Viewpoint: communication warriors

Citation

de Carvalho, S., Perre Viana, J. and Augusto, J. (2003), "Viewpoint: communication warriors", Measuring Business Excellence, Vol. 7 No. 4. https://doi.org/10.1108/mbe.2003.26707dab.002

Viewpoint: communication warriors

Viewpoint: communication warriors

Susana de Carvalho, J. Walter Thompson Portugal, susana.carvalho@jwt.comJoão Perre Viana, J. Walter Thompson Portugal, joao.viana@jwt.comJosé Augusto, J. Walter Thompson Portugal, jose.augusto@jwt.com

"In the beginning, there was chaos..."

Apparently, not only in the beginning.

If there is anything all industries can agree upon is that the very fabric of the business is changing. Acquisitions throughout the globe have created company behemoths, diversification has been total, whole industries have risen to prominence only to disappear back into the backstage of history. We have been confronted with tremendous swings as to what is considered valuable and which business practices have stood the test of time (if any).

This tremendous shakedown has affected each and every industry, and the marketing communications industry is certainly no exception. Acquisitions have been numerous, with the grand advertising networks concentrated in no more than six global groups, alongside with media, PR, corporate ID, relationship marketing, Web, and so forth.

What kind of repercussion have these concentrations had in the market? Are clients better served now? Do the expressions "integrated agency", or "full-service" carry any weight. Has it fundamentally changed the way brands deal with their agencies?

What is going on in the market?

"Houston, we have a problem!..."

Advertising agencies (though they prefer the term "communication agencies") have changed little over the course of the last decades, and not for the better.

There was once a golden age, an age where a client did not dare to put up a neon sign with the company name without consulting first with the agency. The agency concentrated the media planning and buying, strategic planning and research. The insight, creativeness, media dollars and research validations put advertising agencies in a privileged position with their clients; intimacy, dependability and trust were the paragon.

But alas! The agencies were expelled from this Garden of Eden by the flaming sword of specialization. Where do we stand today? How are agencies doing?

Specialization

First, specialization has been a movement towards a greater degree of concentration on a specific business area that left the agency in a sensitive position. By losing media, strategic planning and research, advertising agencies lost two valuable things: brain power and large revenue volume.

The concentration of creativity, media, planning and research kept the client in a warm and tight embrace: strategic planning provided the valuable insight that was validated by research and then creativity drove the insights to incredible heights through powerful executions. Finally, the agency commanded generous margins through media buying.

By alienating these disciplines, the previously generated value was divided to separated companies, with the agency making its revenue through creative fees and media and production percentages. This has caused the clients to invest in three different packages: creativity (advertising, corporate ID, Web), strategy (communications and business consultancy), media (media planning companies, the means themselves) and production.

It came to pass that the creativity fees began to shrink, and this happened for two reasons: (i) growing competition among agencies undercut fees that are compensated afterwards with larger media investment and production percentages; (ii) growing intervention by strategic business consultancies.

The vicious cycle of client and competitor pressure are consistently driving down creative fees. This has tremendously eroded the credibility and perceived value of advertising ideas. The agencies' role is being pushed further down the intellectual value chain. This is a case of industry hara-kiri.

Horizontal integration

With the rise and settling of the importance of PR, relationship marketing, corporate and Web design, alongside with the growing concentration of communication companies in half a dozen global groups, agencies endeavored to create horizontally integrated organizations that encompassed these disciplines, under the flagship of integrated communications. This would, theoretically, spawn closer client relationships, larger turnover, cross-fertilization among disciplines; clients would feel better served by having someone overlooking the growing number of communication media with a simultaneously sharp creative leadership.

However, things did not turn out so well for most agencies. Clients did not appreciate the attempted siege; they always like to have multiple communication providers. This ensures healthy competition and eliminates the risk of overdependence on one single provider.

Further marketing issues arose in the process. These different disciplines, operating under one roof and, at times, one brand, were distinct business units with different agendas, prices structures and margins. Integrated communications projects were often undermined by the budget restrictions that privileged only the "important" disciplines – typically mass-media advertising – different creative approaches, client ownership.

From the marketing point of view, the integrated disciplines did not enjoy equal reputation in their respective fields; the client could recognize merit in one business unit (design or Web or PR) and question the merit in another (direct marketing or event marketing). So clients preferred to go for the specialist: a good advertising agency, a good design agency. In this exclusivity they saw a higher degree and depth of know-how than in the various advertising agency business units they perceived many times as "stupid cousins" that could not equal specialized agencies.

For example, when thinking corporate ID, would a manager prefer a small, dependant design unit in an advertising agency over a specialist the likes of Wolf Ohlins? Unlikely (unless under determinant price constraints). And so did the story return to the beginning.

Agencies had to assume little competence in integrating communication disciplines and had to stick to their diminishing yet under-recognized asset: advertising creativity.

Mergers and acquisitions

A similar rationale, only larger, was applied in the constitution of the great global communications groups. Apart from the financial interest in the building of holdings, the marketing rationale of communication groups aimed to provide the full spectrum of marketing communications services to equally global clients. This would also ensure enormous knowledge leverage throughout the many companies within the group, as well as cross-selling amongst them.

Besides the financials, the groups have created little added value to individual brands; the individual companies did not do much better just by belonging to a group; many were already worldwide networks. Local companies remained local, global networks remained global. Concentration has continued with the merging of networks within groups (e.g. DMB&B merged with Leo Burnett within Publicis Groupe).

International clients are already deviating from global agencies to work with boutiques or small agencies (Nike with W+K).

Which challenges is advertising facing today?

Agencies have done poorly in creating effective and lasting means of differentiation. What makes an agency good or bad? Apparently, an agency's lucky streak lasts only as long as it can retain a certain mix of good creatives, good creative directors and a strong management. Once that team dissolves, the agency starts to lose ground and someone else takes the spot in the limelight.

There are apparently no proprietary means of differentiation, recognized and treasured by clients, that can outlive a particularly effective team that just happens to find itself working together. The attempt, however, to create those means has been made. Strategic tools, account management techniques, client investment analysis tools have been developed to ensure that clients do not flee at the first glimpse of creative defection. These tools, useful as they are, have not guaranteed client loyalty. Why?

Maybe because these tools have not been applied properly, have not been communicated to the client or the agency purely has made little efforts in persistently connecting advertising success with, besides excellent creativity, the application of proprietary tools (these are not as glamorous as creative spark...). Such means could ensure longer client relationships, management predictability and higher margins.

Account instability

Because of the aforementioned devaluation of advertising creativity, clients have become less respectful of the agencies and less faithful. The scales of power tilt heavily towards the client, who feels free to breach contracts at will, accept and implement creative proposals from alien agencies without consulting with the agency, put the account up for review even after good results, decide to split the account with another agency.

This aspect makes agency management quite difficult: agencies need (and are expected by their clients to) have stable structures to run the accounts. That structure may find itself redundant when clients decide to freeze or cancel investments. On top of this we find inflexible compensation habits (success fees are yet a distant thing for many people – agency and client alike).

The communications market is making the task hard for everyone. The number of media is growing and widening, along with the difficulty of cross-measuring the global effects. The quest for more efficiency has also created specialized agencies in terms of ethnicity and age.

The market, in a broader sense, dictates, by its dynamics, the evolution of individual businesses. We have witnessed recently the rise and fall of strategic consultancy. What will be the role of strategic planning, consultancy and marketing services in the future? Will these remain independent, or will companies and groups try to have these in-house? Will the outsourcing fad live on?

The communication warriors

In spite of the latest evolutions in agencies which have left us with a bitter taste of uncertainty regarding innovation in the advertising industry, innovation must prevail, and efforts must be undertaken to create parallel initiatives to ensure that agencies remain relevant in the market and that they can play a more significant role. One of these alternative projects is what we have dubbed the communication warriors.

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  New business → to actively seek opportunities – marketing ideas that elicit agency advertising/communication work.

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  Business development → to develop opportunities – communication ideas/new business concepts/brand extensions/new targets/communication programs – that involve current accounts.

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  Partnerships → to seek and design opportunities with strategic partners (consultancies/investment bankers/venture capitalists/business angels).

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  Management support → to develop opportunities to activate current accounts/clients less active/in risk of defection/low budgets in the framework of the agency's annual business plan.

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  Marketing → coordination with the agency's head of marketing to develop opportunities that maximize the agency's exposure, differentiation and PR eligibility.

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  Resource optimization → A CW team can seek and develop opportunities that encompass disciplines across a network and/or countries (example: a new brand developed by the team that seeks an investor in association with a venture capitalist that involves advertising, relationship marketing and consumer research from a variety of network companies).

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  Market-oriented → The CW also has a focus on the aspects of opportunities that can most effectively address market concerns and which can constitute a portfolio of best practices in the field of marketing communications that enhance the awareness of the agency/network/holding as a whole. Example: projects that deal with solutions involving:

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  integrated campaigns;

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  successful brand extensions;

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  new targets;

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  new products/services;

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  consumer-oriented business concepts;

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  communication investment evaluation and enhancement;

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  on and off-line marketing efforts; and

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  relationship marketing.

How can we set up an army of communication warriors?

Hire people into roles, not jobs. Communication warriors populate their organizations with people who have the skills and talent they need to be fluid and fast in pursuit of opportunities, but also look for people with entrepreneurial expertize.

Agency warriors believe that hiring for a specific job, with specific experience requirements, restricts the pool of potential recruits, so communication warriors stress flexibility with one goal: recruiting people with the capabilities to fill multiple jobs as the organization changes to meet market demands.

First of all we have to create fluid organizations that can mobilize quickly into opportunity teams which are at the heart of how the communication warriors keep ahead of market pace. Opportunity teams are accountable for going to market with the idea and their reward is linked to successful capture of the potential new business.

The most successful opportunity teams are shaped according to a "dream team" philosophy – the best people for the job – whether found internally, hired specially to complement other members' skills, or acquired through external partnerships.

Communication warriors teams dissolve when the job is done, with some portion remaining to run the new business, while the remaining return to the "talent pool" to pursue new opportunities.

Second, we have to ensure that we can drive fast decision making from the top yet make opportunity identification everyone's job inside the organization.

Still, opportunity identification comes with a risk: the proliferation of ideas may draw the agency in many directions with too few resources. Communication warriors avoid these pitfalls in at least three ways:

1. 1.

   Using priority-setting processes that are transparent, quick and rigorous with two simple criteria: size of the opportunity and implications of frontline complexity.

2. 2.

   Eliminating the multiple layers found in traditional agencies and networks to drive pace and ensure focus.

3. 3.

   Using, where possible, tools that apply rigorous, consistent and fact-based criteria to determine priorities

Communication warriors move quickly to review opportunities and set priorities without "over studying". Once we have made the initial approval, we quickly fund and launch the opportunity to win with human, and, as necessary, capital resources to gain rapid feedback of the actual amount and sources of value.

Communication warriors put in place critical reviews to help decide whether the opportunity merits continued investment.

Like venture capitalists, CW maintain a laser-like focus on highest return options by asking insightful questions. This top-down focus results can also be applied to partner relationships.