Thanks for this. All of what you have to say rings true, and not only for creative agencies, but for digital development teams too!

Thanks.

- Greg

I’d like to add a bit here about the part I know best: The Creative Department

It is without a doubt, the nucleus of an Ad agencies. It is one of the key outlays and has some of the agency’s most high-maintenance assets. Yet, for the most part it is horribly managed.

For starters, big network agencies don’t seem to understand that more people or more work done in Creative doesn’t necessarily translate into more revenue! There is an optimum team size – beyond which, it quickly becomes unwieldy.

I know from experience that a tightly-knit, multi-talented group can deliver much more value for the agency and its clients. They tend to be more confident; they venture out more from their comfort zones; experiment; and learn – thus creating a sort of positive feedback loop.

But when quantity is valued over quality, the chickens eventually come home to roost; and clients too begin to demand more for less.

I guess it all boils down to this: The only way to bring in good results, is to have good people. And ONLY good people. The rest just get in the way.

Thanks for taking the time to write such a comprehensive comment. I recently entered the agency world after watching it from afar for quite some time. It’s been a real eye opener!

- Greg

Having been an Exec Director of Strategy in one of the big networks (Omnicom) and left 5 years ago to run a strategy change consultancy, the issue in my view is more simple and it runs very deep.

The communication groups have become obsessed with targets vs objectives. At the top they’ve been managing the balance sheet by quarter & hence the slow decline. The people running groups and how they run are all very similar. You don’t find a David Ogilvy running an agency network – let alone a holding group any more. What hasn’t been happening is investment in reinvention or disruption in models or structure to build differentiated and added value agency solutions for the future. They are not therefore organisations with any sense on NPD or reinvention built into their approach. The model has been driven by size, geographical coverage and balance sheet targets.

Its amazing in a social & media & digital world for example that there is not a joined up PR, media and digital agency from any of the groups. Functionally that would mean disturbing 1 or 2 existing balance sheets, reducing the short term income and getting a fitter and more useful agency long term. These sort of mergers or changes are only the action of last resort when an agency is failing. Meanwhile, spinning a new venture or giving someone a title or a varnished restructure are heralded as change. They are what they are. Moving deck chairs.

The reality is also that the sort of people who challenge agency models and behaviours, or are passionate about quality of output and change are not embraced as the catalysts they should be in the groups. The resistance to change and the wisemen who have the power to delay change arguing “rationally” based on the current numbers that are well arranged. Hitting a target for a quaret or a year is predominantly how networks are aremanaged and incentivated up and down. Innovation & reinvention is not a target (with a budget, or people, or permission attched tomake it real) from the top – neither is it what keeps your international line manager happy if you strive for it in an agency. Many agency bosses – really want to do just that – but their hands are tied. Add into the mix the commoditisation of pitches and the truth is if you are behind on your numbersheading into the second half of the year you’ll be inclined to put forward terms and structures to get you the business vs what is needed. You certainly willbe less inclined to challenge a client to think and behave differently – its too big of a risk.

The potential change agents do exist – but in a group or and agency they struggle to be heard or embraced. They suffer the weird sheep syndrome (see blog http://www.maverickplanet.co.uk/index.php/2010/03/more-orange-dinosaurs-weird-sheep-will-save-the-world/ ) the group structues work on having leader sheep and follower sheep as employees. The 2% of weird sheep who see the world differently and challenge perceptions/rules – those who use to be at the heart of what agencies were about – are not embraced and given support to change the business. They are seen as contrary and normally leave. The logic on this previously for the group companies was very simple. If you go off and are successful we’ll buy you back and reassimilate your billings and new behaviours.

This leave, succeed and we’ll buy you back worked well for ages. However, in a digital world with new skills and disaggregation of traditional agency powers like offices, footprint and troop numbers…it didn’t pan out. Digital search was the first – where entrepreneurs built business & technologies and politely refused to be bought back in on a multiple for holding company shares when their business was booming for cash. Eventually, the group companies entered the fray – but often by bundling these services at a discount under the guise of integration. The senior management and the agency bosses also struggle that they still see theses aspects as functions or departments. They don’t have the next generation of industry leader who are the generalists who are born joining up comms in the world we are now in. It will take a while – but if they really want to change it – the answer is threefold.

1. Skip a generation and give digital thinkers and some weird sheep a chance of leadership of agencies whilst they learn about traditional comms – vs doing it the other way round.
2. Strip out your best talent across discipline and start a new type agency. Its objective should be to kill what you have – but at higher margins.
3. Look at how you structure your staff, time and talent and charge for it. A big reason why margins are slipping is due to how long, how many people it takes to get stuff done. Its a 2 tier business – learn from management consultants. Have super talent and charge for it. Then have a more cost efficient system that then executes.