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Sunday, October 24, 2010

Mid-Sized Malaise--Part Three

This is the third installment of a series that I am writing about the current state of mid-sized advertising agencies.


Marketing Research, Strategic Planning, and Account Planning

I lump these three disciplines together because in both good times and in bad this tends to be the Achilles heel of a mid-sized agency. Most do not have the resources to buy or conduct top quality research. And the people in those positions at mid-sized shops are usually not formally trained. Their knowledge of statistics is sketchy at best in many cases. Some want to look bigger so they take an account supervisor and dub him or her a strategic or account planner. It often ends badly.

Generally, the CEO, Account Service Chief, or the Creative Director drives the bus on strategy. I have met a number who have a very good intuitive feel for what will work or not. Some get to the point where they tell the “researcher” or “planner” to write the research report to back up the creative executions that they want to present. Don’t tell me it doesn’t go on—if you are honest and kept your eyes open, you have seen it too. Maybe you still do.

Often researchers or strategists at a mid-sized shop are strapped for cash. So, they have someone in media do reams of MRI or Simmons cross-tabulations. They built a massive power-point with it, highlighted by way too many bullet points on each page. Some people have a knack for building a logic flow out of it that sounds convincing (I used to be rather good at it myself).

A friend of mine has sold research services for 30 years. He says “agencies today want research that is quick and cheap. If it is very vital new business pitch, they pay just enough to get a few bullet points for the main presentation. A few very large shops do custom work but most of it comes from big companies”. Even the media giants do surprisingly little. The two exceptions are MTV and ESPN. He described ESPN as a gem that knows the profile of everyone using each of their burgeoning platforms and cross-usage of them as well. Perhaps that is why they keep growing and get a huge premium over the competition for all aspects of their sales inventory.

Account Planning is another area that is often an absurd fiction at mid-sized shops. In my long years in the game, I have met two authentic account planners (See Media Realism, 10/13/09 "Is It Really Account Planning" for a detailed discussion of account planning).

Putting people in jobs and dubbing then strategists or planners leads to some funny situations. Not long ago, I was at a meeting where the Sr.VP, Account Planning kept scrunching her face when I spoke of Brand Development Index (BDI) and Category Development Index (CDI). Finally, she blurted out “Don, what is this BDI stuff.” For once in my life I was speechless. The CEO put his palms up in resignation and told me to explain it. The client was not amused and collared me afterwards. It was a very uncomfortable conversation to put it mildly.

So, marketing research and strategic planning are areas where the mid-sized shops fall way short in most cases. They can use smoke and mirrors plus good instincts and common sense with small or mid-level advertisers. They are, however, naked in front of major corporations who have in house teams that would not consider hiring the strategic planner of the agency.

There are a few exceptions to this out there in the mid-sized world. And I mean FEW.

Media

This is where I spent much of my career so you might expect me to obey the 11th commandment and not speak ill of my media brethren. I actually will not attack them but there are some structural issues that put them at a real disadvantage in many cases.

The biggest thing that I notice from media people these days across the U.S. is very simple—fear. Here are some comments from sales executives widely scattered across the country that I have known for years and respect deeply:

“The operative term is scared to death. I can see the fear in their eyes at many mid-sized shops. The smallest are more often morphing into specialty/niche outfits as they are more successful focusing on the best burger in town, instead of banging out an entire menu…..It’s the mid-sizers who are not big enough to truly be all things to all people, and that grew too large, too fast that are indeed suffering. They swallowed hard and down-sized themselves over the last two years (like everyone else) but are now trying to super-serve clients with a skeleton staff. One by one the shingles are disappearing from above the office doors and good people are calling weekly asking “do you know anybody who needs an experienced media planner.””

When I asked a sales director in a major market if people are frightened, the response was “my observation is that many in media in mid-sized agencies are still fearful of the potential SECOND WAVE which could result in yet another downsizing at the agency level. People are guarded, cautious; playing everything close to the vest. Many in media have experienced the unthinkable—the larger than life Media Maven (boss) let go due to downsizing….the slash and burn of some entire media departments which has put many experienced media people on the street. No one wants to go out of his/her way and take chances on anything out of the norm. It is all SO MUCH about the post—now more than ever. I also get the feeling that no one wants to ask the boss to hire on new workers—even if there has been a big pick up with new account work. The attitude out there is that I have got to do more to keep my job.

A charismatic media research salesman whom I often find hilarious in private soberly weighs in: “What I am hearing at mid-sized shops is that larger agencies have cut fees or commissions and it is harder for medium sized shops to hold accounts or even stay in business. So to be competitive for less revenue means less money to pay top quality employees, less perks, less of everything. So the medium sized shops which once had a warmer feel to them and were attractive to the seasoned executive are now becoming places to avoid because the pay and resources are becoming too scarce….I don’t believe that the medium sized shop will evaporate all together but you will see consolidation and unfortunately some will go away. It is just a fact of contracting markets.”

Another media researcher sales maven says that the media teams are nervous but keep plugging along. They are overworked and not paid enough but seem happy to have jobs. He did add grimly that “there are no stars left in media departments. These people do not teach me anything I don’t know.”

A very thoughtful cable executive tells me:" I believe that the media buying community at all levels is scared to death for their jobs. A friend who is a buyer started looking for a job when she did not post on one of 13 markets last quarter. This is symptomatic of being overworked; she needs to understand that she is a much needed commodity….NO ONE IS HAPPY OR OPTIMISTIC RIGHT NOW".

From the world of sports, a seasoned pro says that the overwork is affecting the back office. He told me of a game being cancelled by rain and he had to move 18 advertisers. Immediately his team sent out an e-mail telling people that their schedule had been re-allocated. Two got back to him and one took a credit as the new spots were out of flight. He asked “is anybody checking anything but matching dollars. Twenty years ago, I would have had a dozen calls arguing about the make goods. Admittedly, the ratings are smaller today, but I think good people may be cutting corners”. This man has the ethics of a St. Thomas More but what if he did not?

The big problem facing the mid-level media teams over the next year or two will be the integration of digital and traditional media. Some make them separate mini-departments which can cause a knife fight for budget dollars. It is better for one Solomon to digest both recommendations, allocate the funds, and let each group optimize. Working together as a team is even better! Many, as we have mentioned in an earlier post in this series, fake digital. They buy ad networks and claim to have worked out an integrated on line strategy that optimizes delivery. “The publishers hate ad networks as it diminishes their product”, says a leading media researcher but if you have a digital team of one 27 year old, you play the game.

There are still a few people out there who do as little new media as possible. Most admit that they are having a hard time with social media especially for brands with mature customers. This is okay as all thinking people are struggling with it these days. You know that you need it but in what proportion of total dollars? With each passing year digital will earn a larger place in media plans. To those dinosaurs that resist it, there is no way that they can survive the crunch.

Some media people are not being trained well at all due to overwork of the senior team. Young planners are not learning about marketing like they used to. Some are scrappy negotiators by instinct but do not know the mechanics of where the Nielsen/Arbitron and now digital research comes from. Media planning disciplines don’t come up much as no one has the time to instruct. The proportions of each medium in the overall mix is key issue that gets little attention these days. Youngsters appear to guess at it as they have never learned the benchmarks or quantitative guidelines for it. When the old people go, a lot will be lost.

This should be the most exciting time since 1953 to work in media? Why 1953? That was when over 50% of America had a TV and television became a truly viable national medium. Today, another revolution is going on and smart youngsters should be able to ride the wave into brilliant careers via digital. At mid-sized shops, the financial squeeze will make that difficult.

Finance

Several people harked back to the good old days of the 1980’s when interest rates where high and agencies made a bundle on the “float.” The client paid you and you deposited the money, and paid it out to the media later, pocketing a tidy sum of interest. Well, others disputed that saying that the mega-shops were real sharks with cash management but the mid-sized guys never really made a lot out of it or were that great at it. The question is getting moot today as many advertisers pay networks, stations, cable players and publications directly. Also, the clients are smarter. Why should they give their agency an interest free loan?

To be continued in about 48 hours.

If you would like to contact Don Cole, you may reach him at doncolemedia@gmail.com

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