Before You Walk Away From a Trusted Agency, Better Think Twice

Johnson & Johnson Is Giving Up Too Much in the Name of Efficiency

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It sounded just stupid. Only hours after a Johnson & Johnson exec featured ads for three of its brands at the annual ANA Masters of Marketing Conference last week, the agencies behind the work had lost the business. A higher-up at the company said the changes weren't based on performance issues, but rather "operational efficiency and simplicity."

There are compelling reasons why you should avoid issuing such an inane statement, no matter how right the logic might appear.

The news wasn't a surprise, exactly. J&J had announced a global review of its creative agencies back in July, intended to "build greater value" and "deliver integrated solutions" for its brands. In other words, it wanted to reduce costs by making fewer agencies get more work done, and the news last week was that loads of work will shift from Interpublic to Omnicom and WPP companies.

It's also no surprise, since the exec in charge of the review was newly appointed, and conducting agency reviews is standard operating procedure for marketers in new jobs or roles. A common outcome is to give business to agencies with which they've worked in past lives, and Omnicom worked for the exec when he was at Pfizer.

The catty round-robin matchups that trail execs from brand to brand aren't news. It's hard to avoid having worked with lots of agencies over the tenure of a career, and the appearance of being bold and can-do is a great personal branding opportunity. Agency moves and consolidation can show nifty short-term cost savings, so the marketers who rely on prompting such upheaval at every new job aren't going to stop doing it anytime soon. Old habits die hard, if they die at all.

Longer-term, though, I wonder if the consolidation rationale holds any water. J&J's announcement was based on three myths:

Efficiency. It doesn't make sense that in our age of robust technology platforms and tools that the number of inputs into any system should make it any more or less efficient. Imagine if the supply-chain folks in a manufacturing department decided to forgo using technology to find and use the best possible suppliers, irrespective of number or location, and instead claimed that it was more efficient to make one factory produce all the parts? This myth is only partially real if J&J is outsourcing its management responsibilities to its agency holding companies, but again the number of those entities has no connection to the efficiency of their behaviors. And by not owning it, they trade away authority and control for some cost savings.

Simplicity. To presume that the next relationship will be somehow simpler or easier than the current one is a common fallacy that drives everything from product sampling to the divorce rate. We are a hopeful species, and it's no more apparent than in the recurring expectation that a new agency relationship can be structured to avoid the pitfalls of the last. The best outcome is that the pitfalls will be different, and the more common result is that those issues will become equally nagging over time. Getting invoices compiled into one bill and charging the holding company with agency management sounds simpler, but underneath those benefits are all the complexity and nuance that constitute every meaningful creative relationship. Improving existing relationships is often harder work, but it's work with known resources. Different isn't the same thing as simpler.

Integrated solutions. I'm embarrassed that I'm not up on the current buzzwords for integration ... is it "global vision, local touch," or maybe the reverse? I do know that brands have the capacity to identify and deliver uniquely different strategies to ever-finer slices of local markets, and that the reality of social engagement requires branded communication that 's literally one-to-one on an entire-planet basis. The premise of a broad, single-brand position dominating its category around the world in the way, say, Coca-Cola does is a silly, unattainable goal to chase. Few brands command the distribution, budgets or history that Coke owns, not to mention the production margins and low expectations of consumption benefits. So what's getting 'integrated' at J&J? As far as phrases go, that one sounds even older than the ones I remember.

Agency relationships are profoundly complicated things that appear simple only in contrast to the insanely and endlessly complicated relationships brands have with their customers. If you ever find yourself thinking about walking away from an agency that just produced great work for you, maybe you should consider that a decision based on habits and myths may not be strategic.

It might be as stupid as it sounds.

JONATHAN SALEM BASKIN is president of Baskin Associates, a marketing-decisions consultancy, and co-author of the recently published "Tell The Truth." You can follow him on Twitter: @jonathansalem.
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