Opinion

Agencies must say ‘no’ to client IP theft and bargain basement prices, if ad industry is to survive

Agencies have lost confidence in what they do and clients take advantage of that by making outrageous demands, but it’s time for ad land to fight back – writes Tom Doctoroff

Well, finally the Association of Accredited Advertising Agents Malaysia (4As) has taken a stand against the egregious requests from a growing number of clients to ‘own’ agencies work or intellectual property – even when a pitch is lost. I hope members stay unified, a big ask in today’s dog-eat-dog competitive environment.  

It goes without saying that any request for proposal – or RFP for short – that contains a clause insisting on forfeiture of a communications a company’s most treasured asset, its creative and strategic ideas, is ethically compromised at best.

Doctoroff believes agencies have lost confidence in what they do and clients take advantage of that

The mercantilist, morally-relativistic worldview of many Asian businesses is no excuse for institutionalised intellectual property theft. Nor is the ‘pitch or die’ ethos of agencies struggling to make quarterly numbers. Agencies should just say ‘no’. Period. And clients should look at their feet in shame.

After I left J. Walter Thompson Asia-Pacific, I moved to Prophet, a global brand and marketing consulting firm. It’s amazing how much respect the C-Suite has for our output. Pitches, while often fiercely competitive, usually offer only a ‘point of view’ – a hypothesis-led perspective on the issues a company faces – with no specific ‘solution’. And the hourly prices we charge are perhaps triple an agency’s fees.  

Brand consultancies, also purveyors of ideas, are able to stand their ground for four reasons. First, the investment in intellectual talent investment. Second, bids lay out a step-by-step process to arrive at a solution with concrete deliverables. Third, the client is involved throughout, with frequent ‘co-creation’ sessions during which alignment is achieved. And finally, collaboration is in the bones.

Partnerships are formed with anyone and everyone – advertising shops, digital ‘makers’, user-experience designers, research houses. You name it. And the reason, because they are confident in their expertise.  

 

What about agencies? Agencies have lost confidence in what they do. Clients take advantage of that fear by making outrageous demands. The industry must look at itself in the mirror. It has commoditised its most sacred assets – creativity and the intellectual passion that fuels it.  

This sad phenomenon has been a long time coming, but has accelerated via ‘disintermediation’ – clients producing their work in house — as the power of ecommerce platforms rise. They are increasingly obsessed about short-term sales at the expense of long-term equity generation. At the same time, they are looking for new customer-centric experiences – not just messaging – that agencies often fail to provide.

Why has the advertising industry degraded itself? There are several reasons, rooted in the services marcomms are not providing. Marketers crave three basic things: Strategic and creative ideas that provide conceptual and executional consistency across a shape-shifting offline and digital landscape: A touchpoint plan that exposes consumers to these ideas in a way that encourages behavioral change and, ultimately, purchase; And cost-efficiency in reaching – that is targeting – consumers.

The industry has not helped itself. The holding companies have not yet been restructured to enable collaboration between systematic thinkers (platform builders, programmatic media buyers) and conceptual distillers. The industry’s first death knell was rung when media was extracted from the advertising agencies. The result? Creative ideas, born of brand purpose, have been downgraded to ‘content’, produced on an imagined assembly line.   

In addition, agencies non-productively compete against themselves. WPP for example, has 200 separate operating units, each with its own financial targets. They lower prices and gun for market share at the expense of profitability.

Also, over the past 20 years, large agencies have been denuded and demeaned by holding company leaders. This must end. Agencies must go back to the future to become media-neutral strategists, idea generators and executors. Due to the lack of financial incentives and disparagement of their skills as legacy, mid-level agency executives have fled for sexier realms.

So what can be done? In the short term, agencies should reject the outrageous, en masse. No free ideas. But, ultimately, the holding companies need to fundamentally restructure themselves so their value-added is self-evident.  

Advertising agencies must reclaim their rightful place as the center of the solar system or as idea conductors, not low-end producers of television commercials and print ads. Why? Because only ad agencies – producers of brand and creative ideas people want to engage with – attract both creative and strategic minds who work, more or less, harmoniously to define and spread brand purpose.  

This can only be achieved via a reclustering of assets. The number of profit and loss accounts must be drastically reduced. Media planning should be closer to ad agencies. Likewise, peer-to-peer community building public relations purpose-driven community builders should be elevated above the transactionalism of PR media hits.

In summary, agencies must head to the ramparts to confront rapacious clients. But the ultimate responsibility lies with holding companies, which must institute structural reform that enables the collaboration clients demand. Despite Publicis One and WPP’s ‘horizontality’, reforms have been within, not between, silos. Only then will marcomms specialists lift their heads with pride to resist the urge to defile themselves with bargain basement prices and free ideas.

Tom Doctoroff is chief cultural insights officer at brand consultancy firm Prophet and is now based in New York, after many years of working in Asia

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