Agencies must sell certainty, not hope, as marketer calls for greater accountability
From left: Caroline Dempsey, Avis; Lambro Skropidis, LG and John Chatterton, marketing consultant
The marketing chief of electronics giant LG has called on agencies to share more of the risk with clients and to put more “skin in the game” in an environment where company executives are demanding a better return on their marketing investment.
Lambro Skropidis told a conference in Sydney yesterday it was time agencies began to sell “certainties” to their clients rather than “hope” and insisted they take greater responsibility for the end results of campaigns they have created.
Speaking after Trinity3 managing director Darren Woolley had outlined ways an agency could earn better returns from their clients, Skropidis told the Secrets of Agency Excellence masterclass that agencies cannot have it all their own way.
He told a panel discussion at the Secrets of Agency Excellence conference the client is presently taking all the risk and bearing the brunt of the cost.
“Increasingly the role of the agencies is changing, no longer are they being able to sell hope, they need to be able to sell certainties,” he said. “What agencies are going to have to ask themselves is what role do they play. Is it just ‘here’s a good idea, good luck with it’ or is it ‘I am going to contribute to taking some of the uncertainty out of the equation’.
“We [marketers] are being asked to take risk out of the discussion… and agencies can help us sell our ideas in the business. Increasingly, MDs are going to want confidence that the investment they are making in marketing will give them a return. So the agency has a role to say ‘I am your business partner and I’ll help you take out that uncertainty'”.
Referring to Woolley’s earlier remarks, Skropidis said it was “all well and good” if agencies want to charge more and get clients to “invest more in ideas”.
“But let’s have a think about what the client is doing for a moment,” he told delegates, many of them from agencies. “They are taking an idea you may have generated, usually they are investing in the research to see if it’s a good or bad idea, they are investing in the production and investing in the huge media cost to bring that idea to market.
“And at no point is the agency investing. What I think agencies have to start thinking about is if they are going to charge differently, how can they do that in a way where they are investing in their own ideas.
“If their ideas don’t work does that mean they don’t get paid? Do they remunerate the client for their investment in media? I don’t imagine that’s going to happen. But there’s got to be a point where agencies put more skin in the game. At the moment there is very little down side to most agencies. It’s a huge risk the client is carrying right through the process.”
Skropidies added there are simply too many agencies, few of which are understood by marketers.
“I think most marketers don’t understand the positioning of most agencies,” he said.
Marketing consultant John Chatterton, a former marketing director at Goodman Fielder, agreed with Skropidis that pressure is growing on overworked marketing departments.
“Marketing teams are getting smaller, and a lot more pressured. They are increasingly asked to be more efficient and to do the same with less people,” he said.
Agencies who can demonstrate value in such an environment – particularly in the digital space – will find “a very willing audience” while those whose value is not obvious will struggle, he said. He added there are “too many agencies” and not enough differentiation between them.
Skropidis added that too many companies are not demonstrating ROI measurements and replying on the gut feel of a campaign.
“I see too many companies where no one is doing any pre testing and no one is doing any post testing, there’s a lot of ‘it kinds of feels right’ and that is not going to cut it,” he said.
The panel also debated whether agencies should bypass the CMO and approach the CEO in a bid to forge a deeper relationship with a company, or “seek permission” from the chief marketer first. It followed remarks by Virgin Mobile chief executive David Scribner who described marketers as “gatekeepers”.
“If you think you shouldn’t ask permission and the CMO gets their nose put out of joint, is that productive or counter productive?” Chatterton asked. “Why would you try to broaden the relationship without dong it in partnership with the CMO?
“If you don’t you’ll only make the relationship worse. It’s perfectly reasonably to say we want a deeper relationship but work with the marketing director in a constructive way to do that.”
Visa head of marketing ANZ Caroline Dempsey said: “It would be counter productive to try and go in a different direction without the marketers.”
Steve Jones
LG is hardly a marketing power house, ironic that this advice is coming from a “marketing chief” who’s band is inconsistent, fragmented and irrelevant.
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Let’s be honest: there is no such thing as certainty. If there was, Martin Sorrell would have quants from Millward Brown running every creative department in his empire.
Its a fundamental rule that risk and reward go hand in hand. If you swing for the fences, you may strike out. Sure, pre-testing can help prevent a turkey, but it is just as likely to prematurely terminate what may have been an awesome success (Guinness “Surfer” famously failed Link testing).
Further, agencies do have skin in the game -its called keeping the client. If your campaigns consistently fail, then you can expect to be terminated. Simple, no?
And of course it has to be the client who makes the call to buy an idea or not. It was his brief. It is his money. It is his balls on the line.
Still, I guess Mr Skropodis’ comments do explain why LG has such original, visible and memorable marketing campaigns.
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Completely agree that agencies need to work harder to justify their value, but there are three realities here:
1) Most brands (and of course agencies) don’t have the dollars to measure the effectiveness of an idea, and isolate it’s effects. $100K-$250K worth of research gets you a whole lot of media or production if you’re a small marketer.
2) As several IPA studies have shown (read ‘long and short of it’ http://www.ipa.co.uk/Framework.....px?id=9225) , advertising is a long game – 3 years or more. Focusing on short term results over long term is detrimental to the potential of a campaign or idea. Tell me an agency contract that doesn’t have 6 monthly KPIs and sales metrics, where performance bonuses or penalties are in place.
3) When the tenure of a CMO or Marketing Director is around 2 years, and most new CMOs immediately review their agencies and change the work…. why would any agency risk the short term when there is no long term commitment to them, or their work (which is what is needed if you believe points 1 and 2)
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Given Mr Skropidis only controls one of the four marketing Ps at LG (Promotion) I can’t see how he’s going to give his agencies anything like sufficient insight into anything related to product, placement and price – all of which are controlled by local and international Koreans.
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@hmmm: you’re right, especially on point 3.
But it doesn’t have to be this read. Give this a read: http://www.forbes.com/sites/on.....go-for-it/
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AT LAST! My opportunity to make a fortune has come.
I must immediately go into the production of crystal balls. Spherical translucent apps and Ouija boards (no accountability in that corner yet) I may need some degree of paralegal assistance, but I see the real opportunity to clean up here.
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I agree with Lambro; it ain’t a partnership if there’s not shared risk and reward.
But greater risk needs greater reward.
For more than a decade I’ve been running multi-media campaigns where I co-fund media and production and get paid on the basis of agreed metrics. Poor results I lose money, good results and I make a lot.
There are four catches:
1. Only around 1 in 8 campaigns stacks up, and I reject any that won’t.
2. It changes the dynamic of the client relationship – if it’s my money I want absolute control of the campaign and audit systems
3. Objectives have to be directly controllable via the campaign – and if these don’t turn into profit, campaign ‘success’ can be doubly costly. It needs very careful thought. And finally
4. Too much success costs clients so much money (to compensate for downside risk) that after a couple of years they tend to move on and do it themselves or brief cheaper others to use the same strategies.
Cheers
Toby Ralph
toby@tobyralph.com.au
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To ‘Life’s OK”
I am Link Brand Director at Millward Brown Australia. To set the record straight I am going to use a quote from Michael Harvey, Global Consumer Planning Director, Guinness. “Link has not in any way suppressed Guinness’s legendary creativity. Indeed, the famous Surfer ad went through Link in animatic form, was enhanced as a result, and went on to its place in advertising history”.
The Link summary, which we have permission to share, reads “The Surfer execution is clearly an admired and respected Guinness ad, described as arty, original and highly distinctive. The research suggests Surfer will perform extremely well as status advertising for the brand and will help reposition Guinness as cool, fashionable and contemporary. It is stylish, impressive, original, dramatic and impactful and follows or even surpasses what people have come to expect from Guinness advertising.”
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