As the season of gluttony draws near, when we all tell our livers to brace themselves for the cold and arduous months ahead, I can’t help but wonder whether the networks could do with a bit of a detox themselves. Have they been indulging a little too much?
Despite Scrooge-like leaders, the networks’ portly stature seems to bear more than a passing resemblance to a Christmas pudding.
Procter & Gamble’s chief brand officer, Marc Pritchard, famously said: “Your complexity should not be our problem, so we want you to make that complexity invisible.”
But can they, in their current form?
A huge amount of value is lost through bureaucracy, politics, silos, separate P&Ls and conflicting incentives. The big networks do not collaborate anywhere near as much as they should. They have created an environment of competition where one’s cousins in another sub group may as well be in another network altogether.
There is no incentive for collaboration. In fact there are disincentives. As an agency chief executive, if you can subcontract the work out to a third party and make a mark up on it, you get more benefit to your P&L than by keeping the revenue within the group. This is lunacy.
If what is best for the client is to break down the silos and consolidate the network, what is stopping this from happening? Perhaps it is expensive people not wanting to let go of their train sets. The slow moving upper echelons have long resisted change. They shut their eyes and put their fingers in their ears when the opportunity of digital arose. If agencies don’t evolve with the times, their clients eventually leave. No amount of fluffing can prevent that. It can delay it, maybe for years. But eventually, the client leaves. We have seen this time and time again; once great agencies crumbling – unable to trade on their former glory any longer.
As an industry we must embrace change. Indeed, we must be the agents of change. For if we wait for clients to lead that change, it will be too late. Innovation is not just embracing gimmickry with the latest tech and shoe horning it into a creative idea to get an award. True innovation is re-engineering the entire business around the right solution for our customers. Who is brave enough to do this? Who can move quick enough before it is too late?
Big agencies are still filled with inefficiency and waste and this is magnified across the networks with strata upon strata of people who have made it to “business class”. The lifers who have hung around long enough to get promoted out of the way to one of those nebulous roles with the big pay cheques and no real remit. The epitome of the Peter Principle. We can all name them.
Networks need to reorganise themselves around where the value is, and that means cutting the fat and investing in talent. Moving up the value chain is crucial. Consultancies are buying marketing networks, but the smart networks are taking a more consultant-led approach. We need to own the higher ground and charge accordingly. Production is increasingly commoditised but the value of good strategy and a great idea will always be huge. Because of the way we have evolved, we still don’t charge enough for this stuff. The consultancies do.
Transparency is the word of the year – but it is easier said than done. Everyone is talking transparency but who is really walking it? How transparent are they prepared to be? How much do they have to hide? The ghost of Christmas past is looming.
Cue the programmatic media buying furore – can they change for the better? Can they afford to lose all that margin? Can they right size the teams? Lots of big hitters have left their jobs recently. Is this a coincidence? Is it the tip of the iceberg?
The whole premise of the network model is due for disruption. It is no longer necessary to replicate every service offering in every location. The world is a much smaller place. Communication tools have evolved and technology has unlocked the ability to collaborate, globally.
Clients are not happy with status quo and are demanding change. They have had enough of the shady media deals; they have had enough of the inflated fees; and they have had enough of paying for bloated salaries of over-the-hill bureaucrats.
The network detox can’t start soon enough.
Adam Graham is chief executive of The Marketing Group. He tweets at @adamgraham