Agencies urged to add value after being branded ‘factories’ churning out ‘crap’

Screen Shot 2014-11-26 at 12.35.42 PMAgencies have been described as “factories” churning out “crap” when they really should be selling value to their clients, developing intellectual property and innovating.

In a blunt assessment of the industry, TrinityP3 managing director Darren Woolley said agencies have only themselves to blame at seeing their fees squeezed as too many companies offer the same services with little differentiation.

Agencies have become a “commodity”, he said, “with literally thousands of people offering largely the same services”.

The result is a “race to the bottom” where the the cheapest offer will win the business.

“When you are a commodity the only way is down and this is what is causing this race to zero,” Woolley told agencies at the Secrets of Agency Excellence masterclass in Sydney yesterday.

“Most, if not all of you, are factory workers, producing the collateral that goes into the media and marketplace, and then you decry the fact that people want to lower the cost of the factory. They can get someone overseas in the global market to produce what you produce for a tenth of the price.

“As much as it’s easy to blame procurement, to blame clients and everyone else, the people responsible for this situation are the people in this room. You have become a commodity because there are just too many agencies which are too undifferentiated.”

He said “so many agencies are purely here to create collateral, create crap, and create more advertising” when they should be demonstrating their abilities and insisting to existing and potential clients that they are “value creators”.

Woolley urged agencies to move the conversation with clients away from cost to one where there are articulating the value they bring.

“The whole conversation you have with clients is about the cost of your business and how you recover that,” he said. “All that that does is reinforce you as a cost.

“When negotiating with a procurement person and they ask about the cost of your staff and your overheads, you should be saying we are not about cost, we are about value creation. Don’t have a conversation about cost recovery with a client, keep the focus on the upside which is value creation.

“Most agency people also talk about efficiency, especially with the increase in technology. But technology is replacing traditional agencies as it is allowing many clients to take the services you provide in-house. Don’t talk about the benefits of technology unless it’s a way of adding value and effectiveness.”

While admitting many brands will only ever be interested in price, every agency will have clients who will be open to conversations about genuine value, he said.

“There is an opportunity to become premium, to stand out from the rest. Change the way you think and stop whining about costs and start talking about the upside. Everyone seems to be obsessed about cost.

“If you are just a service supplier then get used to the fact that someone will always come along and take business off you because they can do it cheaper. Turn the conversation around to where you can add value,” he said.

The real winners in the agency environment will be those who develop IP, innovate and provide material “before the client even knows they need it”. But the Australian industry creates zero IP, Woolley said.

“You need to think about what you create as being intellectual property. If you are creating IP you have the start of having real value. But it is only worth what someone is willing to pay for it and the IP created  by the advertising industry in this country is worth zero because I do not know a single client who pays an agency for their IP. We give it away.”

He urged agencies to exploit technology to innovate and develop products in-house which can then be licensed to a client.

“Anyone can take an order but a real innovator creates things for people before they know they need it. Why can’t agencies do that? It is a great way of proving your ability.”

Woolley warned agencies that those who remain wedded to the “factory” mentality risk being “wiped out” by global production companies “who will make you look archaic and can produce what you produce for a lower cost, faster and with more efficiency”.

Steve Jones


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