Clients and procurement are exploiting the passion ad agencies have to create work for less than it is worth, says ECD
Clients and procurement departments are taking advantage of the passion agencies have to create advertising for less than its value, a senior creative said in a video hangout assessing the latest crop of ads.
Richard Morgan, the executive creative director of 303Lowe, called on clients to consider that “cheaper is not always better.”
In response to a question on the challenges ad agencies now face, Morgan said that one of the major pressures facing the business overall is the squeeze on margins – the “race to the bottom”.
He said: “At the end of the day you need the revenue in the door to be able to get the agency on the front foot, get good people, and service clients the way they should be. So with all of those things, there’s a trickle-down effect.”
“It’s a huge issue. I would encourage clients out there watching to consider that cheaper is not always better. You do at the end of the day get what you pay for.”
“And I think advertising as a business that people are actually very passionate about. A CFO a while ago said that advertising is a business where people – especially creatives – are so passionate about it that they pour their heart and soul into something for less than what it might actually be worth financially – just because they care.”
“I think unscrupulous people – clients and procurement agents – can possibly take advantage of that. So it’s up to us as an industry to reaffirm our worth and really partner with clients and show them the value of a good relationship,” he said.
“The 80s are gone. Yes, there was probably too much fat around the edges, but the pendulum has swung too far the other way now, it’s too fragmented and there are too many cost pressures.”
https://www.youtube.com/watch?v=QU4USrj73pw
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There’s an irony about the fact some agencies cannot clearly articulate their value proposition to ensure their ongoing viability.
Perhaps the unsuccessful ones are too busy focussing on creating ‘great work’ for the client that they’ve forgotten it isn’t enough to produce great work but to hit the brief, budget, target demographic, sales target, market share target etc.
How many passionate creatives have any idea about the actual cut and thrust of their customers business. I wonder.
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Start by respecting my money and I will respct you, ECD. Maybe start by having 50% less creatives in edit suites, on shoots and in meetings and then I will start to take your hard luck story a bit more seriously.
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The phrase ….”Race to the Bottom” conveys that the industry has accepted the status quo and that nothing or no one can change it.
The thing to remember is that society ( and yes that does include clients), still widely believe that “you get what you pay for”.
If you prove to a client that you delivered last time then the talk of shrinking margins and the so called “race to the bottom” stops …providing its met by agencies knowing their own worth and saying no to clients that are taking the piss.
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With creativity, cheaper is irrelevant. Ideas cost nothing. More money from clients isn’t going to make the work more creative – and vice versa. Creatives get payed way too much for what they do – and the few hours they do it in. Try looking for savings there.
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Dear Richard,
I’m afraid your argument gets little support from me.
Name me a client who isn’t under pressure to deliver a better product, faster and cheaper to their customers.
Nowadays cars cost less, but are better than they’ve ever been.
Airfares are cheaper than they’ve ever been and we get to fly on the latest aircraft.
Electrical goods are better than they’re ever been but cost less than they ever have.
It doesn’t matter what category it is – clients have been faced with one simple challenge – deliver better quality products, faster and cheaper, or perish.
What makes agencies immune from the same challenge – to produce better work, faster and for less?
Agencies that accept that challenge will prosper – those that choose to ignore it will slowly disappear.
Its time the industry took a reality-check on costs if it wants to survive.
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A few points:
2. “Start by respecting my money and I will respct you, ECD. Maybe start by having 50% less creatives in edit suites, on shoots and in meetings and then I will start to take your hard luck story a bit more seriously.”
You obviously haven’t been to too many shoots lately. One team is lucky to be there. Also, at the end of the day, why should you tell the agency how to conduct themselves? You’re paying for a result – the agency decides how they provide it.
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3. “If you prove to a client that you delivered last time then the talk of shrinking margins and the so called “race to the bottom” stops”
No, actually it doesn’t. Most marketers are only in the job for a very short period so they tend to take a ‘smash and grab’ approach. The easiest way to get short-term KPI’s looking good is to make cuts, not build something. Thus, the cycle continues.
But yes, agencies do need to say ‘no’ more.
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A Client. 50% less creatives in edit suites, on shoots and in meetings means you only get what you pay for, right? And you call that “respecting my money”? If your money is not enough to warrant an agency’s full service then don’t demand it! Then don’t expect a full team! Or full attention! Or full craft! The root of the problem is actually people like you! Maybe we can give you the copy and you can put the pictures yourself in-house? Nothing wrong with a small budget, but stop demanding a full team’s attention if you can’t pay for it!
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An interesting article here. Clearly client’s want some sort of formula: if they spend X they get Y, treating marketing as a science. And agency-land has lost control of art of persuasion, because we’ve all been told about data, and targeting, and conversations, and measurable clicks.
Looking objectively, agencies do have far too many people ‘double handling’ and bumping up costs. However clients don’t have realistic expectations for budgets nor ‘value’ ideas’. There’s a real lack of understanding about a brand vision and how that operates in different channels.
Clearly Mumbrella needs another forum: creative vs client….
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The negative effect procurement is having on the quality of output and agency relationships has been widely acknowledged by industry leaders both here and abroad.
https://mumbrella.com.au/um-ceo-mat-baxter-put-procurement-back-box-belong-263752
The sad part is the level of vitriol in the responses to Richard’s comments and the clear lack of respect and understanding for the place creativity has in this business.
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sad to see this stale and boring argument again. Lack of commercial creativity is being blamed on clients nd procurement.
Try this: be transparent with your costs and ask a reasonable margin. You’re the experts so propose a way to measure success or ROI, and link those to escalating margins. Benchmark how other agencies measure ROI to give everyone comfort (incl you!).
Average tenure in Aus for creative agencies is ~10yrs. Do the maths…
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Hey there Reality Check. Cars, planes and electrical goods are about mass production. Advertising is about creating a one-off idea which is so compellingly unique that it promotes your product or service to the front of its category. Don’t worry about the odd art director. That art director will cost you a fraction of even one mis-placed TV spot. What you should be focused on is the top line. How much extra business will this (hopefully great) idea bring in? If you can’t put a number on it, you’ve got the wrong idea. Or the wrong job.
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I’m very passionate about my car – does that mean I should expect above market value when I sell it?
Of course not.
As other have said here – prove your worth!
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I agree with The Cynic. Clients want cost savings because they aren’t confident in the value an idea can create – particularly when it comes to establishing a competitive, motivating position in a marketplace full of generic products and services. Rather than having the balls to build business and market share with a compelling message they would rather hang out in the world of irrelevance. It’s safer and cheaper but look at all the once leading brands – where are they now? When was the last time you heard from them- Smiths. Arnotts. Coke. Goodyear. Panasonic. the list goes on – not saying they don’t still exist (clearly they do) but perhaps the clients have been focusing too much on reducing costs rather than whetting the customer’s appetite for new news.
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I think the idea of agencies needing to “prove their worth” is true, however I think it’s a difficult job in the current climate. When you consider the average tenure of marketing directors in their roles, the subsequent pitching flurry that follows a new appointment, and the decrease in agency costs and value that comes with every pitch – how are agencies winning here? Sure modern times mean that we need to do more with less, and one look across the ditch to NZ shows it is possible, but I also agree with Richard that as an industry we need to value our work more and it’s the agencies job to partner with clients to help do that.
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interesting that 303 complain about a race they’re very competitive in. Perhaps Richard needs to speak to the guys in his own agency that submit pricing on tenders.
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I think Richard also needs to understand that Marketing Directors don’t always get to decide what budget they get for the year. This has often been handed to them by the GM, VP who has decided how much of the total goes to marketing etc. So, if my budget gets squeezed, your budget gets squeezed. It is a fact of business. We’re being asked to do same work, with less money. What sh*ts me the most is when I give a budget to the agency, and they think I am lying and holding a secret pot of money elsewhere, and they keep coming back with proposals and concepts that will cost heaps more. I’m not being mean. This is the budget. And you’re wasting budget by presenting things that can’t be done. Good ideas don’t always need to be the most expensive ones.
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Let’s start with efficiency and awareness of value for money when spending the clients dough.
Ad agencies are notorious for being operationally disfunctional and unawares of value for money when purchasing outside services.
Maybe a better understanding of running a profitable business should start at home before we blame the outside world
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Dear The Cynic
The problem with your argument is that agencies rarely create ‘a one-off idea so compellingly unique it promotes your product or service to the front of the category’.
If they did clients would be happy to pay anything you ask. So, here’s a challenge for you. if you’re so confident in your and your agency’s ability to produce ‘compellingly unique one-off ideas’ every time, why not put your money where your mouth is and offer clients their money back if your ‘compellingly unique one-off ideas’ don’t work? Or is it only clients who have to pay for the good and the bad regardless?
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I agree with the Clients! They are under enormous pressure to porduce quality for cheaper. But they need to look outside traditional agencies at bare bones teams that don’t carry the fat of big agencies. They could also help themselves by not pitching. Agencies save to pay for all those pitches. We ALL KNOW little pitch work goes to air in tact. Client/agency relationship is collaborative and has to be to produce the goods.
So chose creatives not on pitch but track record and stay close to them. Avoid a million middle men!
Having been in both camps, i’ve seen the waste. Probably why i work closer with clients being in a small collective. Our last campaign delivered the investment back in 3 weeks, including cost of media.
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