Commentary by Rance Crain

Risk Aversion is Risky Business for Marketers and Agencies

Among Other Things, It Makes Advertising Creativity an Endangered Species

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The phrase “risk averse” has been cropping up with greater frequency as a description of the advertising industry.
Rance Crain, editor in chief, 'Advertising Age'

At our Madison & Vine conference in Los Angeles the other week, Stephen Berkov, director-marketing for Audi of America, said that when he returned to the U.S. from overseas assignments he was surprised at how risk-averse -- and at the same time arrogant -- marketers had become. He said what’s needed is to “kill corporate” -- which was turning into a real-life version of the comic strip “Dilbert” -- and “resuscitate brands.”

And in a recent article The New York Times said alternative adman Robert M. Greenberg, proprietor of R/GA, “prides himself on being an iconoclast and a troublemaker in an industry that is flashy and kinetic on the outside but which has grown conservative and risk-averse at its core.”

An era of great uncertainty
What a depressing state of affairs. For one thing, as a Madison & Vine panelist put it, we are living through an era “where great uncertainty reigns,” and people and companies are hunkering down around their core competencies -- which might not be the right ones for the time. If the “old traditional platforms” don’t work anymore, as another M&V speaker said, nobody is sure what is going to work, so the temptation is to stick to what used to produce results.

Another factor is the stock market, which has taken a terrible toll on America’s public companies. It beats them up numerically for missing their profit numbers every quarter, and even if profits are up stocks get hammered if the Street doesn’t think they’re up enough -- or if management injects the slightest caution about the year ahead.

So companies have learned not to take chances on things they can’t control, and that includes advertising that tries to break through the clutter, to break out of the pack.

Creativity, an endangered species
Advertising creativity is an endangered species -- case in point: the latest Super Bowl ads -- and you can blame it on big agencies and big companies. Here’s why:

The big ad-agency holding companies, being publicly held entities, are especially adept at going where the money is -- on a long-term, and more predictable, basis. And contrary to popular opinion, the money today isn’t in 30-second commercials; it’s in marketing services, where the big holding companies now get over half their revenue and profits.

But as we heard at our M&V conference, marketers aren’t necessarily looking to ad agencies’ traditional lineup to drive their business, whether 30-second spots or marketing services.

Steve Heyer's ideas
What they’re looking for are ways to enhance their brands by giving customers “behind the ropes” access to places and events that non-customers don’t get to go. So Steve Heyer, head of Starwood Hotels, is enlisting help from hip partners to differentiate its various hotel brands. He’s having discussions, for instance, with Victoria’s Secret about having fashion shows at W hotels. I didn’t hear Steve mention ad agencies as a source for these ideas.

Maybe marketers are becoming more risk-averse where traditional advertising is concerned. They don’t think it’s worth the effort and risk to pour money into the same old things because the results don’t come with a guarantee.

What worries me most here is that the play-it-safe attitude of the ad industry is indicative of bigger problems. U.S. companies, and the U.S. economy, have prospered because they were willing to take chances. We innovated, we challenged, and the result was perpetual renewal of our system.

Let’s free advertising from the tyranny of trepidation and timidity.

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