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Do agencies deserve the bad reputation they get?
If you read the industry commentary about advertising agencies you would begin to think that agencies are filled with either stupid, lazy, untalented hacks or cunning, duplicitous, lying con-artists. But clearly the truth is a polar opposite of this.
After all who could start every day of their working life with the intention of underperforming at work for their client? Or worse, creatively concocting ways to rip off their clients? It is certainly not the people who are attracted to work in advertising.
While there may have been a Mad Men time when advertising was glamorous and well paid, those days are long gone. Michael Farmer in his book "Madison Avenue Manslaughter" demonstrates how agency fees have fallen 65% in real terms over the past twenty years.
Agency finances are under pressure and entry-level salaries for advertising are well below the salaries paid by the consulting firms and the tech companies who are competing for the talent available in the market. Also, most agency people earn less than their clients with a similar duration of the experience.
Add to this the hours and stress most agency people are under even to the point of in the odd case dying on the job. No wonder the advertising industry has finally got around to addressing the issues of mental health, burn out and poor health.
Yet despite all of these advertising agencies are full of clever, creative and highly motivated people.
The problem is negative stories make better reading and provide better clickbait than the positive stories. I am not talking about the reports on the creative award winners, as this gets more than enough coverage and celebration. But unfortunately much of this award-winning news comes across as self-congratulation and self-obsession for those not directly in advertising.
The positive news I am talking about is the multiple high performing relationships that operate every day producing the work required by their clients to drive their marketing strategy and their business results. Sure, we get an insight into this through effectiveness awards, but at best this is a glimpse only with many of the most positive and successful high performing relationships never seeing the light of industry scrutiny because of commercial sensitivity and competitive tensions.
So in this vacuum of good news, we have the opinion sharers (present company included) and the industry journalists reporting on the multitude of issues facing the industry. These issues are often reported as the problems of agencies underperforming leading to a pitch, or the failure of agencies to provide transparency in the digital media supply chain or the failure of agencies to do any number of other things deemed their responsibility.
What is missing from these stories is often the role of the marketers and advertisers in many of these issues. I am a big believer in the golden rule – the person with the gold makes the rules. In the advertising industry, the people with the gold are the advertisers and the marketers and therefore they are the ones that are best placed to influences and address these issues.
They are the ones that choose where to invest their marketing budget and how to invest their marketing budget and therefore need to take some responsibility for the issues of the supply chain they fund.
Let's look at some of these issues and the role agencies and their clients play in creating the problem and therefore could solve the problem.
Agency talent recruitment and retention is clearly an issue that is often blamed on the agencies, but the agency business model is under huge competitive pressure in a race to zero to win and retain business, as advertisers use the competitive market place to lower agency costs. Therefore agencies cannot compete with attracting and retaining talent financially and working conditions become long hours and high pressure with low security.
Transparency is a big topic in both production and more so in media. In fact, it has always been a problem but it has become core to agency survival as they look for other revenue sources outside of their diminishing fees, leading to a loss of trust. It is also exacerbated by the change in the legal relationship from agencies being an agent to the principle to a contractor, a change driven by client organisations trying to move the commercial risk from themselves to their suppliers.
Ad fraud is reported to be the second-largest source of criminal funds after illicit drugs, yet overall advertisers are increasing their spend in the very channels where Ad fraud is identified as being a problem. Is that behaviour not a sign of being complicit? Their agencies are taking steps identifying the sites, but the fact is a more secure digital supply chain costs money and this appears to be something many advertisers are unwilling to contemplate.
These are just three of the headline industry issues where agencies are being held to account when in actual fact the advertisers as the buyer and their procurement team should be taking the lead. It is just the good governance that many talk about but expect their suppliers to address alone.
Darren Woolley is founder and global chief executive of TrinityP3.
The Drum will look at the unique challenges of running an agency business at the upcoming Agency Acceleration Day APAC.
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