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100 Staff: An Advertising Agency Tipping Point

Starting any business is a bold move. Not all survive and few truly thrive. Those that do face the challenges of managing growth and staying true to what made them successful in the first place. This is an interesting tension that I recently discovered in working with four advertising agencies.

These businesses had grown to 100 or more staff. Of course, that metric in, and of itself, is not an indicator of sustained success. The good news is the agency leaders know that. In fact, these leaders were concerned because interesting things happen when the payroll hits 100. Here are some issues that arise:

  • Agencies of 15 or 30 or even 75 employees possess a start-up or boutique feel. When you hit 100 this weirdly begins to dissipate.
  • You don’t know everyone any more. Small agencies talk of being saatchi-saatchi-office-funkt-1“family” where everyone has each other’s back. While a strong culture can keep this rolling as staff size grows, it cannot mitigate the realities of being larger. This is compounded when they open up other offices.
  • A bigger payroll and presence prompts new business pressures. This can mean chasing the wrong work to keep the machine humming.
  • Founders and principals move from client service oversight to functional roles. Marketing, people, service and product development and other areas need full-time leadership. This transition can be bumpy and skill-sets are stretched.
  • Specialisms and differentiators begin to lose their luster. You simply cannot make the same claims. Being “nimble”, as an example, gets called in to question.

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The Real Reason Clients Hire You

I have spent my career in professional services. From Price Waterhouse to Interbrand to DDB to now running my own agency. Over that time I have become an expert in branding and marketing professional services. At least that is what peers and clients say. To make that claim myself is analogous to me telling you that “I’m cool” or “I’m funny” or “I’m smart”. The credibility is in others saying it. Having others speak well of you is the goal of branding.

This specialty allows me to work with law firms, management and marketing consultancies, advertising and digital agencies, and accounting firms. An engagement with an investment management firm led to an insight about how and why clients truly decide on one professional over another.

screen-shot-2016-09-20-at-8-58-40-pmFor a long period we assumed that clients first and foremost chose expertise. This assumption led ad agencies to talk about themselves way too much, law firms to numb clients with superior high-minded jargon, and management consultancies to dazzle with mysterious black boxes of proprietary processes. To their credit many professionals identified this as a problem but mistakenly identified the solution. They chose to switch emphasis and focus on the prospective client’s situation.

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Agency CEOs Are Chief People Officers

I recently had lunch with an agency CEO. It was revealing because the content was raw and real. In short, he lamented the lack of hours in the day to deal with everything on his plate. There was little I could recommend short of cloning and ruthless prioritization.

If you are an agency CEO or if you marvel at the responsibility they take on, then you know that it is overwhelming. CEOs have to be a master of the balance sheet, superior in business development, aware of technological developments, substantive in interaction with clients, Biz Mensavvy in the press, excellent public speakers, tireless in the pursuit of growth and profit, and role models for the agency’s brand.
And all of this depends on people. Any variable in performance is due to the collective talent of the agency. What this proves is that the CEO is as much the Chief People Officer as anything. Every industry and business can claim, “Ours is a people business” or “Talent is our greatest asset” and that would be fair, but it is especially accurate and evidenced in the agency world. The loss of a key person can sink an entire office. The right person leading the right team can propel an entire agency to dazzling new heights.

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Ad Agencies Make Their Own Products

I recall the 1999 attention-getting idea by Vancouver agency Rethink. The three leaders of the agency had just left Palmer Jarvis DDB to go out on their own. In order to create buzz for their startup they branded and distributed Rethink Beer. The product helped put Rethink on the map and remained on shelves until 2003.

This is one example in a longstanding series of agency experiments with product development. A new book by Leif Abraham, with an amazingly long title, suggests how Madison Avenue needs to change. His effort is called, Madison Valley: Building Digital Products. Getting the Most out of Talent. And How Madison Avenue Can Be More like Silicon Valley, which is a fine preview of the book’s content. The overriding premise is creative businesses should not restrict themselves to communications but should leverage their talents for real product innovation.

Having worked at, and for, a number of agencies, I know these businesses would love to reap the profits of an iPod or Nike FuelBand as additional revenue or to stave off the long anticipated lower margins resulting from an old business model. Yet, Abraham points out the reality, “Every agency wants to build a lab and make products. Every award show adds product innovation categories. But we haven’t yet seen a successful product coming out of an ad agency. My book gives an analysis on how product innovation is treated in agencies today, what needs to change and why it’s about more than just the product.”

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