Agencies in quest for respect

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[New Orleans] Agencies often advise clients to redefine the business they're in, but last week at the annual American Association of Advertising Agencies' management conference, shops were forced to take their own medicine. The unifying message: Stop focusing simply on advertising and become creative business thinkers, or risk a drop in profit margins and the loss of marketers' trust.

Havas President-Chief Operating Officer Bob Schmetterer delivered an evangelical speech urging agencies to fight fear and persuade middle-management to take brave new ideas to the corporate suite. "We must shift the role of creativity beyond advertising and communications strategy and into core business strategy." He added that the industry is often viewed as "too hubristic, self-indulgent and irrelevant."

"Clients, they say, don't trust advertising agencies to make strategic business decisions." Mr. Schmetterer called for a radical redefining and repositioning of the profession, "so it is known not for Super Bowl commercials ... but for its total effect on clients' businesses, and by extension, the economy."

The Havas chief pointed to a slew of marketers, from Pepsi-Cola Co. to Procter & Gamble Co., who want to see agencies' creativity expressed in ways that go beyond the ad campaign. Madison + Vine style convergence is to be embraced, said Mr. Schmetterer, so that "we start thinking of entertainment-based brand experiences."

In a speech made all the more poignant because of its comedic delivery, GSD&M's founder and president Roy Spence gave other examples of creative ideas that reached beyond traditional advertising. The Omnicom Group agency helped invent The Wall Street Journal's Marketplace section and "We got $25,000. They made lots of money," he joked. He said his Austin, Texas-based shop, in addition to advertising, gave client Southwest Airlines a suggestion to replace it's frequent flier program with one based on number of trips rather than air miles. Mr. Spence pointed out that built-to-last businesses were ones that had a purpose beyond making money.

Not everyone is entirely sure that ad agencies are so misdirected. Tom Carroll, president of the Americas at Omnicom's TBWA Worldwide, said "Any agency is a provider of business solutions. If you are not considered an asset, it's a waste of everyone's time. You create your own value and you have to earn respect."

Hal Riney, retired chairman of Publicis Groupe's Publicis & Hal Riney, agreed that the ad agency model needs some repositioning, "Advertising agency is a limited term," he said, adding that ad shops are still often viewed as vehicles for getting cheap media deals. "There is a lack of confidence in the industry and it's ability to [engage] an audience."

restoring confidence

The 4A's is working on ways to restore that confidence. The group's Chairman Ken Kaess, also president-CEO, Omnicom's DDB Worldwide, outlined a number of initiatives that the 4As hopes will reveal "both quantitative and qualitative proof that the product we provide is the lifeblood of marketers' brands. We have to prove that it is far riskier not to invest in a great advertising idea than to invest in one."

The 4A's research initiatives, due for conclusion in July, include a recession study to determine whether brands that maintain ad spending during poor economic cycles did better than those who cut spending. Another project aims to alter copy testing so that it looks at longer-term effects rather than short term memory. The 4As has also commissioned a study to examine whether consumer response to advertising influences decisions to buy stock in that company.

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