Photo: Alex Proimos via flickr
With the continuing vice-like grip of the holding companies on virtually all of the major agencies, the inevitable shift to digital media and the accelerating growth of social networking, the advertising business has changed dramatically since the Martini slurping; three pack a day, if it moves hit on it, Mad Man era.But one of the less acknowledged indicators of how the agency business is losing its soul has been the rapid growth of search consultants over the last 20 years.
These are the people who on behalf of major advertisers (and sometimes surprisingly small ones) will apply their “expertise” to help them find a perfect fit with their next advertising agency, obviously for a suitably impressive fee.
Admittedly, they do a certain amount of weeding out of the chaff from the wheat in terms of compiling a list of the half dozen or so agencies they consider most suitable to handle the clients account.
These lucky “last men standing” will then be expected to suffer through a series of presentations to winnow the list down to three finalists who will fight each other to the point of exhaustion, while expending ridiculous amounts of money for the one in three chance of winning the account.
In my humble opinion, there are a couple of things wrong with this state of affairs. To quote the principal of one of the largest search consultants: “Some clients come in and know what kind of agency they want, and others have no idea at all.”
Firstly, as these churls have been advertising their products and services for years, wouldn’t you expect them to have some rudimentary grasp of what their advertising is expected to achieve?
And, shouldn’t this job of selecting their future agency be within the purview of the client’s highly paid marketing and advertising directors? Why are these people not aware of which agencies are currently doing the good work out there, particularly in their specific markets?
Secondly, based on recent events, after expending a great amount of money to win the account, the odds are that within a couple of years, the successful agency will lose it, before even recovering the cost of the pitch.
As an illustration of how crazy things have become, it’s reputed that the three finalists pitching for the Wal-Mart account a few years ago spent over five million dollars between them as they labored to win the biggest retail account in the universe. Ironically, Draft/FCB, the agency that finally won the business, lost it in less than a month when it was revealed that Wal-Mart’s CMO had been feeding them confidential company information prior to their final presentation.
So, after dumping Draft/FCB, Wal-Mart re-opened the pitch to the two remaining finalists, plus a couple of new agencies who were invited in to complete the final gladiatorial spectacle. All four then proceeded to spend millions more, until finally, a winner was chosen, who, knowing Wal-Mart’s reputation for squeezing every last penny out of their suppliers, will need years to recover the cost of their pitch, and will have to be on their best behaviour to guarantee the relationship will last long enough to make that possible.
The unfortunate losers will just have to swallow their costs, or attempt to pass them on to their existing clients through the magic of billing. Compounding the problem is the fact that many of these search consultants are now demanding retainer fees from agencies dumb enough to pay them for the honour of being placed on their roll of recommended agencies.
Of course the root cause of these problems is simply one of accountability. As I’ve written many times, the agency and its clients each have to make their quarterly numbers, if, because of consistently falling sales the client doesn’t, they often blame the agency, eventually firing them. In the pre-search consultant days, that would have reflected badly on the middle management advertising and marketing directors.
Now with the buffer of the search consultant, these characters can off-load the blame onto them by suggesting they didn’t put together the right list of candidates in the first place. After a suitable pause, they will hire a new search consultant to go through the whole pantomime again.
As for the agency that was fired, it just has to keep pounding away on that new business treadmill. This way they can pacify the bean counters at the holding company for a while, putting off the day when someone finally realises that virtually all the BDA’s are expending greater and greater efforts, resources and money for less and less reward, which in the real world would not be recognised as a sustainable business model.
But this isn’t the real world. This is advertising.
George Parker has spent 40 years on Madison Avenue. He’s won Lions, CLIOs, EFFIES, and the David Ogilvy Award. His blog is adscam.typepad.com, which is required reading for those looking for a gnarly view of the world’s second oldest profession.” His latest book, “Confessions of a Mad Man,” makes the TV show “Mad Men” look like “Sesame Street.”
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