Advertising Age reported U.S. ad spending fell 6.5% last year from 2000 levels. Industry forecasters said it was the largest year-to-year decline since Great Depression year 1938, when ad spending fell 8%. The cause goes beyond the current recession and the death of dot-coms. It reflects fundamental weakness in the advertising process. This can be fixed with a more disciplined creative product, new agency/client work structures that emphasize greater speed and efficiency, compensation schemes that focus agencies on producing great ideas that generate results for clients, and a resolution to the problem of commercial saturation on TV.
* Fix the creative product. Too much of today's advertising is irrelevant and a waste of money. Ten years ago, some observers opined that ad agencies seemed "more interested in selling their product than the client's product." Since then, it's gone from bad to worse. Next time you watch a TV commercial, ask these simple questions. Does it contain an idea? Is the idea relevant to the selling message? (Nine times out of 10, it isn't.) Does the idea have legs? (Is it campaign-able? Can it be run for years?) Does the commercial reward the viewer for watching? Does it impart useful information? Make me feel better about the brand? Few meet these criteria.
The industry needs to refocus on getting results for clients via better training and discipline. Creative people should be rewarded based on results they generate for clients, not awards they win. Put together a portfolio of ads that are creative and have generated results, and use this as a template and training tool. Agencies that produce great ads that get results are the most profitable, win more new business and attract the best people. Why wouldn't the industry focus more on creating work that gets results?
* Fix the creative process. Most clients have completely changed how they do business to improve productivity, product quality, customer service and so forth. Agencies have done little to change the way they create advertising. The process is inefficient, unproductive and not conducive to greater speed and lower costs.
Currently, a team of agency people and the client develop strategy. After a great deal of time and money has been spent, the task is handed to a few creative people. They often work on other clients' business as well and this can create a bottleneck situation. Usually, the rest of the team and the client are excluded from the development of creative work. As a result, first creative efforts are often wide of the mark-causing more delays. Why not keep the entire team and the client involved in the idea-generating phase? Who says ordinary mortals cannot come up with a great ad idea? Wouldn't it be sensible to involve the client in the entire process so that selling the end result would be a foregone conclusion?
A word on planners: Their job is to distill huge amounts of information into a simple insight that can drive a powerful creative idea. But I've often been presented with incomprehensible 100-page documents. Keeping it simple would make planners and the creative process more productive.
* Fix agency compensation. Many clients have told me they feel their agencies are paid too much for too little. That perception, in combination with a mediocre creative product, explains why clients have become less loyal to their agencies. I am a proponent of fee-based incentive bonus systems that reward the agency handsomely for a big idea that gets results. Perhaps this reward should work more like a royalty payment over the life of the idea rather than a one-time bonus payment. A big idea has enormous value. Shouldn't that value be paid for over the life of the idea? Clients should not begrudge the agency making significant profits in return for significant results. There should be no compensation limits on the upside in return for lower going-in costs.
* Fix TV-commercial saturation. There are nearly 40% more commercials and promos on network TV today than 10 years ago: 16 minutes per hour. Cable TV can contain more than 18 minutes per hour. Are we not killing the goose that lays the golden egg? Let's see more effort to merge program content and advertising into a seamless format. It will require the cooperation of broadcasters, writers, producers and ad people, but something must be done to reduce TV ad clutter.
Lack of confidence in advertising as an effective marketing tool may be contributing to the current downturn. Refocusing on getting results for clients and becoming more innovative is essential advice for the industry to heed.
Graham Phillips (GrahamP@aol.com) is a former chairman-CEO of Ogilvy & Mather and Y&R Advertising. He is a director of Brunswick Corp. and consults for a number of other companies.