I have had the privilege to work in communications, mostly on the agency side, for almost 33 years. For a period of this time I was a CMO. I realized, as I started this site, that I’d not taken the time to reflect back and codify some of the lessons I’ve learned in agency management. Here’s the first draft.
- The Only Three Assets Of An Agency: Clients, People & Ideas
We exist to create ideas that drive growth.
Without people we have no ideas.
Critically, without clients we have no agency, no people and no ideas.
We exist to serve.
- There’s nothing new in advertising. The fundamentals of direct marketing are the fundamentals of great communications: Targeting – Offer – Execution
When I first started in direct marketing we were taught that the drivers of response were targeting, the offer, and how well you execute. Testing showed that targeting accounted for about 60% of response value, the offer 30%, and how well you executed only 10%.
Over three decades I’ve used this thinking and validated the approximations. There is no doubt that how well you target is most important. This is true in DM, print, radio, TV, digital, and social. It’s also why the ability to use data to improve the knowledge you have about your consumer, and the ability to target them is so valuable. It’s what makes people-based marketing so powerful. And it’s why data science is one of the fastest and hottest fields in communications.
How attractive you’re able to make your offer, and the relevance and value it has to your target, is the next biggest response driver. All of the targeting in the world will not make up for a poor offer and to advertise without a competitive offer is a waste of money.
And then there’s execution. This is probably under-rated at only 10% and probably the wrong word for it. I think we’re better off referring to this as creativity. And here is why creativity is much more valuable than 10% of the response value. We operate in extremely competitive and connected marketplaces. Offers can be copied. Targeting can be matched. This means creativity alone differentiates your campaign and is therefore the most critical part of communications.
- With growth, everything is possible
When it is all boiled down, the most valuable thing an agency can help create for a client is growth.
When the client grows, we grow.
Individual client growth, combined with overall retention, has an incredible impact on a P&L.
A strong agency P&L makes everything possible.
- Art & science
Much of what we do in advertising is art. The creation of a big idea. The development of a brand. The improvement of customer experience.
However, hand in hand with this art is science. A lot of what we do, or more precisely what successful agencies do, takes root in the scientific method. We gather data, we develop theories, we make observations, we set up tests and ask questions, we develop testable predictions, we gather data as a result, then we validate or refine our hypothesis, we improve our work, and hopefully, we roll out. And then once we’ve rolled out we continuously improve.
Which leads to the thought…It’s not rocket science….well sometimes it is
(See above….…..sometimes we can take it all a little bit too seriously.)
- Put more in than you take out
Very early on in my career I had the privilege of working with an incredible Executive Creative Director. He cared deeply for the work. He cared deeply about each client’s success. He cared deeply about each of us, whether or not we were in his department. He made a massive impact. He was in many ways the center of the agency.
Australia was going through a recession. Budgets were being cut. There were lots of changes at the agency. I was the most recent employee, and brand new to the industry. I feared for my job.
One night I was working late with the team. It was obvious to John that I was worried and after everyone else left he asked me why. I told him about the fear I had of losing my job.
He shared with me a piece of advice that one of his first bosses gave him. It was that the best you can do is to put in more than you take out, and that when you do, you’re making your future secure.
I’ve tried to manage my career along these lines and I think it’s worked for me. I’ve also given that that advice many times since. I trust it’s worked for those who’ve taken it.
- Do the right thing
Much later in my career I had the privilege of being transferred to our global HQ and to lead what became the largest client of the network. In this role I reported into our global CEO, Bob Schmetterer, and was given a lot of access. I thoroughly enjoyed working for Bob and spending time with him. He was really smart, an innovator, an industry leader, widely and deeply respected. Given all of this, he also had a lot of answers.
Throughout this period I’d often go to him for advice, or to ask a question.
Almost always his answer would be ‘do the right thing’. It was the most empowering answer possible. It was not ‘what do you think you should do’, or ‘here’s what I think you should do’, and it definitely was not, ‘don’t do the wrong thing’. It was focused on doing the right thing for the client, for the team, and for the agency.
- Transparency and accountability build trust. Trust is the foundation of all relationships
In a business in which you’re often ‘acting as agent’ trust is critical.
Agencies typically manage significant portions of clients’ budgets. Often this includes media and production. We’re all aware that the ANA called the industry to account, agencies, the media, and clients, through the K2 Intelligence study they commissioned and released in June 2016. The ANA has just followed this up in August 2017 with a report on Production Transparency. Of possibly greater consequence is an ongoing Department of Justice investigation on commercial production practices.
The first two lines of the ANA’s media transparency press release were, “Numerous non-transparent business practices, including cash rebates to media agencies, were found to be pervasive in a sample of the U.S. media ad-buying ecosystem..”
Bob Liodice, the president and CEO of the ANA went on to say, “Advertisers and their agencies are lacking ‘full disclosure’ as the cornerstone principle of their media management practices. Such disclosure is absolutely essential if they are to build trust as the foundation of their relationships with their long-term business partners.”
Absolutely! Transparency is critical for trust to be built and maintained.
As you would expect, there was a lot of pushback to the media study as well as significant denial, as there will be with the production report. It has however focused the industry on what is fair, how agencies are compensated, how contracts are structured and managed, and on the role of procurement.
Accountability is as critical as transparency. We need to spend (or preserve, or redeploy or…) our clients’ budgets as if they were our own. Sort of obvious, but not always the case. We also need to sweat the detail of execution in the same way. A relationship based on total accountability, where you’re as focused on the client’s bottom line and success as they are, will typically become a long-term relationship and one where trust is built.
One of the best and most enjoyable relationships I had the privilege of leading for many years was with Dell in Asia Pacific. As a direct marketing business we were totally focused on their sales. Besides being the right thing to do, the agency had a significant portion of our fee tied to Dell’s success.
- Information – Knowledge – Wisdom
I’ve always believed that where possible, information should be available to all. Obviously, a client’s confidential information can’t be shared, and there’s some agency information that’s confidential, but on the whole, sharing information should improve the performance of the agency.
What’s of higher value than information is knowledge.
The highest value though is wisdom. This is particularly the case when wisdom is shared with those around, and by doing so, illuminating the way for all.
- The only meaningful award is your client’s business
All too often, agencies, and agency leadership are fixated with winning awards. At times you’ll also come across clients that have a similar focus.
The only truly meaningful award though is the one that our clients give us each day, and each campaign, when they entrust us with their business.
- Line each other’s pockets with gold
In a network, made up of offices with competing bottom lines, it can be difficult to get the sort of cooperation needed for client success. We’d be asking other offices for information or resource, and often that information or resource would not be fully or even partially compensated. Early on in agency leadership I realized that by lining the other office’s pocket with gold, and taking a little less for my office, things were a lot easier, the client got what they needed for success, and ultimately, what goes around comes around.
- Data, technology, connectivity & continuous improvement
We live in times of great opportunity, yet significant competition. There is massive data availability, the cost to use and profit from that data is dropping as the cost of technology and connectivity drop, but this same technology and connectivity also makes business more competitive.
Those of us that are focused on continuous improvement and innovation will thrive. Those that are not will go the way as the coupon, catalogue and the USPS.
- New business is the lifeblood of an agency
Without taking away from the critical importance of growing your current clients’ businesses first, new business is the lifeblood of an agency.
New business keeps thinking and teams fresh. It allows people to expand their roles and try new things. It’s a challenge and a stretch. If managed well, it can energize the whole agency.
Success in new business can be incredibly invigorating and do great things for morale. Managed carefully, new business can also do great things for the bottom line.
Ongoing success in new business, especially winning larger pitches, is also one of the best ways to improve the reputation of the agency.
For all of the benefits of new business, there are downsides. When new business takes the focus off, or critical resources away from current clients, be prepared for trouble. The new business process needs to be managed ruthlessly and each opportunity must be evaluated critically.
Finally, putting you hand up to help in new business has never damaged an agency career.