In the '80s, major corporations lost faith in their core assets-their big brand names-and diversified into all sorts of non-related areas-Kodak into analgesics, Xerox into financial services. When that didn't work, they went on a productivity binge, downsizing their way to prosperity. Now, they are again focusing on what brung 'em to the party.
But at the same time, I keep hearing from agency guys how hard it is for them to build relationships with the heads of their client companies. The CEOs seem diverted by other pressing problems-keeping quarterly earnings growing faster than Wall Street analysts are predicting (even in a booming stock market, the street hammers stocks that come in below their projections); staying on good terms with their boards; and trying to figure out how to hedge against the strong dollar. Ad decisions are being pushed down to lower and lower levels, often to people new in the job who don't know anything about advertising. As one agency biggie told me during a round of golf the other day, it's getting harder to keep bright young people in the agency-they are getting disillusioned and are leaving for greener pastures. "It's not a whole lot of fun anymore," he told me.
Part of the problem is clients perceive agencies in a much narrower way these days. As Martin Sorrell, chief executive of WPP Group, said in a speech last fall, "There was once a time when client companies would welcome an agency's thoughts on just about all aspects of their business: diversification, brand strategy, investment, internal training, presentation-as well as advertising and promotion. For a wide variety of reasons, all that has changed. Increasingly, clients expect only creativity in their communications from their agencies-and increasingly, that's all that agencies are organised [he's British, you know] to provide.
"The internal consequence of this is significant. It's clear from the books, and from talking to David Ogilvy and others, that the best agencies were once all-around inventive enterprises. Clients approached agencies expecting inventive and unorthodox perspectives on their total businesses.
"Today, it seems, only creative departments are expected to be creative-and the consequence of this is two-fold. The first is to reaffirm the impression the only creativity that matters to clients is the creativity of their communications-the words, pictures, packs, posters. And the second effect, linked to the first, is that it increases the risk of advertising creativity being seen, at least by its practitioners, as an end in itself-rather than the means to an end for a happy, prosperous client," Mr. Sorrell stated.
Maybe that's why there is so much emphasis on whether advertising works-a debate that should have been settled long ago. Now they're using "advanced analytics" to measure the impact of advertising. Campbell Soup has six people devoted to probing how its ad dollars are spent, and has increased ad spending 30% "because we've seen that there are certain brands that are very responsive to advertising," Campbell's head of global marketing research told our family newspaper.
Pardon me, but I wouldn't have thought it was stop-the-press news certain brands are responsive to advertising. Does it take six researchers to figure that out? You advertise, you see sales go up. Why does that require constant verification?
It's because clients, deep down, hold such little faith in what advertising can do to build their brands.
What's saddest is the way companies jerk brands around, diluting advertising's value. Scott Bedbury, senior VP of Starbucks and before that, Nike, contends, "A lot of brands are trying to position themselves as 'cool.' More often than not, brands that try to be cool fail. They're trying to find a way to throw off the right clues-they know the current vernacular; they know the current music. But quickly they find themselves in trouble. It's dangerous if your only goal is to be cool. There's not enough to sustain a brand," Mr. Bedbury wrote in Fast Company.
But that's what happens when the top guy takes his eye off the ball-his underlings are free to create mischief with their company's most important assets. And that's why I'm not optimistic about the staying power of America's