An ad agency grown-up weighs-in on changes needed to the procurement process

Good interview with Tara Comonte in Ad Age today. Tara is the COO/CFO of Mediabrands and especially well-qualified, therefore, to talk about changes needed in agency compensation models.

Sober and thought-provoking.

Hitting the marketing reset button

It’s a very good sign to see more chatter about the need for senior marketers to re-assert the strategic value of marketing inside organizations, which is the point of Scott Davis’s piece in Ad Age.

It boils down to trust.

Fixing ad agency compensation

A ray of light at the end of the tunnel: Ad Age reports that ad agencies are finally getting their dander up over compensation. That’s a welcome bit of news to concerned blogs everywhere – like this one – that believe the pendulum has swung too far to the austere side of the ledger in the matter of  providing agencies with a living wage.

Let’s make the marketing departments of clients part of the conversation, as well.

Calling all advocates – Part II

In a side-bar to the piece in Ad Age about Forrester’s proposal to re-make Brand Managers into Brand Advocates (see earlier blog), Rishad Tobaccowala, Denuo CEO, observes that marketing departments are getting smaller at exactly the time they need to be getting bigger. This is about the most important thing to be thinking about in our business today.

The media and marketing world is doing just what it’s supposed to do – and has ever done – in order to keep up with the growing complexities of society: it is getting more complex. The marketing business, however, is still being made to atone for the excesses of the last era, when costs continued going up long past the point of observable returns; when advertising was in its extravagant period of broadcast television and mass circulation newsweeklies.

It is time to move on. More risk-taking in defense of the business. Better compensation. More, not fewer people. These are things marketing needs to be working on in a complex world.

Brands need advocates. Marketing needs advocates, too.

Calling all advocates!

I am waiting for a new report from Forrester Research that Ad Age says is due out this week that will offer insights on how brand marketers should behave in the digital world. According to the Ad Age story, the guts of the report will focus on familiar themes about the need to be faster and more nimble, and the need to be open to new sorts of partnerships, especially with the media, that are less reflective of the long-term ad agency associations that are industry legend. A summary observation in the report is that “Brand Managers” should be re-christened, “Brand Advocates,” which is an interesting point, and the one that most caught my attention.

I remember Stu Upson, the CEO of Dancer Fitzgerald Sample, the ad agency in New York where I first worked after graduating from college, addressing the New York office in a rare all Company meeting to talk about the loss of a major client. I don’t remember all the things he said about the client loss, but I remember what he said about the business of advertising. He said advertising is not about giving consumers the information they need to make an informed decision about products they buy – and he used the word “bunk!” to underscore his objection to that notion. We are advocates, he said, along with our clients, of their brands. We are advocates.

There’s a bit of the “so-what-else-is-new” to me, then, in Forrester’s recommendation that marketers re-brand “Managers” as “Advocates”, but fine; Perhaps what Forrester is sensing about the current state of brand marketing is an urgent need for advocacy given the amount of change that has occurred over the past thirty years, and given that in the violent tumble of new media brands are losing track of their audience and audiences are losing track of brands.

Online we are doing a lot to push the value of brands – media brands, that is – away. We seem to imagine that we can distinguish between the value of media brand relationships and consumer brand relationships. We think competing for brand advertising is desirable, but dependence on media brand relations in order to do so is not. That’s a significant disconnect. It implies that the context of things – and all brands are contextual – matters only part-time. Bunk! If the relationships that consumers have with particular media brands are irrelevant then the relationships they have with all brands are irrelevant. Also bunk, of course. Brand relationships matter. Context matters.

Context has simply improved and multiplied. Call it fragmentation. (Everyone else does.) The media world has fragmented. So what? The consumer products world has fragmented, too. I stood in line at Starbucks this morning. Fortunately, by the time I got to the register I was chatting with my wife on the mobile telephone and had her to walk me through the choices. The coffee business is fragmented. Who would have thought it could happen?

All of which is to say that Forrester may sense the urgent need for Brand Advocates in order to weave back together the fragmented pieces of their brands and brand relations. Happily, the media world is configured to help. It can segment reach against the normal Joes that just want coffee and the other Joes that want Grande Cappuccinos. And, it can do it in the context of those relationships.

A few more media brand advocates to join the consumer brand advocates and we should be good to go.

Pride goeth before a fall: consumer magazines talk about building an ad network

According to Advertising Age, rival consumer magazine publishers are talking about working together to build an ad network in order to offer competitive reach compared to other ad networks.  Foremost in the minds of the publishers is the price of their inventory, which has been decimated by third-party ad networks, in their joint estimation. Now, they have determined, it’s time to circle the wagons.

Presumably, salespeople at each magazine would be allowed to sell across the ad network. Or, participants could be envisioning a dedicated network team apart from the rest with shared responsibility for sales. Or, they may be thinking of one person per sales force exclusively responsible for network sales. The parties may be looking at the Newspaper National Network (NNN) as a model, which has done reasonably well for its newspaper clients offline – albeit, as a stand-alone business. 

Whatever. The reality is this (and it bites): a horizontal consumer magazine ad network is the wrong model. Don’t do it.

Aside from the fact that magazine publishers, much as competitors in any other field group, have never shown themselves to be especially good colleagues and collaborators except when attending awards banquets, the horizontal network model will not protect them from brand erosion, the source of all value. If they propose to compete on reach, for performance, by selling across each other’s properties price will enter into it – and the price will be lower. If charging less on one’s own for one’s self can make one feel better, then we must come to terms with the fact that one is not protecting brand; one is protecting pride.

Pride in something has value. Pride for the sake of pride does not. And, today, in truth, there is altogether too much pride being confused for brand among major media companies.

Time to get over it.

A little competition is the thing to make everyone feel better and to support brand value. If magazines want to compete with ad networks they should, indeed, start their own, but they should be proprietary, vertical networks that sink deep roots under their brand promises and take aim at competitive brand properties, as always.

Horizontal generalizes. Vertical specifies. Brands are a set of specific promises, including media brands. If consumer magazines try to compete on reach they will compete on price, thus giving the market permission, effectively, to plan and buy accordingly. Under those circumstances, third-party horizontal ad networks will win. 

Don’t do it. Compete on brand and drill deeper into the proposition.

How? Build vertical brand networks by inviting independent web publishers to assemble under established media brands and sell down through those networks. Voilà, reach happens. Price will follow reach down, but for independent publishers anything above a $1.00 is a win. Bring them $5.00 cpms and they will slay dragons for the provider. Speak in admiring tones about their work and the admiration will cause them to shine. The shine will cast a glow on the market and, voilà - brand halos.

Right now, it’s apparently in the heads of people at consumer magazines that everyone will be judged better if they keep in the exclusive company of each other. For better or worse, snobs don’t really behave that way. Mostly, they conspire continuously to undermine their neighbors and gain the advantage, and this is how it will be with a consumer magazine network.

The status quo, relying on third-parties that are unaligned and unvested in the brand, is clearly no way forward. Consumer magazines are right to want to seek new partners. They would be wise to pick ones that desire them to be successful in the future and are willing to provide unconditional support.

Who is that going to be? It will be the have-nots, the wanna be’s, the aspiring and the yet-to-be-discovered - the Great Unwashed in the Internet wagon train heading west.

And…if you build it, they will come.

It’s just business. Or, is it?

Advertising Age reports on the game of musical chairs that has been taking place over the past 18 months among the top media buying agencies. According to the report, 10 of the top 14 companies in the space have swapped-out their CEO.

This is what comes of living in the real world. It wasn’t always thus for ad agencies. Before the era of leveraged buy-outs made consolidation possible, ad agencies were private companies owned by partners living in places like Connecticut. Now, they are public companies, most of them, and when times get tough the tough re-arrange the deck chairs.

Whither client relationships in all of this? I liked Phil Cowdell’s reported statement to boss Scott Neslund that he would only take-over Mindshare’s North American operations if he could do so as an “old-fashioned client man.” But what does that mean today? Do relationships matter? Matt Seiler at Universal McCann reportedly thinks it’s more complicated than that.

Maybe so, because the clients themselves, perhaps taking their cue from the itinerant nature of things on the agency side, are as prone to sweep the decks by changing one agency for another in costly account reviews.

Is it the business or is it simply business that has the agency world doing so much deck chair re-arranging? Is it the complex realities of the new media world, or the realities of the world, period? What problem is getting fixed by all these changes? Performance problems? In which case it’s being argued that among the top 14 companies in the media planning and buying industry 70% of the leadership was - well – not right for the times.

Really? Recessions have always taken their toll on the advertising and media business. Technology, on the other hand, while disruptive, has done nothing but help. Radio? Television? Very disruptive, but they helped make multi-millionaires out of the leading agency executives of the time.

Adaptation can be brutal. We are a full fifteen years into this Internet thing, however, and the conversation is still about how to make it work, meaning there is no evidence that adaptation is occurring at a faster rate today versus the past. Indeed, the IAB’s report on Internet spending for the first half of this year issued last week with Price Waterhouse Coopers indicates nearly 90% of media spending still occurs on the top 50 web properties.

How complicated is that? But, maybe, that’s the point of so much change at major buying companies. No more skimming the surface of the new media opportunity and hanging around the shallow end. Time to wade deep and really connect with the possibilities – starting at the top.

It which case, maybe the 70% overhaul leads somewhere. But, only if you believe it’s about the business, and not just about business.

Ad Age poll finds industry divided on support for political cable shows. But, seriously.

In the wake of the Glenn Beck fiasco Ad Age has asked in its weekly poll if the political talk shows on cable TV have run their course. In response to the question, “Do you think more advertisers will pull out of political cable shows,” 55% appear to have answered yes, and 45% no. The industry is divided.

I want someone to ask a follow-up question: “Do you take political cable shows seriously?” I expect results to reveal that only 20% say yes, and 80% say no.

Therefore, what sort of industry people in the Ad Age poll - making up 45% of the total - believe advertisers will still pony-up for spots on those programs in view of the fact that nobody really takes them seriously?

The possibilities include the following:

1. Industry people that believe the political cable shows represent quality entertainment (if not serious political programming) and are valid advertising opportunities for that reason;

2. Industry people that believe political cable shows represent entertainment on a par with reality TV and are still a valid advertising opportunity for that reason;

3. Industry cynics that believe advertisers could care less, frankly, and they’ll be back as soon as the fury dies down and as long as the ratings remain;

4. Staunch First Amendment supporters within the industry that believe advertisers should be defending the rights of political cable shows by resisting calls to disengage;

5. Direct response people that are thrilled to think advertisers are abandoning political cable show inventory.

I suspect the 20% in our model that take political cable shows seriously are included among the people that click on all the ad banners. So, perfect, there is a silver lining at the end.

What the heck is Display Advertising, anyway? And who cares?

It’s mid-year ad forecasting season. ZenithOptimedia and PricewaterhouseCoopers have both issued outlooks that could be described as cautiously optimistic. Once more online is expected to float slightly higher in the water than traditional media. Again, however, online is a mixed bag. Paid search will grow the fastest. Social networking will also grow. Video is reportedly still just around the corner according to analysts. But display advertising will shrink - at least according to PricewaterhouseCoopers.

It is a wonder anyone can arrive at an overall picture of the health of the business with all the separate ups and downs projected within our industry. Why is it important to differentiate among advertising formats as if they were businesses unto themselves? With regards particularly to “display” advertising, what are we talking about? Banners? Leaderboards? Do the OPA’s new, larger ad units qualify as display advertising? Yes? No?

Why is video not display advertising, or visa versa? What about in-banner video, is that display or video? Expandable banners…what are those? Is rich media display advertising, or is it different? Or, does it depend?

Is display advertising inclusive of behavioral targeting? Behaviorally targeted video is not display, I assume. Are behaviorally targeted leaderboards display? Probably. Paid search display ads such as Google is keen to foist upon the world: is it display advertising or paid search? What exactly do we think social network advertising will look like as distinct from display advertising?

Of course, whatever it is, who cares what happens to display advertising? Really, let it wither and die. Should we not be agnostic concerning ad formats and delivery? Arguably we should do everything within our power to ensure that video emerges as the standard given its ability to compete with the sight, sound and motion of television. Of course, it might remain as hard as it is today to populate the Internet with good video content capable of supporting good video advertising. In which case, what is the problem with in-banner video which seems especially user friendly, except that it might start out life each time as a banner?

Possibly, the pretzel logic that has us examining individual species of advertising within the online media animal kingdom has its roots in our temptation to bite the apple way back when in hopes of - well, you know, knowledge. The Ad Age story on PricewaterhouseCooper’s ad forecast quoted Alistair Beattie, head of strategic planning at AKQA London, saying something in that regard:

“Banners have been sold as a media where effectiveness can be directly measured by a click,” he said. “If posters were measured by the number of times people reached over and touched them, they wouldn’t be used. If you measure banners by clicks alone you are missing a trick — we’ve made a rod for our own backs.”

A rod for our own backs, indeed. All this energy on which ad units and formats are likely to trump the other, like one is the key to the door leading in - or out. How about let nature take its course? Says Ad Age again about Mr. Beattie:

“…Mr. Beattie said banners should be measured through a process of noticing the effect on how consumers feel about a brand. He also warned that it’s early. “People talk about the internet as just another media channel, but it’s not — it’s a social revolution, and the industry is still relatively immature.”‘

“Rational arguments enclosed in emotional envelopes.”

Further to some of the thoughts yesterday in this space about the creative shift taking place in the advertising business and its impact on the quality of advertising up for awards at Cannes this year, is the Viewpoint from Hernan Lopez, President of .Fox Networks, in the Global Issue of Advertising Age this week. Lopez calls for a creative revolution in interactive advertising, echoing sentiments already expressed by others such as Randall Rothenberg of the IAB in the U.S.

These are all threads of the same story-line: good creative must come next in New Media. The people require it. The new generation of consumers has made the move to online and advertising must respond with messages that reflect the sophistication of the users and the environment. People are ready and waiting. Old commercials formats are drying-up creatively as attention shifts to new platforms.

Hernan Lopez leans on some of the findings of advertising veterans and researchers, Erwin Ephron and John Philip Jones, to make his points. Both have agreed in their studies over the years that the quality of the creative is the most significant contributor to the success of TV commercials. More recently, Mr. Jones distilled the ingredients of effective advertising down to “rational arguments enclosed in emotional envelopes.”

Creating emotional envelopes is the critical concept here. In a broadcast environment we do it with sight, sound and motion. Online we need to think more like we do in print and use the environment to help create the emotional envelopes.

Lopez laments that we have missed creative opportunities online given our fixation with things like click-through rates. Quite right. Our formative creative years online have been invested in action rates to the detriment of building bridges between our advertising messages and the reason people visit the web. Internet advertising has been lacking emotional context despite being surrounded by it.  

Fortunately, we are gathering ourselves around the need for creative answers. Unfortunately, the answer we are sometimes tempted to give is to make online advertising more like television by relying on video. Video feels like home, I suppose, offering emotional context to those of us in advertising business. But, consumers keep resisting this initiative by communicating through their proxies, the web publishers, that video is disruptive.

In the end, I think we’ll discover that the Internet is not a place for “commercials.” Sight, sound and motion works in the context of television because television is sight, sound and motion. The Internet, on the other hand, is about – well, come to think of it - emotional envelopes. 

We can make a strong new beginning, creatively, by tucking our messages neatly into those.