If I had a dollar for every time an advertiser asked me this question I could have retired by now. Not have to be writing articles for newspapers or magazines. I’d be floating in the swimming pool of the Hotel du Cap Eden Roc sipping on champers and deciding whether to have the Lobster or Alaskan king crab for dinner. But alas it is still a dream, so back to reality.
The most common question clients ask these days is: ‘Why won’t my agency listen to me?’ I answer, “why don’t you speak to another agency.”
“I have,” says the client, “but they don’t listen either.”
It’s a pretty sad and perplexing indictment on the industry, and I can’t for the life of me understand why agencies just don’t get it.
In my role as a television Production Consultant I’ve worked with a lot of different advertisers but their laments are always the same. In a nutshell it’s horribly simple. There is a lack of trust between the parties. Let me explain this broad-brush statement a little further.
The problem is in part people are so busy making sure they are heard they forget to listen to what others are saying.
How can you expect your client to listen to you if you haven’t first demonstrated you have listened to them?
Listening has nothing to do with agreeing, or even reacting. It is the gentle art of letting your client know you genuinely understand their business and want to help them meet their challenges and targets.
And it isn’t always about advertising.
While advertising (in all its various forms) or advertising related exploits is 100% of what most agencies do. It’s usually only ever around 5-10% of what most marketing people do. (Those sale forces can be extremely time consuming to manage.)
If you understand this you’ll appreciate why your clients do the things they do and how they do them.
A client, a large Japanese car manufacturer, told me, almost in passing that the thing that worried him most was the position of the Yen against the AUS $.
“Why?” I asked.
“Every time the dollar moves one Yen either way it means a million dollars plus or minus to my bottom line.”
Message received. I avidly followed the fluctuations between the Yen & the Aussie dollar and waited until an appropriate opportunity arose to weave the subject into a conversation.
When I did the effect the effect was immediate. My client put his arm around my shoulder and sat me down to tell me many of the other things that were on his mind. Few of which concerned advertising. He became my partner and listened enthusiastically to my ideas and even championed them to his peers.
It’s not just about listening. It’s also about letting your clients know that you have listened.
I was recently involved with the production of a television campaign for a new product the success of which was crucial to the client’s bonus. It went to air on the eve of a long weekend. On the Tuesday morning I rang the client to find out how many units had been sold in the previous three days. He was tickled pink to be asked.
“We’re on track to meet our targets,” he said. Then he added, “Funny my agency hasn’t asked.” Turns out they never did.
The really funny part is, it cost nothing to do.
But then I’ve always wondered why agencies allow production consultants to exist in the first place. After all, we’re employed by their clients to ride shotgun on their business practices. If agencies were good at what they do, cost / production consultants wouldn’t exist.
Agencies no longer occupy the same Share Of Brain, (SoB) they once did. Why? I’m afraid to say it comes down to the one simple, sorry thing. The business model that most advertising agencies use today is fundamentally flawed.
People rarely trust or believe those they suspect are ripping them off.
The system whereby they charge by the hour for the work they produce has never worked and it never will.
It’s downright dishonest and patently ineffective to charge for creativity by the hour. A good idea, even a great idea… might materialize in 5 minutes or it may take five weeks. I knew of one exceptional talent who could write a campaign in his head as the client was briefing him. But if the process takes 5 weeks is that the client’s fault? On the flipside, if an idea takes 5 minutes, if you’re charging by the hour you are grossly undervaluing its worth. I suppose you could lie to the client and say it took 5 weeks and charge accordingly, but this creates its own unique and mostly insurmountable set of problems.
Another major issue is getting people to fill in timesheets honestly. Self preservation usually trumps honestly. I knew of an agency who would lock staff out of their e-mails until the accounts department had received up-to-date time sheets. Talk about madness! One copywriter was inspired to fill in a single time sheet then photocopy it 48 times. He became the poster boy of the accounts department.
Agencies today however show little interest in altering their “modus operandi” and foolishly and desperately cling to their own latter day version of the Titanic.
Until advertising agencies change and recognize what business they are in, and charge accordingly for the product they produce they can only look forward to ending up like the dinosaurs they have become.
The problem stems back to media commissions. When agencies received a 10% rebate from the TV stations for placing their clients advertisements they didn’t need to charge for creative work. (The very thing they said was the reason for their existence.) When the courts ruled the commission system was tantamount to unfair trading they scrambled to find a new way to make up the shortfall. What they came up with was fundamentally flawed.
A creative director told me how he had once asked a group account director in charge of a major FMCG account take him to lunch. When the GAD refused citing work commitments, the hungry creative said something along the lines of, “If you don’t, my time sheets will show that I worked on nothing but your business for six weeks.” Needless to say the pair enjoyed a delightful lunch at the CD’s favourite eatery.
My first hand experiences of dealing with the insanity of time-sheets includes the matter of a $225,000 TV production budget for a major product in the health and beauty category. The agency wanted to charge $146,250 for creative development, account management, creative management, and production supervision. They thought it was perfectly OK to spend 65% of the budget on themselves and 35% on the screen.
When challenged the Account Director justified his position with, “Well that’s what’s on the timesheets and it’s in accordance with the agreed rate card.” I countered with ‘How could a writer and an art director take 60 hours to write one 30 second television commercial? What was it, one word per hour.” His response was predictable “It’s on the timesheets.”
It is patently obvious the system is totally flawed.
Its little wonder clients mistrust their agencies and turn to independent production consultants and cost controllers for advice and support?
Agencies must take responsibility for the deterioration of their relationships and set about rebuilding the trust they once enjoyed.
What is the solution? Again the answer is incredibly simple. Charge a fair price for the work in line with the available budget and time available. I believe a fee, agreed up front, would be the easiest and quickest solution, somewhere between 15% too 20% would seem reasonable depending upon the volume and complexity of the work.
Globalization has unhappily been the driver that has forced margins down to such low levels that it has made it near impossible for agencies to properly resource their businesses. The net result is unhappy clients (who aren’t getting the work they think they want) and unhappy agencies (who believe they are losing money providing it).
The real truth is agencies aren’t losing real money. Their staff costs are fixed, their overheads are fixed and business 101 should tell them if they cover these costs and make another 20% on top their futures are bright. Thousands of small businesses throughout the country can do this, why not agencies? Oh that’s right, New York wouldn’t like it.
Where will it end? Given the current circumstances I believe the multinationals like the dinosaurs before them will become extinct. Clients will hire smaller boutique operations whose costs and overheads don’t swallow 65% of the available budget. Production consultancies will grow, as the downward pressure on budgets continues. Freelance teams will be brought in as and when needed, and a leaner and more cost-effective methodology will replace these leviathans.
Unless of course someone thinks of a new and better way to do business and implements it.