R/GA global CCO Nick Law: Ideas aren’t worth much, Aussie ad industry is bloated
Law
The value of an idea is a lot less than the ad industry thinks, and agencies should be more “frugal” about what they share with clients R/GA’s global chief creative officer Nick Law told an audience last night.
Speaking on a D&AD curated panel on the topic of The Future Creative Landscape: Insights, Innovations and Opportunities alongside Google Creative Labs creative director Tom Uglow and Right Angle Studio founder and strategy and insights director Barrie Barton, Law said he expects the ad industry to shrink.
“The ad industry will shrink, I really believe that. I particularly think the Australian industry is bloated for the size of the market. There will always be some advertising but it will contract a little bit and that will ease the pressure of companies feeling like they need to give away stuff for free,” he said on agencies giving away ideas to clients.
“On the innovation side, what’s interesting about that is the ideas are really worth a lot less then you think,” he continued.
“Silicon Valley runs on a model where ideas are not funded, they don’t give a fuck about ideas in Silicon Valley, they care about working software because the difference is in the execution and the example I often give is Instagram and Hipstomatic.
“If it was contained in a powerpoint presentation given by an agency to a CMO they would probably look like very similar ideas. So the value of those ideas is only realised in execution. It’s fine, I talk to clients about ideas, more innovation ideas, all the time safe in the knowledge that we’re the right partner because we can make it.”
Talking about more traditional advertising such as TV-based campaigns, which Law referred to as a “narrative idea” where the concept is “kept more pure” through the pitch, production and final release processes, Law said he would be more “frugal” when it came to sharing the idea with a client as opposed to sharing an idea for a platform or product.
“It’s in that world where I would be more frugal with sharing ideas with clients and yet that is the world when we pitch we give them like ten. And this has happened I’m sure to all of us, you’ve been through a pitch, shown some great ideas but didn’t win the pitch and then strangely enough you think ‘that’s familiar that ad on TV, didn’t we do that?’ But of course we have no recourse.”
For these different ideas – traditional advertising ideas and innovation or product ideas – Law said agencies need to start considering different models of compensation.
“Right now R/GA has two parallel compensation models going on. One which is more like the agency model, we get paid fees to do marketing and products and services too and the equity is the ongoing relationship,” he said.
“Then we have another model which is more recent and borne off the back of our Accelerator. We have an Accelerator program with Techstars, who is an accelerator company in the valley, we partnered with them and did our first accelerator where we bought ten start ups to market last year around connected devices. We’re about to launch a second one on connected spaces.”
It is this model that Law said gives the agency equity in a company.
“What we get out of that is we get equity in the companies that we help. In addition to that, we have the ability to add different compensation models around R/GA Ventures, which is a larger umbrella thing, where we can bring products to market and actually play in a world where the idea you get equity for work is far more accepted.
“It’s very hard to do that in Maddison Avenue because agencies, well neither party, is prepared to take the risk of downside. If you look at a model in Silicon Valley where you’re lucky to have a success one in 10, that’s really not going to work in a fee-based structure with a client.
He added: “I think both models will continue to exist. There’s pros and cons on both sides, agencies should think about the other model, the equity model. It’s good to be working with that level of risk.”
Miranda Ward
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“Silicon Valley runs on a model where ideas are not funded, they don’t give a fuck about ideas in Silicon Valley”
I’d like to hear what someone from Silicon Valley thinks about that statement.
Certainly contradicts Ben Horowitz comments at this years Cannes Lions. You can see his stance on ideas here http://www.bhorowitz.com/can_d.....o_cultures
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I’d like to suggest Nick talks a little less and works a little more. His performance at the AANA conference was a shambles, full of expletives and largely baseless. The Q&A at the end revealed he didn’t know what the hell he was talking about – seriously awkward.
More broadly, why should we care what Nick thinks? What have RGA done here in Australia that has any merit?
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I broadly agree with Nick’s point that an idea ain’t worth much ’til it’s a working execution. As a CD at an “Ad agency” i’m kinda bored with the ‘all ad agencies are dinosaurs and sit around writing TV ads all day’ rhetoric ….. it’s simply not true and outdated. In this market especially the dinosaurs like M&C Saatchi, Havas not forgetting Leo Burnetts and Saatchi, even us at Whybins seem to be experimenting way more with tech and mobile platforms…. of course digital agencies like SOAP, REACTIVE, VML are also doing great interactive work.
It was an interesting conversation last night and I thought all 3 speakers were insightful.
Praise be to D&AD
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@dosomeworkNick you have a point, the AANA conference was very underwhelming in terms of Nick’s contribution and who knows what the 40+ people at RGA in Sydney are actually doing.. i havent seen any notable work, same is true for their singapore office. nothing coming out of it. RGA London and NYC are the shining stars …their work on Beats and NIKE SB is epic, but it’s a big drop for the satellite offices..kind of like Droga 5.. NYC = rockstars. Sydney = ordinary
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…Mind you .. some of the great creative minds of recent times, from the likes of RGA and others in the UK & NY have since left in the search for greater opportunities…
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An expletive in search of headline
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Russty, I think the point Nick was trying to make was that ad agencies are not geared to operate properly for the future. They have too much baggage from the past, including their model and their people. You say that you are experimenting more with tech and mobile platforms (and therefore not all sitting around writing TV ads), but your core agency structure doesn’t allow you to really focus in these areas. Therefore, you will shrink.
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Not sure that Nick understood the irony of preaching about communications thinking while effing and blinding his way through some incoherent visuals. Guarantee that none of the advertisers in the room at the AANA will be beating a path to his door.
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@Ben
By having a collection of companies under an umbrella group brand is how we are structured. So a PR company, a digital / innovation company, a shopper marketing company and a communications / ad agency all shrink and grow depending on what clients want. Therefore a portion of the business might shrink whilst another grows.
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He is right about the bloat. There is plenty of fat in the industry worth shedding.
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