It's fair to say that advertising's contribution to our clients' growth and profit is undervalued by consultants, by financial professionals, by procurement executives, by companies themselves and perhaps, even by us. The prevailing view is that the service agencies provide is a commodity, and a soft cost to be relentlessly cut instead of an investment capable of yielding high returns. This in turn poses a serious threat to the industry's continued ability to deliver the caliber of creativity and service our clients need to grow their businesses.
Michael Farmer details this reality in his book "Madison Avenue Manslaughter." Farmer notes that the price we get paid for what we do has been declining for more than 20 years to the point that we're now getting paid less than half as much as consultants. This reduction in industry revenue makes it difficult for agencies to compete for the quality of talent needed to create the kind of magic that transforms brands and leads to exponential growth and profit for clients.
Can a consultancy return £11 for every £1 pound invested, as adam&eveDDB did with a Christmas campaign for John Lewis?
At DDB, we believe that Creativity is the most powerful force in the business. But as an industry, we need to better explain and extoll the bottom line results we produce with and for our clients.
We not only sell their products and services effectively and efficiently, we increase the monetary value of their brands and increase the value of their stock.
We can argue about the merits and the ills of shareholder primacy—short termism being one of the ills—but as Michael Farmer says in his book, agencies must simply acknowledge and accept that clients are governed by shareholder value concerns, and that the mission of the agency needs to be refocused on helping clients improve growth and profitability.
A recent report commissioned by Think Box from Ebiquity and Gain Theory is called "Profit Ability, the Business Case for Advertising," and it states our challenge clearly: "Advertising must be seen as a capital investment in growth, not as a cost. It should be an investment option that is weighed up and risk-assessed alongside and against other routes to business growth as part of a long-term plan."
So how will we get clients and procurement executives to think of advertising as an investment, not a cost to be cut?
A few years ago one of our veteran creative people was attending a particularly frustrating client meeting in which no one seemed to be communicating. During the lunch break, he called a friend of his who is a professional negotiator. As he began to describe the nature of the communications impasse, the friend interrupted with this observation: "Here's the problem. You don't listen like they talk, and you don't talk like they listen. If you talk like they listen, eventually they'll listen."
That reminded me of something Nelson Mandela once said: "If you speak to a man in a language he understands, it may go into his head. But if you talk to a man in his own language, that goes to his heart." Or her heart, as the case may be.
How then can we learn to talk like the procurement people listen, and speak to CEOs in their own language? How can we engage the financial people by using their vocabulary to explain our creativity?
Alan Krinsky, a co-author of a 4A's publication called Advertising Agencies and Marketer Procurement Functions,says, "If you take the show-business approach with procurement people or purchasing executives, showing flashy ads and award-winning campaigns, you can expect glassy-eyed stares." Krinsky urges us to 'Focus on results, not on how you got there." "The process is where the costs and fees are discussed" Krinsky says, "but the results are where the deal is made."
So, can we learn to speak net present value? Can we become fluent in cash flow?
Recent evidence indicates that advertising can have a remarkable effect on the investment community. Nike's share price reached an all-time high after the release of the Colin Kaepernick ad.
So many agency leaders are doing a great job to rethink work processes and re-imagine structures—DDBWorldwide's CEO Wendy Clark is one who is pioneering in these areas with her "Flex" concept. But can agency leaders find better ways to engage with client-side financial people to demonstrate the R.O.I. potential of advertising that's brilliantly conceived and strategically employed? And along with appearances on the stages of advertising events, can these agency leaders publish their thought leaderships in business journals, in the language of business? Finally, can journalists covering our industry write about ad driven business successes in bottom line terms?
In short, we need to learn to talk like they listen and convince the industry's clients that as their partners, we truly mean business!