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Tuesday, March 25, 2014

Is Advertising Agency Analysis Superficial?

Over the last year or so, I received several requests from readers to write this post. Much of it sprung out of a post entitled “Is Media Planning Getting Too Superficial” (see Media Realism, February 8, 2013).

Every month or so, I have received e-mails from ad agency principals, current staffers and a few very frustrated clients regarding the lack of depth of agency people in answering client requests or preparing for meetings.

To set the stage, perhaps the best definition of superficial is “comprehending only what is on the surface or obvious.”

Here are several verbatim comments from people who want and need to remain anonymous and one from me:

1) A company marketing director wrote: “I asked our agency media team to do an analysis of a major trend in TV viewing for the quarterly review meeting. When we reached that item on the agenda, the agency CEO said, ‘wait until you see the analysis that Brad (the media supervisor) did for you. It is amazing.’  Well, Brad presented a five point summary of the issue. I nearly choked. It was taken verbatim from a Wall Street Journal article published three days before the meeting. Brad changed the order of the five points but he was so damn lazy that he did not even paraphrase the text. When I probed for questions, he was completely unarmed. I doubt if his president knew what he had done, but I was annoyed that the kid would think I was so uninformed. Had he said the Journal had summed the topic up nicely, I would have been okay. He stole the piece and tried to pass it off as his own work.”

2) An agency CEO said that he liked a post I did in Media Realism reviewing Ken Auletta’s book GOOGLED (December 16, 2009 post). “I bought the book, loved it, and then purchased a dozen others for may senior staff to read. I passed them out and set a meeting two weeks later for a discussion. Before the meeting, I overheard two senior staffers talking. ‘Have you read GOOGLED yet? Of course, not. The old fool is not going to ruin my weekend. Just read the flyleaf and wait for Tom to talk. Then tell the old boy that Tom summed up your feelings as well.’ When the meeting began, I asked for opinions. Tom raised his hand and I said that I would get to him in a few minutes. There was real unease in the room. I starting going around the room and no one had read it or much of it. By now, Tom was furiously raising his hand like a kindergartner badly in need of a bathroom. He started to talk and I cut him off sharply. Finally, after it was clear that he and I were the only ones who read it, I let him speak and the two of us had an interesting back and forth.”

    After the meeting, no one was contrite. A young lady on the team was overheard  by my executive assistant saying ‘what right has he to ask us to read something on our own time. I have a three year old. He asks way too much.’  What can I do? Fire everyone but Tom? Some appear professional but they have no interest in the industry. They have a job but not a career. I will gradually make changes.”

3) Some years back, I worked savagely on a new business pitch. The weekend before the meeting, I sat down with three staffers and we made a list of every possible question that the prospective client could bring up in the Q&A session. I had more facts and figures at my disposal than a candidate in a presidential debate. As luck would have it, three of the painfully prepared questions came up in the meeting and the difficult prospect was impressed. We got the business. It was a nice effort from everyone so I can only take part of the credit. On the way out, the CEO said “you really made up some great stuff on your feet.” My eyes must have become fierce blue slits. “I did not make anything up,” I told him. Then I went on to describe how my team and I had spent the weekend. He showed genuine appreciation.

 Several months later, the new client called a big meeting. I was not invited in an effort to save
 on travel expenses but I went through a drill similar to the pitch. The number two man
 in the agency was going with the creative director. By Sunday night, I had put together
 twelve likely questions and e-mailed them and my team’s answers to my immediate boss. A few days after the meeting, I asked him how it went. “Not very well as far as the media and marketing activity is concerned. I guess that I should have brought you along. When I asked if the client had covered any of the questions my team and I had prepared he said, “Do you think that I bother to read the crap that you guys put together.” Sixty days later I had moved on to better things. :)

4) A friend and long ago colleague wrote the following: “I have always tried to be tight with the money of the companies I work for. We work hard for it and do not want to waste it. So when I would ask for a $1000 piece of software, I had a business case and even then it was not always approved. And that's fine. A co-worker brought in a proposal to management for a six-figure data management tool with the promise that it was needed to help run the analysis for a significant client. No detailed business case, no work-savings analysis, no comparison of vendors. It was approved in one meeting, and proved to be twice as expensive to implement as proposed due to unforeseen additional needs, and it was never effective despite the ongoing six-figure annual fees. People went to conferences, training, onsite training, etc.etc. and it just was not useful. I think that major corporations do this kind of failed project all the time, but we are not a major corporation”.

5) A former client wrote to me out of the blue recently. It had been twenty years since I had heard from him. He said, “I always thought that you beat competitive spending analyses to death. You gave us great detail and we really knew what the big guys were doing. My current agency gives me top-line data only. If I ask for more, they say that I have to pay big bucks for it. I know that they subscribe to an online system that can summarize my request in a few minutes. Even the account director does not seem interested in getting the whole picture".

6) I sent an early draft out of this post to a long time friend and enthusiastic critic of this blog. He responded as follows: “Don, everything you say is true. We are way more superficial than we used to be. Why? Today, I consider it a success if I make it to a client meeting on time. Forget adequate preparation. I run my ass ragged across the country because the young kids on my staff do not have the credibility with the clients yet. So, if I show up I can fake my way through some stuff at meetings. I feel guilty sometimes but I honestly have no choice. Why? The truth is that advertising does not attract the best people anymore. If you are far from New York, forget it. Sometimes I see a kid with that spark of interest that we had, but they do not stay with it. I cannot afford to hire the best people. A decade ago, they went to Wall Street and now they go to Silicon Valley if they are real stars. So, we do not have an A team. At best, we are a C team. There, I said it.”

Had enough? Well, many clients have and employ consultants and speciality firms to pick up the slack. If an agencies assets go up and down on the elevator every day, it appears we need many new and enthusiastic players riding with us.

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

Sunday, March 16, 2014

Ad Agency Organizational Drift

These days sociologists increasingly talk of “organizational drift” in American business. Much of it clusters around what goes on in Wall Street particularly in the world of investment banking. Some blame the repeal of the Glass-Steagall Act signed by Bill Clinton. When investment banks could become traders in a wide variety of financial instruments as well as advisors to their large corporate clients, things began to change. Big institutions that were always 100% client focused, shifted. The balance between their trading profits and their client advisory business became blurred and the trading business often took the upper hand in corporate emphasis.

Coupled with that, the sociologists also talk frequently of the need for “dissonance” in an organization meaning healthy internal conflict. People fight behind closed doors about a particular issue but, once they come to agreement, create a united front in front of clients or the public. Dissonance was thought to be a great help in dealing with rapid change and uncertainty in the market and helped to avoid “group think” in any company. Minority opinions were always heard.

The more that I talk and write to people, it is obvious that many ad agencies, particularly the small and mid-sized that this blog focuses on, are struggling with the exact same problems as the big Wall Street investment houses. The money involved does not have as many zeroes at the end as is typical on Wall Street, but the overall problem, that some have labeled “organizational drift” is very real.

Now, cynics may say that these problems have always existed and I agree that they have to a certain degree. However, consider a few issues. Those of us with a bit of gray hair remember hearing about or actually working at ad shops whose mantra was--”We service our clients, we service our clients, we service our clients.” How often do you hear that today and is it really ever true anymore?

As the noose has tightened around mid-sized shops in recent years, I have received a number of reports about a shift from client focus to an emphasis on short term agency profit.

A few examples:

More than once, I have reported on young media staffers getting pressured or ordered to put a large complement of over the air TV into media plans forcing a huge allocation of the total budget to TV production. Less expensive digital options abound and even good old low cost production radio was available and made sense. The agency chief or creative director wanted some first rate TV done that year so the client(s) needs be damned.
For years, many of us have said that they avoided their CEO at year end as the scramble for revenue required one to empty one's  pockets to proceed to the other side of the agency. We all laughed about this and many experienced it, but lately I have been hearing of tactics that are just plain wrong. One old acquaintance wrote this to me: “for years, you have been telling me and demonstrating that most new products fail. Recently, I have seen it firsthand. Well, my boss told me that we needed to move the rollout for a brand we handle into 4th quarter last year. I argued that distribution was not strong yet and we needed to wait several months. He countered that our new work was so good that it would force distribution. I looked him right in the eye and he did not blink. He is a smart guy and knows better than make a ridiculous recommendation to advertise to empty shelves. The client wisely did not bite and the product died a quick death recently. My boss recently rationalized his trying to move billing to improve 2013 agency financial performance by saying that most products fail anyway, so what’s the difference. It makes me sick.”

Separately, the idea of dissonance is fading at many mid-sized shops. “We don’t hash things out anymore. The Boss or Czar as we call him behind his back gives orders and we follow. Ten years ago, I was a confident marketing pro who gave his opinion freely. I was a team player but I was never afraid to speak up. Now, I am approaching 50 and am facing high school fees for my kids. I have become a yes man. Given the sweeping changes as we move into more digital, I know my boss is not getting things right. I never speak up as I did at other jobs. The culture here is for short term profits only.”

The above comment was from someone whom I have known for 25 years. He says that other than some creative work, there is no discussion left at his shop on policy or client retention issues.

Am I overreacting? Maybe. When I look at it objectively, it seems that organizational drift seems to have (sadly) caught on at many mid-sized shops. What will push the pendulum back toward a client orientation? It is difficult to see a way out in the short term as shops with less than 100 employees are more challenged than ever financially.

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

Tuesday, March 4, 2014

How Much Frequency is Enough, 2014?

For decades ad professionals have debated or at least considered how much repetition of a message is necessary to break through with the consumer. Thoughtful people have always felt that there is a threshold level below which nothing will happen to the sales needle. This low level of spending will be largely wasted funds. At the other end of the spectrum, people have struggled to define the upper limit of effective repetitions, as invariably, you get to a point where each message is progressively less effective than the last.

I have always been intrigued how the nuances of copy or art direction could trigger long and heated arguments. Decisions on various aspects of media scheduling were largely left to a media planner perhaps in the business only a few years. They were sincere but often served up decades old pablum as their rationale for weight levels and scheduling tactics.

In the 1970’s we had Krugman’s “three-hit” theory followed by Achenbaum’s “pattern of the frequency distribution where the optimum or heart of the distribution was to reach people 3-10 times during a purchase cycle.

The year 1979 The Association of National Advertisers (ANA) published “Effective Frequency”, which did a very nice job of summing up the existing research. In 1993, they revisited the topic with “Advertising Reach & Frequency.” Several years later, the Colin McDonald study appeared which said that two exposures in a purchase cycle was optimal.

In the 1990’s the concept of Recency came along which encouraged lower weight levels  but keeping your name in front of people as close to the time of purchase as possible.

Okay. Since then, we have not seen a great deal of new research in terms of effective frequency despite the reality that the advertising landscape has changed forever. For a decade, I have been encouraging many advertisers, particularly retailers to increase weight levels in every flight of TV advertising as ADVERTISING AVOIDANCE is getting higher and higher. Keep in mind that DVR’s did not exist when many of these oft quoted research studies were done, remotes had about 6% penetration, and the internet was unknown even to Al Gore.

Some TV data is out there based on the large Set Top Box sample and it indicates that commercial avoidance is huge, even in high profile events like sports, due to channel hopping during commercials. So, to get the two or three exposures needed 20 years ago, you may need to provide 12-15 EXPOSURE OPPORTUNITIES.

This can be a tough sell. Cash strapped clients claim that agencies are simply after more money for TV, Radio, and Magazine. And, they get great sales and often demographic feedback from their online efforts and the reports get stronger all the time. Why, they ask, should they spend so much on conventional media when impact is such a crapshoot?

Media mix has always been a murky area in terms of determining effective frequency as each media type was measured differently and most people relied on a sophomoric formula to project it which in no way took in to account the nuances of each media type in the mix. Did Radio and Outdoor blend the same way that TV and Magazine did? The formula did not differentiate between them.

Much research needs to be done in this arena that is in tune with the media habits of the 21st century and specifically, 2014 and beyond. Unless it is undertaken, billions will continue to be wasted and many mid-sized advertisers will get crushed as their limited funds are not spent properly.

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