A Conversation Starter

Reconsidering the Advertising Industry

By: Alain Thys and Stefan Kolle © Lisovskaya | Dreamstime.com

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Sponsored by
Management Centre Europe.
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Comparative Estimates: US Total Media

Advertising Spending Growth, 2009
(% change vs prior year)

Wachovia: - 0.8%
BMO Capital Markets: - 1.9%
Collins Stewart LLC: - 2.0%
GroupM: - 3.2%
Citi Investment Research: - 3.6%
MAGNA: - 4.5%
Morgan Stanley: - 5.0%
ThinkPanmure LLC: - 5.0%
UBS: - 6.0%
ZenithOptimedia: - 6.2%
Myers Publishing LLC: - 6.7%
Barclays Capital: -10.0%
Source:
Seven Predictions for 2009, eMarketer, January 2009

Prelude: Why This Document Exists

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Prelude: How will Agency’s Fare in a Market Where Clients are Dissatisfied?

Net Promoter Score™ by Industry

telco advertising automotive

-6%

-21%

© Stockphotonyc | Dreamstime.com
-48%

The Net Promoter Score ™ is a registered trademark of Bain, Satmetrix and Fred Reichheld
 Prelude: Are Marketers Held Hostage by the Advertising Industry?

High
Hostages Loyalists

Likelihood to repurchase

Defectors Mercenaries
© Alexey Avdeev | Dreamstime.com"

Low
Low Likelihood to recommend High

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Prelude: Do Agencies Overestimate Their Impact on the Client’s Success?
© Chris Fourie | Dreamstime.com
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Table of Contents

SITUATIONAL ANALYSIS: Agency Challenges 2009 Page 7

12 REMEDIES: Setting Things Right Page 35

10 FORMATS: Agency Models of the Future Page 48

Appendices for Digging Deeper Page 59

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Chapter One
Situational Analysis: Agency Challenges 2009
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Chapter One
Situational Analysis

7 client needs many

agencies ignore.

3 areas where agencies

are “out of synch”

4 gaps in agency
authenticity
Client Need #1: 75% of clients want a truly tailored approach to their business

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© Frozenpeas | Dreamstime.com
Agency Response #1: Services that Happen to Fit the Agency Model

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 © Breeze393 | Dreamstime.com
Client Need #2: Show Me the Return on My Marketing Investments

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Agency Response #2: We Are Very Creative ... And Big ... And have Big Clients
© Robert Byron | Dreamstime.com
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 Of the 50 largest advertisers in the world ...

91% 85% 74%

Consider the media buying Are convinced their media Opined that these deals
process to be insufficiently agency had deals outside the caused bias in the choice of
transparent client agreement media and recommendations.

Client Need #3: Be A Trusted Media Partner

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 Continued Underperformance The Occasional
Intransparency and “creative math”” Scandal

Agency Response #3: Bad Apples

Image 1: CC 2.0: Phauly
Image 2: (c) Design 56 – Dreamstime.com FUTURELAB
Image 3: (c) Aleksander Ruzicka
Client Need #4: Engage Our Audience
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Agency Response #4: Saturation Bombing

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What marketing leaders want from their agencies when it comes to digital

Client Need #5: Walk Digital

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Agency Response #5: Talk Digital

© Yuri Strakhov | Dreamstime.com

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CAGR by Marketing Mix Element - Manufacturers

(2004-2010 Est.)

Source: Deloitte, 2007

Client Need #6: Shopper Marketing

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Agency Response #6: Silo-based Thinking

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Client Need #7: Help me into the C-suite

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Agency Response #7: Look How Cool and Fun We Are ... And Creative Too!

© Tomislav Birtic | Dreamstime.com

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Chapter One
Situational Analysis

7 client needs many

agencies ignore.

3 areas where agencies

are “out of synch”

4 gaps in agency
authenticity
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Agencies have optimised their business for themselves. Not for their customers.
Kris Hoet, EMEA Digital Media Communications Manager, Microsoft

Disconnect 1: Most Large Agencies are Mass Production Factories…

© Leigh Prather | Dreamstime.com

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Agencies need to be chameleons which can become

what ever the client requires them to be.

Not just what they happen to be good at.

… While The World Needs Multi-Disciplinary Boutiques

© Iphotoexpert | Dreamstime.com
 Digital Creative

Production Management

Account
Mgmt

Planning

Disconnect 2: Most Agencies are Multi-Local with High Levels of Duplication ...
© Michael Brown| Dreamstime.com
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... While Today’s World is Global and Highly Interconnected
© Hewlett Packard, Halo Room
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Disconnect 3: Agencies Compete within “Their Crowd” ...
© Julien Tromeur | Dreamstime.com
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 © Kevin Renes | Dreamstime.com

... While the Competition is Transforming

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Chapter One
Situational Analysis

7 client needs many

agencies ignore.

3 areas where agencies

are “out of synch”

4 gaps in agency
authenticity
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Authenticity Gap 1: Diffuse Identity

© Eric Marechal | Dreamstime.com

Authenticity Gap 2: Oversensitivity to Trends

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“We knew that it wouldn’t work, but the

client wanted it. So we made it happen.
After all, under all the gloss, we must
accept that we are prostitutes.”

Head of Business Development commenting on

modifications to a global campaign you know.

Authenticity Gap 3: Undue Compliance

© Jose Antonio Sánchez Reyes | Dreamstime.com
© Steve Cukrov | Dreamstime.com

“I don’t care about making money for my clients. I just want

another award before I jump this ship. ”

Agency CEO of a A-list mediterranean agency

“Listen, we know that spending x million in above won’t fix the

issue, but they’re going to spend it anyway. We can just as well try
to grab as much as possible.”

Pitch team on an international account

If a client thinks a brand is great, but you find out his consumers
disagree, you’d only tell him if you’d get more business out it.
Otherwise, best to leave these things untouched.

Major agency creative director instructing a recent recruit over lunch

Authenticity Gap 4: Occasionally Questionable Motivations

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 1. Become a solution house ...
2. ... Or Not
3. Talk Money
4. Media Neutrality & Transparency
5. Replace Noise by Engagement
6. Be Digital
7. Think of the Shopper
8. Get a Makeover
9. Synch to Global Reality
10. Establish A Clear & Differentiated Position
11. Align Good Apples, Get Rid of Bad Ones
12. Take a Moment of Self-Reflection

Chapter Two
12 Remedies to Set Things Right FUTURELAB
© Jan Prchal | Dreamstime.com

“Our recommendation is not to proceed with any

above-the-line campaign in the coming year.

In stead, it is better to upgrade call-centre training

and accellerate the go-to-market processes so
they co-incide with the consumer shopping cycle.

Obviously we are happy to assist in these areas.”

#1 Become a Solutions House ...

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 © Infomages | Dreamstime.com
#2 ... or not

© Lisa F. Young | Dreamstime.com FUTURELAB

 #3 Talk Money

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© Breeze393 | Dreamstime.com
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© Nob50 | Dreamstime.com
#4 Media Neutrality and Transparency
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#5 Replace Noise by Engagement

©i Dan Breckwoldt | Dreamstime.com

 #6 Be Digital

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#7 Think of the Shopper
©i Edyta Pawlowska | Dreamstime.com
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#8 Get a Makeover
© Rebecca Abell | Dreamstime.com
Image: (c) Sebast1an – Dreamstime.com

#9 Synch to Global Reality

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#10 Establish A Clear and Differentiated Position

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 Customer
Proposition

Strategy Behaviour of
Culture
Commitment Leaders

Performance Processes &

Metrics Structures

(c) This framework is property of Management Centre Europe – used with permission

#11 Align Good Apples, Get Rid of Bad Ones

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#12 Take a Moment of Self-Reflection

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Chapter Three
10 Formats: Agency Models of the Future
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#1 The Factory

© Sedam35 | Dreamstime.com
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© Infokus408 | Dreamstime.com

#2 The Category Killer A: Media

 © Rui Vale de Sousa | Dreamstime.com
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#3 The Category Killer B: Curated Creative Marketplaces

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#4 The Category Killer C: Production Machines

© Richard Thomas | Dreamstime.com

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#5 The Customer Specialist

#6 The Serial Monogamist

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#7 The Marketing & Communication Boutique

 #8 The Craftsman

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© Sebastian Czapnik | Dreamstime.com

#9 The Fragmented Giant

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#10 The Persistent One

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Appendices for Digging Deeper

 • Forrester Research: Help Wanted: 21st Century Agency ($ 279 at www.forrester.com)

• Rainmaker Consulting: The Intelligent New Business Survey (free at

http://tinyurl.com/59dkff)

• Agency Search – What Matters? Winning Strategies for Ad Agencies – presentation ,

MillWard Brown, April 2007 (free at: http://tinyurl.com/5hhh7e)

• Henry Jenkins, Convergence Culture, NYU Press, 2006

• The full version of this report which can be purchased on

www.futurelab.net/agencyreport (€499 + VAT)

Must-read information for every agency executive.

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If you want more information on this report or would like to discuss the
pursuit of any of the strategies discussed in your agency, get in touch For a conversation on aligning the people in
with us on info@futurelab.net: your agency to your strategy, get in touch
with Management Centre Europe who have
International: + 32 2 733 8332 Alain Thys/Stefan Kolle acted as co-sponsor to this report:
Athens: +30 210 6101240 Milton Papadakis
Bucharest: +40 751 229 217 Ramona Patrascanu Mr. Patrick Faniel
Hamburg: +49 40 2780 6223 Anne Marx Customer Specific Solutions Director
Kiev: +38 067 502 99 41 Olga Vaganova Tel.: +32/2/543.21.20
Moscow: +7 905 500 5856 Marina Natanova Email: pfaniel@mce-ama.com
Shanghai: +86 136 2179 9450 Jan Van den Bergh

More Information & Action

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