Simon Hakim of Hunter: How we can show clients that advertising isn’t a commodity

I recently saw Darren Woolley, founder of consultancy TrinityP3, speak at the Melbourne Advertising and Design Club (MADC). He was there talking about the commoditisation of the advertising industry, and he made a couple of key points that struck home with me. First, that someone will always be able to produce your ideas for cheaper, and second, in the future there will be only two types of agencies: creative thinking high-value agencies, and factories.

The speech reminded me of Sir Martin Sorrell’s famous Beans and Pearls lecture, so I re-read it and despite everything that has changed in the 18 years since – smartphones, the cloud, big data, apps – it’s disappointing to realise actually, how little has changed. Sure, digital advertising and social media have sprung up, growing in leaps and bounds, but they still face the same issues the industry at large does.

115375662_martin_349408c“Increasingly, clients expect only creativity in their communications from their agencies – and, increasingly, that’s all that agencies are organised to provide” – Sir Martin Sorrell, Beans and Pearls.

At first, agencies reacted to this change in expectations by unbundling services. Strategy, research, media, and the other assorted functions were pulled apart into separate business units. Now the trend has come 360 and agencies are bundling them back up (or bolting them on to their existing service offerings).

There will always be agencies that make their business on the commoditisation of creativity – those that deliver, as Sir Martin put it “the words, the pictures, the packs and the posters” for cheap. That’s fine, those agencies have their place and they have their market. The problem is though this can create a market where clients view the entire industry as a commodity.

What the better creative shops provide, is something much different. What we aim to do is take creativity and apply it to business and organisational challenges. What we do, sits far more in the realm of management consulting firms – the McKinseys, the Deloittes, the KPMGs – than in the purely creative world. But we’re nowhere near as good as those guys are at packaging it in a way that the market is prepared to pay a realistic price for. Just look at how well current revenue models are entrenched. As others have noted we, as an industry, are stuck billing for time instead of value, which can’t always be seen or appreciated by clients.

Creativity is being devalued as evidenced by the less than one per cent of marketing budgets reportedly spent on the creative idea. Where agencies lose share to firms pumping out product to specification, the management consultancy firms occupy the space we should – but can only deliver half the product creative agencies can.

Think about it this way: your management consultant identifies your company’s issue – you have a loyal demographic of +45 consumers but are failing to appeal to the desirable 18-34 year olds. What then? Technically, your management consultant’s job has finished with the delivery of that insight but someone needs to take that information and execute it, in this case by promoting to a younger demo. What happens if the real reason it doesn’t appeal to that 18-34s is because the product is associated with an older age group? Either way, all that big consultancy cheque gets you is a recommendation on a direction. They can’t execute that recommendation and they definitely cannot do any creative work. And if they do take that next step into creative territory it tends to be bland or generic.

It’s simple, really. What agencies can do is work out exactly what the challenge or opportunity is, and then implement the changes needed. Advertising is both science and gut-feel intuition. Something that’s hard to value or put a price on.

What we need to do, as an industry, is better convey that we can deliver both – the consulting and the creativity. Like Sorrell, I find it absurd that clients feel they should have to choose between marketing companies who are “sound but solid,” and creative agencies who are “occasionally brilliant but almost as often un-businesslike.”

Fortunately there are individuals, agencies, and industry bodies around the world already making strides in this area. Look at what the 4As in the US has accomplished. One example – the work Tim Williams from Ignition Consulting has done, in partnership with 4As, to promote the idea of revising billing based on value instead of time. In this presentation, Tim quotes Jason Deland, co-founder of Anomaly, a self-described “new-model, multidisciplinary marketing communications” agency. Deland has this to say about value-based billing: “Value-based compensation essentially revolves around reaching an agreement on what our ideas are worth to the client and what the opportunity is worth to [us].”

And in the UK, the Account Planning Group (APG) has been successful in doing their bit for the industry, including advocating for greater involvement of planners in the boardroom. This video on the topic is long, but definitely worth the watch.

Alone these efforts aren’t enough but, if we can continue to support efforts like them and stop undervaluing our own creativity, then I think we will be well on the way to conveying the value of our work to clients and the industry at large.

“We are the only professional group that has, for a great many years now, been consciously turning the talents of creative individuals to clients’ business advantage,” Sorrell says in his lecture. “We are the only group to recognise out loud that business success and progress depends on hunch, intuition, trial and error and inspiration – as well as analysis, precedent and the rigorous application of research.”

So let’s start acting like it.

Unknown-74-1Simon Hakim is MD at Hunter
Twitter: @nomis_mikah

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