Let me tell you how advertising agencies work.
Agencies, by and large, sell hours. Unless they find a way to productise intellectual property or build a clever piece of proprietary technology, agency businesses scale by adding staff as they add clients. Win a client, hire people. Lose a client, fire people.
Agency owners and executives make money by consolidating with or selling to larger agencies or networks. When founders or shareholders exit they leave their organisation without its key creative or strategic leadership, often with catastrophic implications. The cycle repeats itself over and over again with relentless predictability. Agencies that were all the rage (often on the back of a single piece of work, award or client win) find themselves scrapping for work a few years down the line.
Somewhere between starting and selling an agency you realise that the only ways to make better than average margins when billing hours is to exploit staff, or manipulate clients. If you’re a nice person, this is troublesome. If you’re a dick, you carry on and enjoy the ride.
Having had zero agency experience and limited business acumen when I started Cerebra, this realisation came as a bit of a shock to me. Today, we interview people who go to great pains to tell us they’re not eight-to-fivers, not afraid of hard work, not shy of high levels of stress. This is, after all, #AgencyLife.
What utter bullshit.
If our staff have to slave away from 7am to 11pm all week and come in on weekends scrambling to finish work there are only two possible explanations: They’re lazy and don’t get their allotted work done in office hours, or (more likely) we run a crappy business that forces people to work themselves nearly to death on the back of unrealistic deadlines, poor resource allocation and mismanagement.
Overworked employees are not the only messy byproduct of broken agency business models. The fundamentally unhealthy nature of many agency client relationships is a far deadlier cancer.
There’s a reason why the Madison Avenue overlords of the 50s and 60s call their reign the Golden Age of Advertising. The romance and mystery of the practice in that era resulted in agencies charging a massive premium for creative services that didn’t necessarily have to track back to measurable results. Enamoured clients were manipulated and abused. That dynamic has come full circle today, and when big business feels the squeeze marketing budgets suffer first. Agencies clamber over one another for client work, saying yes to any and all opportunities, bad-mouthing each other, and winging it on work they shouldn’t have attempted in the first place, instead of prioritising shared value and fighting for mutual respect.
Last year we terminated our relationship with a major brand on the back of what we believed to be a better opportunity for shared value with one of their competitors. We were well within our contractual rights to do so. Man, were they pissed! How dare WE fire THEM?
“Agencies don’t fire clients. Clients fire agencies!”
The last three pitches Cerebra attended were all rigged to shoe a specific agency partner in to a client, not to genuinely evaluate the respective skills and experience of the short-listed candidates. We dance around like monkeys in a cage begging for a banana from a kindly onlooker – it’s shameful. Staff get so amped and motivated by new business briefs and pitches and so utterly devastated when we aren’t chosen.
More often than not agencies don’t get paid to pitch. This means that the first R250k worth of work for the client is done for free in the hope of beating other agencies (also working for free). You present your most compelling ideas and seldom manage to justify the the budget to deliver at that level. But the expectation that you can deliver that level of work for free or next to nothing is set. Recovering from that is almost impossible – nearly everything you do after is a disappointment.
Every single mutually beneficial and valuable client relationship Cerebra has ever had begun with an open discussion, a real need and a slowly but steadily evolving scope of work.
Pitches are broken and breed broken results. They’re like The Bachelorette for business.
Because many agencies are deeply insecure about their ability to show tangible results, awards become their primary differentiator. This fuels the unhealthy dynamic between clients and agencies even more. Work is done because it wins awards, not because it achieves business objectives. Choosing an agency primarily on its awards is like choosing an intimate partner based on the car they drive.
Craig and I have no immediate plans to exit from Cerebra. We flipping love this company. Having said that, if we are still “just an agency” when we do leave one day, we will consider our tenure in leadership as a failure. We are wholeheartedly determined to find better, more sustainable ways to run our company that diminish or eradicate some of the broken dynamics I’ve alluded to in this post.
This starts with ensuring that our colleagues have healthy working lives. That does not mean that they don’t work hard. It means that they work passionately and constructively in their contracted hours, not because they feel they have to but because they know they’re part of something great – something that is changing the world of business forever. It means they leave us happier, smarter and wealthier than when they joined us. Over 25% of all people that have left Cerebra have gone on to start their own successful businesses. We think that’s rock ‘ n roll.
It also means agency leadership taking more responsibility and accountability for the health of their businesses. I will publicly lynch the next agency exec I see blaming juniors for client hiccups. That behaviour is cowardly and detestable. Running a great agency means making a profit as a by-product of happy people, not at the expense of people!
Lastly, it means fostering client relationships built on mutual trust and respect and fixing or even in some cases terminating those that are abusive in nature. Mutual trust and respect comes from us establishing unequivocal thought-leadership and market dominance by constantly pushing the boundaries of our industry – the onus is entirely on us (and not the client) to prove value. If there is a lack of education on the part of the client, it is our responsibility to educate.
Agencies have the opportunity and insight to change corporations from the inside out. The only reason we don’t get asked to play that role more often is because we haven’t earned the right. It’s time to up our game. It’s time to change the power dynamic and win our seat at that table.