Required reading for Big Dumb Agencies and Big Dumb Holding Companies – Madison Avenue Manslaughter.
There is no question that the advertising agency business I used to know, love, and profit from, is in a radical state of change, not to mention confusion, perhaps even panic?
Back in my Mad Man days, you could reach over eighty per cent of American consumers to sell toilet rolls, or as P&G preferred to call them “Bathroom Tissues” via Mr. Whipple on three TV networks. You could also sell pre-filter Pall Mall cigarettes, “You can light either end,” via three national weekly magazines. It was an era when media plans were done on cocktail napkins during a three martini lunch, and on returning to the office, you had your secretary type it up whilst you had a nap on your office couch.
Today, things are slightly different. With the growth of digital and social media the multiplicity of choices to reach consumers is only matched by the multiplicity of choices consumers have to ignore you. But it isn’t merely the proliferation of new media that has led to the impending demise of ad agencies as we know them; I would suggest that it’s the stranglehold of the ever powerful holding companies over their subservient agencies that is inexorably pushing us to the end of relationships that have served clients and their agencies well for many years.
I was saved from throwing my hands up in despair when I read Michael Farmer’s wonderful new book, Madison Avenue Manslaughter. This is an extremely well thought out exposition of how we have arrived at this state of affairs, whilst presenting the most convincing arguments yet posited for how we can hopefully address the situation. As he puts it so cleanly, yet forcibly… “Workload is growing faster than income.” Putting this in terms that even I can understand, it means that once an agency is acquired by a holding company, its prime function is to meet the quarterly numbers the holding company needs to keep its shareholders happy… Not to mention the holding companies CEO’s upkeep on luxury apartments, villas, yachts and “Rollers.”
Meantime, at the other end of the shitty stick is the unfortunate fact of life that the holding companies agency clients are now treating them in the same way they deal with suppliers of mops, brooms and stationery. In other words, bean counter procurement people will be responsible for negotiating agency fees. Which means that agencies can look forward to having the cost of their “Big Idea” looked at in a similar purchasing fashion as providers of “Big Toilet Rolls.” Unless the client is P&G, in which case it will be “Big Bathroom Tissue.” Oh, and can we now pay your invoices on a 120-day-at-the earliest schedule?
Inevitably, the holding companies and their subservient agencies succumb to this pressure, agreeing to cut fees and accept delayed payment without suggesting the clients accept longer delivery times and less of a cornucopia of creative offerings. Then when, a few months later, the procurement people turn the screws an extra twist or two, the agencies knuckle down and go along with the ever diminishing game.
Michael Farmer has several rather gnarly suggestions to fix this problem. Essentially, the key is the measurement and management of the agency workload necessary to be able to create the client’s expected deliverables, and to do it in such a way as to justify the fair income and profitability that will satisfy the management of both the agency and its holding company. Further, he suggests a complete rethink of the agency structure and operations, making many detailed suggestions from staffing to remuneration. Finally, he lays the onus on agency management, particularly the CEO, to admit to themselves that they are steaming towards a Titanic-sized iceberg and it’s almost too late launch the lifeboats.
On a final, final note, apart from Madison Avenue Manslaughter being required reading for all agency management. I would put a gun to the head of the CEOs of the major holding companies until they have read it from cover to cover. After all, most of this mess is their fault.