They split the atom, we had Hiroshima; they split agencies, and...

By Ayan Banik , Cheil, Mumbai | In Advertising | June 28, 2017
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... it led to a different kind of bloodbath...

Many moons back, when the legendary George Lois was asked what he did for a living, he simply replied that he makes unheard entities like Tommy Hilfiger famous in a matter of hours. That was the power that advertising wielded back then.

Cut to today. An unheard of start-up, whose very existence can become a question if it doesn't get its next round of funding, calls for a pitch on Facebook Live, and close to 100 odd agencies fight against one another like a pack of hyenas.

How did we become so abysmally weak in just a few decades? When did we lose our swagger, arrogance and negotiation powers? What went wrong with us?

The Glaring Mistake

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One of the glaring mistakes was when we separated media planning and media buying from creative, and let media departments operate as separate profit centres. Creativity is a mix of tangibles and intangibles. It's the holy culmination of a great idea leading to great execution. The idea is intangible and the execution, tangible.

Earlier, there was one unified agency that would create both the intangibles and the tangibles, and charge one 'unified' amount of money from the client. The understanding being, the bigger the idea, the bigger the execution... and therefore, the bigger the money.

Now, by separating media from the mainline agency, we have broken that creative output into intangibles and tangibles. While the media units, operating with tangible outcomes (GRPs bought, newspapers taken, OOH sites booked, etc.) can still extract the right money from the client, it has become extremely difficult for the creative agencies to justify the money that they charge. Rightly so, because how can you put the right price tag (without getting into heady debates and arguments) on something as intangible as a creative idea?

An Example

Say there's this nice, upmarket coffee shop right in the heart of the city that sells a cup of coffee for Rs.150. Now think of a similar upmarket coffee shop, that sells exactly the same cup of coffee (same coffee beans, same cream, same sugar), but at Rs. 200, simply because it offers a wonderful view of the sea. Here the coffee is tangible, the final cost of the cup is also tangible, but the view of the sea is intangible. It's an unwritten understanding - customers are willing to pay the extra 50 bucks for the view.

But that argument works as long as we don't split the cost by saying, "The coffee costs Rs. 150 and the view costs Rs. 50..." because the moment we do that, we get into an argument of tangible Vs intangible. The same people who were happy paying the extra 50 bucks (without the coffee shop spelling out the details) would now argue, "What's so special about the view that they are charging an extra 50 bucks for it? Bring that down to 10 or 20 bucks..."

And that's exactly the problem that creative agencies have been facing ever since this split - trying to justify the cost of intangible creative outputs. We had lost the battle, then and there.

Growing Divide

And we kept losing more battles and kept suffering, as agencies were further fragmented into specialised sub-units like PR, events, activation and finally digital... all with separate profit centres. There's a running joke around advertising agencies: agencies are more adept at doling out fancy designations and roles than pay cheques and increments. Everyone is a head. Everyone gets to run one's own unit. Everyone's ego is massaged. And because these units have tangible outputs in terms of execution, they can effectively monetise their work. However, since their core expertise lies more in execution, they still have to either outsource their thinking (strategic planning) and creative ideas to a third party (creative agency) and split the share of their earnings, or with their limited resources, produce average/below average thinking and creative outputs on their own.

In both scenarios, the people who are responsible for the thinking and creative ideas (a crucial part of any creative agency set up) tend to lose. We may have the best time sheets in place, but it's virtually impossible to quantify the creative process - at times it takes a couple of days, at times it takes a couple of months. And there's no way to evaluate the exact worth of that output.

Half-hearted Collaborations

Then, there was this mad rush for agency consolidations. Creative agencies started tying up with independent media agencies, PR agencies, activation, digital and event management companies. All under one name. And one roof. But the problem remained. Because more often than not, these 'so called unified entities' have different - and often conflicting - accounts. Merely sharing the same name and sitting under the same roof doesn't result in miracles. When you have separate P&Ls, you are like different tenants, sharing the same address and landlord but eating out of different kitchens. This kind of an arrangement hampers profits... and creativity.

Creativity Suffers

Creativity is a collaborative process. And when we split agencies into separate business units, we break that natural collaboration. It's a known fact that in every job, one team (which has natural expertise) leads and the rest follow. But it's the nature of the job that should dictate which team leads and which one follows, rather than 'who is earning how much from that project'. More often than not, we end up bickering... "It's an ATL account, why should digital resources be used?" or, "It's an activation account, why should mainline planning strategise?"

Earlier, in a unified agency set-up, different departments not only sat together, they also shared the same P&L. Each one contributed its own expertise to the same pie; if one department fell short on revenue targets, other departments would compensate for it. And that's why when agencies of yore went out for a client pitch, they went together as one unit, one family. It was a 'Do or Die' situation for every department. If the business came in, everyone won.

Unfortunately, today, we are pit against one another, trying to fight while staying in the same pool. The more we fight for every morsel, the more we lose negotiating powers with the client.

And this fragmented arrangement doesn't seem to help the client much either. Unus Sed Leo. Only one, but a lion. Clients don't need multiple agencies making the same point but in different power point presentations over and over again. They need one agency that can do all the jobs for them. End to end. One agency - but a unified, committed one.

Clients need leaders. Clients need legends. It's a pity that we don't have legends anymore. We only have fancy designations and fancier offices.

(The author is head, brand strategy, Cheil India.)

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