I tend to greet anything that hints of being a listicle with extreme cynicism and disbelief. Listicles always bring to mind the old Steve Martin joke: “You ask how can I make a million dollars and never pay taxes? It’s easy! First, get a million dollars…” It goes on, but you get the point. A few bullet points can’t solve complex problems.
However, an exception can be made for a smart piece by Max Lenderman (@maxlenderman) that appeared in Adweek last week, 3 Ways Agencies Can Remain Relevant in an Ever-Changing Industry.
It became clear to me more than 20 years ago that traditional agencies were dinosaurs. Now, I wonder why so many are still around. Lenderman describes many of the environmental factors behind their decline, including the role of procurement departments squeezing agencies on fees and the big consultants moving into the advertising space. Not to mention the seismic disruptions to media consumption resulting from the rise of the Internet, the DVR and the smart phone.
Depending on your point of view, the changes of the past two decades in the marketing/media world are some combination of terrifying, painful, joyous or exhilarating. Long established businesses were thrust into an existential crisis, needing to reaffirm or redefine their essential purpose.
However, as earth-shattering as these transformations have been, I believe that there is another, completely overlooked factor at play in the decline of the ad agency: the decimation of account management. Lenderman touches on this indirectly, noting that “too many recent campaign proposals that I’ve seen are anemic in the strategy upfront,” and calling on agencies to “champion the strategy.” Let’s look at this in greater depth with some historical perspective.
In a simpler, 20th century world, before cable, the Internet and big data, agencies played a critical role for clients that extended well beyond advertising. The actual creative product – TV and print ads – was just one of many deliverables, and often, not the most important.
At the heart of the great agencies of the time – Y &R, Benton & Bowles, Ogilvy & Mather, Dancer Fitzgerald Sample, Compton, Leo Burnett, J. Walter Thompson, Ted Bates, McCann-Erickson, Needham, Harper & Steers, Tatham Laird & Kudner, Grey, and even creative powerhouse Doyle Dane Bernbach – was account management. Clients relied on agencies as strategic partners and insisted on talented, experienced, credentialed account people. Agencies recruited from (and found plenty of enthusiastic talent at) prestigious MBA programs. High quality, entry level marketing people for both account and brand management were also recruited from my alma mater, Northwestern University’s Master’s in Advertising program (now called IMC, Integrated Marketing Communications), which offered an intensive, specialized program in marketing, media and creativity.
Without a Master’s degree, you couldn’t get into account management without a few years of experience in sales, agency media or research.
Account people were expected to “know the client’s business better than the client.” While this was, of course, impossible, it did serve as a clearly articulated, aspirational goal that reflected the proactive role expected of the account side. Account managers were true partners of their client counterparts both quantitatively and quantitatively. Most often, agencies played one-on-one or two or three-on one. That is, every brand person had a direct counterpart, and account people would often outnumber brand people.
Account people pored over sales data and research to crunch the numbers, reporting back to the client with insights and specific recommendations. They not only contributed to their clients’ marketing plans, they were often responsible for writing entire sections of those plans. They attended sales meetings and went on store checks. The creation and placement of advertising might have been their main focus, but account people were concerned with the health of the client’s business, first and foremost.
Then, the 1980’s came along. Apple and other Silicon Valley start-ups inspired an obsession with entrepreneurs. Mike Milken pioneered the use of junk bonds to finance leveraged buyouts. The big fish started eating the little fish (who were generally very well rewarded for being swallowed up) and suddenly the finance people were now the business superstars, not the marketers. The ad agency business was not immune.
In an effort to build strong global networks, create business efficiencies, offer a deeper range of services, and sometimes just to cash in, agencies started buying each other up and merging. Giant holding companies like Interpublic had already existed, but their influence started to grow tremendously. A recent piece in Forbe’s by Avi Dan of the CMO Network, states that:
“The formation of the holding companies in the 1980’s shifted the industry’s energy to acquisition and consolidation. In 1985, the biggest ad agency, McCann-Erickson, had a market share of 1.5% of all ad spending in a fragmented industry. Thirty years later, five holding companies had a 75% share of the advertising industry.”
From my perspective, the industry consolidation of the 1980’s turned once creative enterprises with unique points-of-view into lumbering conglomerates focused on short-term financial concerns. They might as well have been banks.
Dan agrees, writing, “This consolidation denigrated creativity and treated it as a commodity that can be monetized.” Lenderman too points out the “tragic mistake” of agencies letting themselves become commodities: “In the chase for ever-decreasing margins and fees, ad agencies have increased their offerings to try and become everything to everyone.”
But it wasn’t creativity is that was “denigrated.” It was account management.
Agency headcounts relative to billings were slashed in response to lower fees and agency profit requirements. Account management suffered along with other departments. Adding insult to injury, a new discipline arose in the 1980’s that proved to be the coup de grace.
That, of course, was Strategic Planning, also known as Account Planning.
The practice originated in London, and I was at Chiat/Day when Jay Chiat brought the first British planners to the U.S. Now some of my best friends are planners, including the great M.T. Rainey, Chiat/Day’s (and America’s) second UK import after Jane Newman. But most often – not always, of course – style and toeing the agency line seems to trump substance in the planning function.
To be fair, many account executives could also have been categorized as “empty suits” back in the day. But my feeling – and I should try to quantify this – is that the quality of the people isn’t the same, neither among planners nor the new breed of account managers. I don’t believe they are as well educated (Master’s degrees from top schools), or as well trained in (or even suited to) marketing and advertising. Account managers now seem to be nothing more than traffic managers. They coordinate tasks but seldom add meaningful strategic value.
More important is the actual role of the account planning function. The aspiration is noble: To be “the voice of the consumer.”
At its inception, account planning relied predominantly on consumer focus groups for that understanding. Eventually, as agency research departments – equally balanced between quantitative and qualitative – were completely replaced by planners, copy testing (as demanded by clients) and other quantitative methods made their way into the planning mix.
The biggest problem may have been one of perspective. Without the discipline of account management creative departments ran amok. The motto of the old Benton & Bowles agency, “It’s not creative unless it sells,” seemed quaint.
Led by agencies like Chiat/Day and Fallon, McEllligot & Rice – both heavily invested in account planning at the expense of account management – it seemed that creativity for creativity’s sake was all that mattered. Voice of the consumer? Forget it. Get noticed. Stand out. Be outrageous. Be self-conscious and ironic. Be cool. Win awards.
It seemed to me at the time, as it still does when I work with some of the best-known “creative agencies” now, that the true role of account planning is to rationalize why whatever campaign the creatives are pushing is great. It is rare to see account planners stand up to the bullying of creatives. We go through a long, productive strategic process and come to agreement on a creative brief, the creatives ignore it and do whatever the hell they want, and the account planners rationalize the work with with egregious sophistry. (Worse yet, is that clients often don’t know better to push back.)
Sometimes, letting the “creatives” run amok works. Most of the time it doesn’t. Anyone remember the Taco Bell Chihuahua?
Without credible strategists – true business strategists in substance, not just title – all the agencies have left is “creative.” Unique agency personalities resulting from the interplay of account management, research, media and creative are now harder to find. Agencies are all too one-dimensional, lacking depth and balance.
And if “creativity” is all you got, you are now competing in a world where clients have learned that you’re not the only option. And not even the best option, at that. They can look to Hollywood, to expanded in-house capabilities, to all those influencer/writer/filmmakers on the Internet or any number of other sources. Surely, if clients are now driving the marketing strategy more or less single-handedly, why bring in a middleman? Clients have no reason to think that they can’t manage the creative process as well as, or better than an agency.
The Lederman piece is right on the money in terms of what needs to be done to Make Agencies Great Again. I expect that someone will crack this nut. Most likely small, nimble groups of strategists with one or more senior “creative” people who will curate and strategically access the right creative talent for each assignment.
But it won’t be the usual suspects. Agencies as we knew them, for better or worse, are long gone. The days of agencies as we know now them are numbered.
