Category Archives: Agency Management

8 June, 2012 · 8:45 am

One Tip to be a Better Interviewer

When I first arrived at the managerial level in my career, I started to do a lot of entry-level interviewing for my firm.  Some of that involved going to colleges and business schools where we would interview 8-10 candidates back-to-back.  It became a taxing chore, trying to stay attentive to each person as the day wore on.  The faces, resumes, and responses all started to blend together.

I had the good fortune to team up on one of these campus trips with a wiser, more experienced colleague. Rishad Tobaccowala is now one of the most respected global voices in the advertising industry, but then he was just a very insightful guy who gave some terrific advice. His suggestion was simple. Put aside the standard questions, and instead just try to learn something useful from each person you meet.

That simple tip almost immediately elevated the experience on both sides of the table. It made me a better interviewer, and it made each interview a more substantial conversation. If you really focus on learning something new from a person, it has the following effects:

It makes you ask better questions

Instead of leaning on old hacks like “tell me about yourself” or “share an example of where you overcame a significant obstacle,” it makes you want to uncover what is special in their experiences and background.  It creates a game-like dynamic that motivates you to search for clues about what makes this person unique.

It’s more revealing

We tend to reveal our truer selves when we talk about something that’s a real passion for us. It shows what’s important to us, how we think, how we pursue goals. By bringing out something the other person feels drawn to, you get a clearer sense of who they are. As a result, you get a better gauge of what that person could or couldn’t bring to the role you’re hiring for.

It increases the value of the conversation

The traditional interview creates a filtering mentality. The time is only worthwhile if the candidate passes muster. By transforming it into a learning opportunity, it creates a reward even if the person isn’t a fit for what you’re looking for. It brings a benefit to the conversation itself, not just to the chance of a hiring outcome at the end. Practically speaking, it also opens the potential for seeing a different fit down the road.

Interviews are a problematic evaluation tool for a number of reasons. But I found this advice makes them more effective for what interviews do best, which is providing the opportunity to get a fuller sense of a person beyond their acquired skills and experiences.

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14 July, 2010 · 10:43 am

Ten Things Your Agency Prefers You Don’t Know: #10

Only two things really matter when picking an agency.

If you are a major marketer, the type of agencies you’ll consider all have the same basic approach and capabilities.  Their processes, for better or worse, are all about the same as well.  Many claim to have proprietary tools or processes, but that’s just not the case. They may have different names and different labels for what they do, but the breadth and delivery of services is essentially the same at any holding company agency or major independent. Pricing is also not different. More accurately, if there is a pricing difference, agencies are quick to match their competitors in order to win or retain a client.

If the basic capabilities are the same at most every agency, what distinguishes them? In my experience there are two factors that really matter. The first factor is the quality of the people working directly on your business.  A great team at a mediocre agency will tend to do great work, and the opposite is true as well.

The second factor is the standards an agency sets for itself – standards for creativity, professionalism, and integrity. The agencies with higher standards make it harder for bad work to get out the door, and are quicker to realize when their work is falling short of what it should be.

If I had to choose a new agency as efficiently as possible, I would do three things.  First, I would look at all their work. Not just their highlights or major clients, but everything they’ve done in the past 6-12 months so I could judge their overall standard of work. For example, on a big retail account there is often a lot of little stuff that has to get churned out quickly and cheaply, like tent cards or shelf talkers.  Do they just jam their print ads into another format, or do they actually take a little time to design it for the environment it’s in.

Second, I would talk to each of their clients to see if they had more than the usual compliments and gripes so I could assess their standards of professionalism and integrity.  No client-agency relationship is without its spats and hiccups, but I’d listen to see if problems get addressed, or if  the same spats and hiccups keep recurring

Third, I would meet directly with the people who would be working on my business. I’d not only assess whether I like and trust their work, but also to sense if they are people who will champion my business back at their place. Big agencies have lots of people competing priorities and opinions, so I want someone who is going to advocate for me when I’m not there. Oh, and you can have them do some work too since most agencies are giving it away for free anyway.

The typical pitch process gets around to accomplishing these things indirectly, but generally takes a lot more money and time.

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30 March, 2010 · 10:19 am

Ten Things Your Agency Prefers You Don’t Know: #9

There is no reason for an agency of record.

With the possible exception of a media agency, the agency of record status is of no benefit to marketers. A little historical context is useful to understand the situation. Back when ad agencies did everything for their clients, including buying their media space, the agency of record designation had a legal and business purpose. It meant that a newspaper, magazine, or TV station knew that an agency was authorized to make purchases on behalf of its client. It was in keeping with the technical definition of agent in commercial law: someone authorized to negotiate and enter contracts with a third-party on behalf of the principal. An agent provided clients the convenience of not having to deal directly with hundreds of media contracts associated with a large marketing campaign. For large marketers making frequent purchases of many types of media, this role still makes sense for their chosen media agency.

But after media agencies spun off into standalone entities, the other types of agencies worked to hold on to this title. There were now creative agencies of record, promotional agencies of record, or interactive agencies of record. These designation exist to this day, but solely for the benefit of the agencies. They are the basis for long-term contracts and associated retainers that make holding companies more attractive to their investors.  In short, they provide the assurance of a more reliable revenue stream, and create a barrier to entry to competing agencies. It is a sort of corporate engagement ring jammed onto the finger of a client to ward away other suitors.

But there’s no reason for marketers to wear that ring.  These agencies don’t play the business role of agent. As with production for example, pre-production estimate approvals and other mechanisms effectively make marketers a first-party to any contracts or external agreements. In fact, an agency of record can be a detriment to marketers because it hampers their ability to seek out ideas from whoever they like.  Forrester just predicted the demise of the interactive agency of record, but why stop there? It’s true that marketers may prefer the convenience of working on an ongoing basis with a single organization that understands their business and their way of working.  There may also be some efficiencies in having multiple projects run through a single provider.  Some marketers may find their agencies so valuable that they want to ensure they have a long-term relationship. But that should be a matter of choice and not a contractual obligation. Most marketers have to earn their customers loyalty every day.  So should their agencies.

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2 February, 2010 · 1:15 pm

Ten Things Your Agency Prefers You Don’t Know: #6

The agency network model is designed for investors, not clients.

Almost every agency pitch involves some bragging points about capabilities in which a list of sister companies demonstrates the agency’s ability to provide expertise in every marketing function known to civilization.  Inevitably, it is positioned as a way for clients to tap into whatever services they need while maintaining an integrated brand approach.

The Omnicom/WPP/Interpublic/Publicis model of accumulating multiple marketing agencies across different fields has little to do with integrated marketing and everything to do with market share. As different marketing fields developed over time, agencies saw revenue going out the door. First it was promotions, then it was direct marketing, then interactive, then social media,  and so on.  Publicly-held holding companies rightly decided that if you can’t  beat them, buy them.  Revenues must grow to grow stockholder value, so why not capture the revenue that is going elsewhere? Holding companies can capture a greater share of their clients’ total marketing spend if they have a broad range of companies to funnel work to.

But when a client works with a “sister company” within an agency network, there is no inherent financial or strategic efficiency.  For example, when a traditional agency brings in an interactive agency in their network, there is no staffing efficiency. The interactive agency doesn’t put less people on the account because they are working with another agency in the network.  Revenues are not shared between network companies, so there is no incentive for any agency to suggest that a client would get a better return by shifting money outside  of what that specific agency does.

As for strategic integration, try asking a few agencies within the same network to share their brand positioning models. Not only are the models rarely the same, even the vocabulary is different.  What one calls a Brand Position, another calls a Brand Proposition, and another calls a Brand Promise.  It’s unlikely a client will get a higher level of strategic integration among companies that don’t even share a common brand language. There is an advantage in working with companies that are used to working together. But you don’t have to be part of the same corporation to work together, and being in the same corporation doesn’t mean you have worked together. Any agency veteran will tell you they often meet their “integrated agency partners” for the first time a day or two before a pitch.

There are two potential advantages for a client working with a holding company network of agencies. There may be some comfort for a client in having what some call “one point of contact” and others call “one throat to choke.”  There also may be some financial benefit for very large marketers with big budgets in several channels.  In this case, a holding company may be willing to cut their overall margins across several agencies in order to capture more total revenue. But that is a by-product of clout, not of efficiency.

Until holding companies really work to integrate their companies financially and strategically, marketers would be well-served to find the fit that is best for them regardless of any shared corporate structure.

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6 January, 2010 · 4:24 pm

Ten Things Your Agency Prefers You Don’t Know: #5

money_question_markAgencies don’t know how much they are making on your business.

Because of the backward retainer system endemic to the industry, it is hard to say what the real margin is on any one business. The agency may be making a healthy margin on the day-to-day delivery team, but there are a lot of costs that are built into the general overhead of the agency. These costs include people and money spent up front in the new business process, the time of agency executive management in supporting the business relationship, and the ad hoc responses to sudden market developments or changes in direction. These costs tend to get mixed into the general administrative costs of the agency, and assigned to agency overhead. That makes overhead a murky number full of costs that may or may not be fairly allocated across clients. A client with a high margin who likes to manage by crisis may actually be less profitable than a low margin client with a more steady operational approach. So while generally agencies know how they are doing as a whole, they have only a fuzzy idea of how they are doing on any one particular client. As a result, marketers assume agencies are making too much, and agencies assume they are making too little.

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6 January, 2010 · 10:10 am

Ten Things Your Agency Prefers You Don’t Know: #7

Agencies don’t have a lot of bench strength.
That’s mostly because they can’t afford to. Clients have gotten their procurement departments more involved in agency compensation over the past decade. This procurement movement helped in several respects and hurt in others. It helped reduce some inefficiencies and pushed agencies to be more forthcoming in their fee proposals. It has failed to create a lot more value for the client. It has failed because both agencies and marketers focused on reducing the costs of the inputs rather than increasing the value of the output. In order to reduce costs, agencies have had to reduce the total compensation for their staff. The dynamic has been similar to the effect of salary caps in professional sports. Now there are only so many stars an agency can afford to keep on the roster. So you get what few stars you can afford, and fill in the rest of the team with role players, or unproven rookies who you hope will rise to the occasion. This has pushed agencies to manage their clients like the old vaudeville spinning plate routine. They try to get all the plates spinning, and only give their attention to the ones that are really starting to wobble. The A-team is dispatched to get the plate spinning again, and then as soon as that’s done, they rush to the next wobbler. So for any marketer wondering whether they have a first-rate team dedicated to their business, the answer is probably no. They can’t afford to.

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23 October, 2009 · 12:50 pm

Ten Things Your Agency Prefers You Don’t Know: #2

Square Peg in a Round Hole_0565The agency structure dictates the ideas you get.

Every agency makes the claim that they are media-neutral, fully integrated, 360, or some other catchphrase implying ideas that are bigger than any one channel. The intent is certainly there, but the very structure of the agency prevents it from happening.  Agencies have accumulated a full-time staff of people who need to be allocated if that agency is to survive as a business.  This is true for almost any type of agency, be it traditional, digital, or social. If you have a dozen copywriters on staff, you better be generating ideas that require a lot of copywriting. Similarly, it you have 3 Flash programmers on staff, you better be doing some Flash development.  So imagine a situation in which a traditional agency is on retainer with a client.  What is the likelihood that the agency will come back and recommend moving most of the budget into shopper marketing? Sure, the agency has shopper marketing in their holding company network, but moving the budget to them means the agency loses the bulk of their retainer. Will the agency reward the Account Director for slashing their retainer and putting agency staff in jeopardy? Of course not.  That’s why you’ll get the ideas that match the resources of the agency.

Related to this structural issue is the myth that agency creatives are focused on ideas that transcend channels. It reminds me of the “IT expert” that only shows up in movies. This fictional guy is equally adept at every computer application ever written, knows both hardware and software, has a PhD level understanding of encryption algorithms, and immediate access to every database on the planet.  Meanwhile, in real life, if you need help with a Mac version of Office, the PC guy in tech support can’t help you. Similarly, a creative brought up to think in terms of websites is not likely to start thinking about a marketing problem in terms of retail events. Another one highly skilled in the art of scripted :30 stories isn’t going to be comfortable crafting a social media program.

It is not a question of smarts, talent, or even intent. Architect Louis Sullivan expressed the adage that “form follows function.” In the case of agencies, function follows form.

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13 August, 2009 · 4:29 pm

Ten Things Your Agency Prefers You Don’t Know: #3

ATM Out of OrderThe business model is backwards.

The agency business has evolved to a state where there is little relation between the value they add and the compensation they get. This is a historical problem. The original commission system rewarded agencies for how much their clients spent, not for the actual work the agencies did. The fee-based compensation that is most common today rewards agencies for how many people they can get to work on the account. Neither system is related to the strength or effectiveness of the ideas and programs that they develop. In fact, the most valuable thing that agencies do is often given away for free. In the typical new business pitch, agencies get their best people to work feverishly on developing their best ideas to the point where they’re ready to be executed. They do all this for free, and then hope that if selected, the client will compensate them after the fact by paying a premium price to manage the production and execution of those ideas. It’s like a restaurant giving the food away for free, and hoping to make it back on the valet parking.

This model might have made sense when marketer-agency relationships averaged 10 years or more. But now that the best relationships last only 3-5 years, it doesn’t. Marketers may think they’re getting something for free, and initially that’s true. But whenever the compensation model of the seller is out of sync with the objectives of the buyer, something is lost. Can marketers really think they are getting the best service and advice from a provider who gets penalized if they can develop and execute programs more quickly and cheaply?

Agencies have been shy to take on results-based compensation because there are so many factors beyond their control, like sales and distribution, that effect the outcome in the marketplace. But some may come to realize that facing the same market risks and rewards as their client puts them in a far better business and financial situation than constantly justifying monthly retainers with procurement.

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3 July, 2009 · 4:26 pm

Ten Things Your Agency Prefers You Don’t Know: #8

olsen twinsThere is no real difference in capabilities between agencies.

The marketing services business in heavily saturated. There is no shortage of people willing to manage your social media campaign, make a TV ad, or facilitate an innovation workshop. There may be a brief window in the very beginning of new tool’s life, when there are a more limited number of people who can claim competency. Experts in search engine optimization were limited in 1996, as were television producers in 1938. But the pace by which people master new media has accelerated, such that those windows of scarcity are increasingly short. What that means is that there is no agency that is going to distinguish itself by having some capability that another does not.  Everyone has the same type of experts in the same fields. If not, they are easy to hire. While it is true that the very best in any field will always be rare, that true elite is probably not on staff at an advertising agency anyway. So agencies are not differentiated in terms of what they can do for a client, though a few may be differentiated in how well they do it.

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