CreativeTopper

Creative Clash: Are big agencies burning out?

Forget the agency of the future. Consulting firms are forcing their way into the space

I think the clients correctly pay agencies at bare-bones rates because the agencies aren’t even committed to doing work that generates results

Michael Farmer

Heat, a San Francisco-based Independent creative agency, won eight Lions at the Cannes Lions International Festival of Creativity last year for EA Sports’ Madden NFL Football game with a campaign that checked all the boxes for modern marketing creativity: digital-first content (and lots of it), real time, social, personalized, sharable, engaging, data-driven.

There was the Madden Giferator—a real-time GIF engine stocked with thousands of game-scenario GIFs created from the video game that fans could customize and sent out based on real game action every week. There was also a rollicking, very sharable music video with comedian Kevin Hart extreme-taunting Dave Franco into a game of Madden with a handful of NFL stars (with huge followings) making cameos to boost the social reach.

By any measure, Heat’s campaign was a spectacular touchdown—500,000 GIFs were made and the game enjoyed one of its most profitable years ever—but by the end of the year, the 11-year-old agency had been acquired. Not to WPP or Interpublic or Publicis or any of the other advertising holding companies that pride themselves on creative thinking. Instead, Heat agreed to be bought by Deloitte Consulting, the largest business consulting firm in the world, famous for its accountants, operational efficiency experts and button-down culture. Why?

“Without being too trite about it, we could see where the market was headed,” said Mike Barrett, Heat’s managing director.

The Business of Creativity Issue is available now (Summer 2016)

The Business of Creativity Issue is available now (Summer 2016)

Which is where, exactly? While most agencies have adapted and evolved in response to the uncertainty and forced transformation that arose from the break-neck speed of the digital revolution, there’s a sense that the ground has dramatically shifted again in just the past couple of years, and lots of people are still trying to figure out how to respond.

The problem has layers: increasingly marketing-savvy consumers are even more elusive thanks to ad blocking, new players (like Deloitte) are entering the fray while everyone still struggles to turn big data into anything meaningful.

But talk to agency execs and very early in the conversation the crux of the problem emerges: while agencies have endured years of procurement-mandated fee cuts, now they are being asked to produce more and more and more for their clients without corresponding new revenue.

“There used to be a time when we would create five or six creative pieces over the course of a year. That’s turned into 400, 500, 700. There is this insatiable thirst for content,” said Bob Goulart, who recently left Grip Ltd. to join Unitas.

Michael Farmer, a business consultant specializing in agency work and the author of Madison Avenue Manslaughter, estimates that agencies today are doing work for one-third the revenue of what they were 25 years ago and are generally understaffed by at least 20%. As ever, agencies want to be strategic contributors, coming up with big creative ideas that generate brand love and drive sales, but instead they are consumed with churning out content; the more time and resources they put into content, the less strategic value they have to contribute, the more they are expected to produce content, and so it goes. Creatives could be forgiven for feeling undervalued, more marginalized and further from the table where the important decisions are made than ever before.

Marketers, meanwhile, say they are under very similar stresses of their own.

“The reason agencies are doing more with less is because, guess what, the clients are doing more with less,” said Ron Lund, president and CEO of the ACA.

“Marketing today has two accountabilities: we need to find the right customers and close the deal,” said Frederick Lecoq, senior vice-president of marketing at FGL Sports. “The business has never been so ROI focused.”

Agency execs may feel like they’ve bent over backwards to accommodate marketers in recent years, and plenty of agencies pride themselves on using their creative thinking beyond advertising to solve brand problems. But the reality is that more and/or different changes may still be necessary. “If we can get by ‘what are you doing to me’ and really focus in on the fact that this is the way of life, then I think we can find more creative solutions to be more cost effective and efficient,” said Lund.

Aside from calls for more transparency and improved collaboration, one of the recurring suggestions from marketers is for agencies to find ways to produce some of that content at lower costs and, not in so many words, be less precious about their creative being compromised to produce lower quality content.

Any work that can be automated should be automated, said Jason Anderson, SVP of marketing, Cadillac Fairview.

“You don’t need creative resources on every piece of work that you do. There could be a promotion that we ran last holiday that worked, and we believe it can be just as successful this holiday. You don’t need creative resources on that. You adapt and you push it out.”

That’s not about cutting costs but about efficiency and freeing up time for more strategic work, he said. “It is about dedicating your resources where you believe you can have the most impact.”

Samsung’s Mark Childs cited a recent campaign for the Galaxy S7 produced in collaboration with the popular Toronto photographer Taha Muharuma (more than 34,000 followers on Instagram) who used the S7 to shoot some of his #streetsoul portraits of the city. Samsung shot him roaming Toronto and that footage was used across social and even for an outdoor billboard.

“That campaign, I would say, is brilliantly creative. And when I think about my audience, it hit the nail on the head. It is authentic, it has a tone of voice that is appealing and it is in the moment,” he said. “Did we spend the same kind of money that we would have done on a 30-second commercial a decade ago? Absolutely not, but is it any less creative? No, I think it is more so.”

In the past, the big breakthrough idea was the singular goal of creative agencies. “When creativity was one size fits all, it was a 30-second ad that everyone was going to bring to Cannes to try to win an award,” said Lecoq. “I don’t think creativity is being traded off for ROI. People are saying that, but I don’t buy it. Is there room for creativity? Of course, and I think the creative has to be more breakthrough than ever.”

Now people are always on, constantly connected to media and “snacking content,” he said. Brands need a steady stream of emotional, functional and transactional content and that calls for agencies to develop new business models with scalable ways of producing the content.

“We need to get into lean creativity,” he said. “There is so much content to produce that brands can’t keep up with the demand. The agency that can keep up with this will be super successful.”

Samsung tapped Taha Muharuma’s #streetsoul project for a creative, but cost-effective camapaign

FCB’s global chief creative officer Susan Credle has a plan for her agency to benefit from the tough times so many agencies seem to be experiencing these days.

“I’m just going to wait it out,” she said. “I’m going to wait until everybody has decided they are not going to be an advertising agency and we’ll be the last one and everyone will want us.”

Gallows humour aside, Credle is unequivocal about how the industry’s unquenchable thirst for low-cost content is putting unreasonable expectations on agencies and skewing the value of agency creative.

“There is just much more work involved today, and I’m not sure we have a real sense of it,” said Credle. “We’ve got people that are working double jobs. So we have a false sense of how much labour it is actually taking to create all those banners and social media pieces.”

“Agencies start to scramble to figure out a way to make this stuff faster and cheaper, and the holding companies are demanding that you make it faster and cheaper,” said Goulart. “And here is the horrible thing: there will always be someone else to make it faster and cheaper.”

The logistical and practical implications of workload and compensation aside, the issue also raises larger philosophical questions about the effectiveness of the saturation content strategy. Does the all-out push for data-driven creativity and personalized, snackable content make it more difficult to develop mass campaigns around big ideas that transcend adblockers and work their way into the cultural zeitgeist?

“I have seen RFPs come in that are specifically about, ‘we need an agency to make 1,000 pieces of content for us.’ To say what? Nobody is asking that question,” said Goulart.

“I think we are creating too much stuff,” said Credle. “We get push back on this, but I think you need more valuable things that people cherish and look forward to or find interesting than a lot of little stuff that basically goes mainly ignored.”

Rather than just blindly pouring more content out into the world, brands need to take time to make sure they have something meaningful to say first, because “if a brand doesn’t know who it is at its soul, and why it exists, it is not going to be a very positive experience when it comes to marketing,” said Credle. “And the next thing you do is you start creating work that tells that story. By creating work that really tells the truth of who you are and why you matter, you become more famous for that exact thing and it is a relationship that over time becomes stronger and stronger and stronger.”

“I don’t think advertising agencies are helping companies stand for something great,” said Goulart, who joined Unitas because he felt its founder and his one-time Grip colleague, Mike Robitaille, had created a different model that focused on using creativity to solve business solutions and build brands rather than just pump out advertising.

Robitaille said he started Unitas to become the “McKinsey to the right brain of business.” The analytical, left brain of the business world is already well served by McKinsey, Deloitte, Bain and the rest of the big, number-crunching consulting houses. But it takes creativity and lateral thinking to build a company that people actually care about.

“The biggest idea is ‘What do you stand for?’” he said.

CreativeClash1Heat’s Madden NFL Football work was the envy of the creative industry. Now, Deloitte owns that talent

If agency execs are looking to validate their complaints of being overworked, undervalued and underpaid, they’ll find it with Madison Avenue Manslaughter‘s Michael Farmer. Validation, but not a lot of sympathy.

“I think the clients correctly pay agencies at bare-bones rates because the agencies aren’t even committed to doing work that generates results,” he said. “If an ad doesn’t generate purchase, but a video game on a website does, than they should be doing video games on a website.”

Instead, he says, marketers keep asking for more content because they hope it will drive sales, and agencies comply because they are order takers instead of strategic contributors.

“But the agency should have some responsibility for saying we are smart, we understand the consumer, we understand millennials, we understand technology and media. We know what kind of work should be done to improve brand performance and here is our proposal,” he said. “I don’t know anybody that does that anymore. They sit there and wait for the proposal.”

Over the course of two conversations, Farmer struggles to find anything positive about the current situation for agencies. Until the subject of Deloitte buying Heat comes up.

“I totally get that, I understand that,” said Farmer. The deal adds creative capability and “off the wall thinking” to the consulting business model already proven to deliver results for its clients, he said. “I think [buying] Heat was a brilliant move.”

ClashBulbs

Deloitte only established its creative services group Deloitte Digital in 2012. It’s already grown to 7,000 employees and last year booked $2.1 billion in revenues. Other consulting firms have also been manoeuvring to steal away marketing marketshare. Accenture and PwC are making big plays and IBM’s Interactive Experience, which reported $1.9 billion in revenue last year, boosted its digital creative/design offering by scooping up three firms earlier this year.

On the one hand, the arrival of these corporate giants onto the marketing landscape should seem like more bad news: powerful new competition in a market that gets tougher by the day. But in the acquisition of Heat, advertising creatives should also see brighter skies for the future of their profession —evidence that the business world is starting to value creative contributors in ways it never has before.

In the past, creative was viewed as an operating cost in most businesses, but that is changing, said Alicia Hatch, CMO of Deloitte. “Now creatives can actually create value and that pipes it right back into the business model,” she said. “We believe that creativity belongs in the board room. The CEO needs creativity to run a business now. You have to think completely differently.”

Getting into strategic discussions with clients much sooner was the primary reason Heat opted to join Deloitte rather than a traditional marketing company, said Barrett. But the interest from Deloitte is also an affirmation of the power of advertising agencies.

“A creative idea can truly, completely transform a category,” said Heat’s Barrett. “We believe in that deeply. That is why creative is such an important part of what we are doing going forward. It is not just about strategic excellence. It is not just about operational chops. It is about being able to capture the imagination of the consumer.”

Barrett said he’s seeing a lot of creative agencies trying to improve their strategic capabilities in an attempt to match up against the consulting houses. Heat tried it and he expects the ad companies to make more moves in that direction as consulting firms boost their creative credentials. “Can the management consulting firms turn into marketing firms faster than marketing firms can turn into consulting,” he said. Heat bet on the consulting firms winning the race. “I say this with respect: [advertising companies] have built entire structures that are essentially manufacturing plants for specific things… It is always difficult to change the business you are in.

“WPP has seven different billion-dollar brands [it’s actually nine now]. It is difficult if you are employed at one of those brands and people say you should be in a different business and should do things different. ‘You should put a billion dollars at risk, maybe it will work and maybe it won’t.’”

The uncertainty, speed and complexity across all business today means most business models must also evolve, and that requires creative input, said Hatch.

“When you bring creatives into it, they see the intangible value that the economists might not see,” she said. “We have to move from product-centric brands to customer-centric brands.” But what exactly a customer-centric brand looks like today is still being determined. “That is what the creatives are delivering. That is still just now being uncovered.”

The reality is that, in the short term, the content challenge is unlikely to go away any time soon, and agencies will struggle to keep up and adjust.

More changes are coming, giants may tumble only to be replaced by other giants, and the price of the work that typified creative agency life for so long still needs to be reset in a radically different market. But after years, decades even, of being left out of all the important client decisions and uninvited to all the important meetings, creative thinkers and their agencies may at long last find themselves increasingly called to the table—valued for their unique perspectives and the power and potential of their imaginations. If this is where the market is headed, maybe it’s not so bad for the creative industry after all.

NOTE: Business of Creativity illustration by Ben Weeks

See all comments Recent Comments
BrucePhilp

Seeing this handwriting on the wall, I co-founded a firm in 1996 whose mission was to “invent what will replace the advertising agency.” It was commercially successful enough, I guess, but it absolutely failed in its ultimate mission. And one big reason for that failure was the decision to fill the place with people from within the advertising industry. It seems so obvious in hindsight, but to this day very few ‘disruptors’ in this business seem to have the guts to burn the ships. I’d hate to see the task of reinventing the ad agency completed by a bunch of accountants…

Monday, July 04 @ 4:35 pm |

TheJackRussellAgency

Hey FCB Clients,

While Susan Credle is “waiting it out” The Jack Russell Agency will be more than happy to help you out.

http://www.jackrussellagency.com

Cheers.

Tuesday, June 28 @ 9:08 am |

ROBERT WYATT

Susan Credle said it best with her “I think we are creating too much stuff” comment. Great creative has always been about quality, not quantity, and this is one of those things that transcends demographic cohorts.

Samsung’s campaign cited here is a good product demonstration and nice localisation of the iPhone campaign still running. I would argue that the execution is more brilliant than the creative idea here.

Hiring Deloitte as your mar com agency might make sense if you are P&G, but not if you are small or not otherwise working with a consultant. What mar com agencies can learn from the consultancies is how to get paid for their value.

Thursday, June 23 @ 11:34 am |

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