3 ways to fix the ad industry—before it’s too late

The previous installment of this column was a well-meaning rant against agencies attempting to sell process instead of ideas, and it seems to have struck a nerve. Half the industry believes that clients want creative solutions to their business problems, while the other half is trading process for pennies and peanuts. Because the two sides can’t agree, agencies are having an identity crisis, clients are losing faith and rolling layoffs are now a seasonal occurrence. So if we’ve diagnosed the problem correctly, what can we do to turn things around? [Also read: Breaking down the process-idea debate] When an election year rolls around, people naturally complain about our comically corrupt and institutionally inept representatives, at which point suggestions are made by family and friends on how to save our democracy. Here’s my favorite: Hang all the lobbyists, drown all the lawyers, poison all the politicians and then start over. Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here Perhaps a bit draconian, but it cuts to the quick of the problem, because those suggestions boil down to money, process and people. Those are the same three elements we can leverage to save the marketing industry from its current downward spiral. So with apologies to anyone offended along the way, here are three suggestions for digging ourselves out of this mess: Agencies should get paid for their work, not their hours Everyone knows that agencies were once paid by media commission back in the days when creative and media sat under one roof. Recurring fees were high enough for agencies to hire truly top talent—iconoclastic thinkers who redefined entire categories with platforms built on big ideas that set a brand up for decades of growth. Don’t take my word for it, study the advertising archives and you’ll see a level of storytelling and craft rarely visible today. This led to relationships that lasted because nobody felt exploited, so agencies weren’t distracted by constant pitching or paranoid about pressure from procurement. The advent of the holding company changed all that, not only for agency networks but independents, too, because the barons behind the holding companies tricked clients into believing media was a bulk-buying business and the creative side was all about client service. Clients aren’t buying client service, they are shopping for ideas. Clients should expect outstanding service just like you expect the guy at the Lexus dealer to answer the phone, but you’re not visiting the showroom to find a golf buddy or a lunch date. Remember, the holding company model was designed by small men with big checkbooks who knew next to nothing about marketing beyond what it cost. Trained in finance, not the messy business of creativity, they lacked the instincts to charge top dollar for intellectual property. Charging clients for hours is akin to a wireless company charging for minutes. Pretty soon a competitor announces the first month is free, then a rival who’s bleeding customers says, hey, now it’s unlimited, and before you know it, an entire industry is on its knees cutting costs and racing to the bottom like a sumo wrestler on a bobsled. Ad Age Creativity Bookmark our section covering the best in brand creativity every day Read more here Billing by hours is a disincentive for agencies to solve a problem quickly or ideate beyond the brief. It corrupts partnerships once based on shared goals and turns them into transactional relationships. Mischief has said they don’t do timesheets, and Anomaly once made a similar claim, but our industry urgently needs solidarity on this issue. If management consultants can align on the price for adding value, why can’t we? Clients should pay for the incremental value of a breakthrough idea—which is measurable—and not the time it takes to produce a set of deliverables. Call bullshit on conflicts and own your IP Ogilvy recently did work for both Unilever and L’Oreal, and a while back Wieden worked with KFC and McDonald’s simultaneously. Clients gladly pay management consultants for “category expertise” and accept the fact that Deloitte, McKinsey and Bain sleep with everyone, yet advertising agencies are forbidden from philandering. Given that consultants handle more proprietary data than agencies, this never made sense. Great campaigns come from the DNA of a brand, so a decent agency would never create the same campaign for Coke as for Pepsi. As retainers turn into project fees and clients become more promiscuous, it’s only fair agencies leverage their category knowledge to work across competitive brands. All boats rise. [Read more: How agency conflict of interest policies are evolving] Agencies should also own and license their ideas, not sell them outright. If a fickle client flees, the agency should earn royalties on that campaign, and by the way, so should the individuals who developed it. (Take a look at the film production company Artists Equity launched by Ben Affleck and Matt Damon. It offers clues on ways to be more inclusive in compensating the talent that makes the magic happen.) Agencies should (re)hire senior talent if they expect to stay relevant As this publication pointed out recently, agencies are making their quarterly numbers by shedding more senior talent—a very dangerous game. Statistically, our industry is the most ageist in the world, with less than 5% of the workforce over 50, which is ironic considering agencies are begging clients to trust them with the future of their business. Clients want an expert who has seen a problem before and knows how to solve it, confidently and quickly. Independent agencies and brand consultancies are increasingly attractive because the agency principals are involved, but the real point isn’t about ownership, it’s having the work guided by grownups who know the difference between disposable advertising and a long-term idea that drives business through the power of creativity. There is no such thing as a small client. Most seasoned talent is now freelance after getting cut from their agencies by the threshing machine of finance. As a result, agency-client relationships are downstream and unstable because they are being managed by junior talent working for time cops. Try bringing some ballers back from the land of misfit toys, go full New York Yankees on the salary cap and see what happens. Your clients might reward you with incremental work, your ideas will get measurably bigger overnight and younger talent might get mentored for a change. None of these suggestions require poison or starting over from scratch. What clients and agencies need is a renewed commitment to common goals, shared faith in the business benefits of creative thinking and an agreement to make things fair and fun for all parties concerned. If we can pull that off, maybe we can stop selling process and get back to selling what clients are really shopping for—an idea that can change their world.

3 ways to fix the ad industry—before it’s too late

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