or butchering your agency fees?

Benchmarking has quite rightly earned a poor reputation. Recently Michael Farmer, Executive Chairman of TrinityP3, expressed this opinion in an article in Media Village republished here. This poor reputation is primarily because it is used by many in the industry to simply reduce agency fees and not as a way of obtaining a reference point for comparison, which was the original purpose of a benchmark.

I have shared this opinion with him and the industry way back in 2011 when it became obvious that many in the industry (including many competitors) were simply using benchmarking to reduce advertising agencies to the lowest common denominator. This is because many are simply benchmarking one dimension of agency being costs, such as hourly rates or day rates. In this case, they are relying on titles and position descriptions as a measure of quality, or ignoring value completely, then simply butcher the fees paid for those resources to the lowest in the market. It can certainly deliver cost reductions, but usually at the expense of the quality of those resources.

Very early on we acknowledged that the rate or fee per resource was flawed and often criticised those who used cost per FTE resources as a benchmark for being the same type of people who would buy books by weight or choose a movie based on the length expecting it to represent better value. Instead, we set about developing benchmarks that better represented a benchmark of value rather than cost.

It is not benchmarking, but the misuse of benchmarking that is the issue.

Misapplication of agency remuneration benchmarks

I participated in a meeting of a Marketing Leadership Team (MLT) and was presenting the results of the agency benchmarking we had undertaken on a number of their agencies. The various agencies had different roles in the roster of agencies in regards to the type and quality of work they were expected to produce. They also had different specialist knowledge and skills that made the roster complimentary to the capabilities required by the marketing team.

Using low, medium, and high benchmarks, and benchmarks specific to the category in which they operated, we were able to provide significant insights into the current remuneration models and how well they were performing for both the marketers and the agencies. It was not a surprise for the MLT that the lead agency was at premium to the market overall, even though the organisations procurement team had achieved a significant reduction in the agency hourly rate at the contract negotiations three years earlier, the agency was effectively working at the high benchmark because of the additional hours, particularly in creative, they were investing in delivering the scope of work.

While the procurement team had reduced the premium agency to midlevel benchmark fees the agency had managed to recover by inflating the resources required for the scope of work to make up the shortfall that would have resulted in the retainer. The marketers were comfortable with this and were also happy to know that they were getting what they were paying.

On the other hand, a second tier agency who worked on project fees were priced on an hourly rate card similar to the lead creative agency (clearly the benchmark provided at the time) and slightly higher than their market position and expertise, but were managing on a project by project basis to add incremental margin to each project quote as a way to improve profitability. Interestingly it was this second tier agency that was perceived as more cost-effective even though they were effectively more expensive overall for delivering the scope of work.

The reason for the difference in perception turned out to be that being on a project fee and being able to incrementally increase margin the second tier agency were more attentive and more available than the retained creative lead agency.

If the purpose of the original agency negotiations was to reduce cost to the organisation, the procurement team had used a common benchmark across all agencies, but in a very one dimensional manner, being rate or resource cost. In the process they had encouraged or at least allowed the agencies to game the system procurement had created by increasing resource hours in the retainer to make up for the shortfall, or allow a project system were the agency could incrementally increase costs without anyone noticing. In both cases the cookie cutter approach to benchmarking failed. Continue reading

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7 Questions Everyone On Your Marketing Team Should Be Able To Answer

When it comes to setting expectations with your agency(s) – and your marketing team – there are some ‘price-of-entry’ questions everyone should be able to wrap their head around. None are complex, but they are the bedrock of creating harmonious client/agency relationships and ensuring everyone is focused and aligned.

And even if you think your teams are completely clear and in sync with their respective roles and responsibilities, some of the answers (or lack thereof) might surprise you. So, why not test them out? Here is what we believe are the top 7 questions everyone on your business should be able to answer:

What are our expectations?

Whether asked from an individual or corporate perspective, expectations of – and between – everyone should be the starting point. The sting in the tail of this question is that if people can’t answer it, chances are you’ve not been clear or never articulated expectations to begin with – so if there’s a worrying silence after asking it, perhaps it’s an opportunity to bring teams together and let them know. Continue reading

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Is your TV production process moving forward or stuck in the old ways?

Recently I received an email from an “Institute” claiming that they were researching the current state of the global TVC production industry.

They said that they had read several of my posts on the TrinityP3 site and considered me to be an expert on the international TVC production industry. Of course, I was extremely flattered to be labeled as an industry expert. The email then went on to propose that I forward my insights to them so that they could incorporate them into their “white paper” on the global production industry as it now stands.

It did not take long for the penny to drop (having a healthy cynicism is one of the most important traits a production expert should have). Of course the “Institute” would use my insights and re-brand them as their own, passing themselves off as industry experts and perhaps even make an income from their new-found expertise without doing the hard yards, many years of hands-on experience and constant monitoring of the industry. So I declined their kind invitation to share my specialist knowledge with them, instead to continue to share it here with you.

The state of the television production industry

But their invitation did make me think that the current state of the TVC production industry is one of confusion, mistrust, and fear, in fact this could be said about the advertising industry in general. I will keep my generalisations to TV production and television as an advertising media.

This confusion is partly driven by the impact of technology on the advertising industry and particularly the production industry. The cost of entry into the production arena has dropped as digital technology has made production equipment and the process more cost-effective. In fact, it is so cost-effective that many companies, and particularly their marketing departments, are building video production capabilities in-house to cost-effectively produce the huge amounts of video content many marketers need for their content marketing.

So back in the early days of television onward, if you wanted to advertise on TV you went to an advertising agency and they took care of everything to do with TV advertising, from script to on-air scheduling and everything in between. But now things have changed.

Now an advertiser has a multitude of options: you can buy each and every agency service individually from any number of specialist service providers, you can bring the whole production process in-house and contract the experts you need when you need them or you can still leave it all up to the agency. The reality is that advertisers are now tailoring their production models to what suits them and their needs. Continue reading

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Engagement Agreements to align expectations and performance – 3 case studies

Just as marketing is increasingly complex, so the relationships between marketers and their various agencies are increasingly complex and difficult to manage. Many of the past practices, both formal and informal, struggle to keep pace with the changes and complexity. Over the past decade and more we have seen many marketers still relying on the assumption that the relationship they have will their agencies will naturally manage to work itself out. At the same time, we have witnessed an increase in complaints from marketers over the fact that their agencies struggle to work or collaborate together.

We have also witnessed an increase in agency contracts that appear to address this issue, with the inclusion of service level agreement (SLAs) and set up key performance indicators (KPIs). The trouble is that firstly, these are designed for the delivery of services, but do not easily define the interdependent relationship that exists between marketers and their agencies or between the agencies working with the marketer. Secondly, the agency contract, once signed, is often filed and not looked at again until an issue arises or the marketers are planning to take the relationship to the market. Continue reading

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What Happens When Ad Agency Creative Magic Fails?

Ad agency creativity was pure magic in the traditional days of Bill Bernbach and David Ogilvy.  Advertised brands flourished and grew, and iconic brands like Tide, Budweiser, McDonald’s, Visa, Chevrolet, American Express and others became genuine Lovemarks, earning countless millions for their brand owners.

Agency creativity has been much less magical in recent years with the advent of digital and social media, “content” instead of ads, and the widespread introduction of technology and e-commerce to the changing demographic mix of consumers, with fickle Millennials now the dominant segment.  Iconic brands are dead in the water, marketing spend is shrinking, and CMO job tenure is short and uncertain.  The magic of creativity disappeared along the way. Continue reading

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