Let’s say your agency management team just completed its annual offsite retreat to plan the agency’s objectives and strategies for the coming year. You spent a fruitful day identifying opportunities that could make a big difference in the agency’s future success. Now the question is, will you actually follow through, or will this be yet another year of “We were just too busy to work on our own brand?”

Executing your strategy isn’t just an important thing; it’s the only thing. Unless you actually put your initiatives into action, nothing will have been accomplished. Without execution, there is no strategy. And if you really analyze the agency landscape you’ll realize that the main difference between mediocre agencies and great ones is not vision, but execution.

The problem is, most agencies are too busy working on yesterday’s problems to work on today’s strategic imperatives. This chronic challenge can produce real cynicism within the agency. Employees begin to doubt not necessarily the sincerity of management, but rather their commitment.

Talk is cheap, but execution is priceless

Talk isn’t really cheap – it’s expensive. Think of the countless hours wasted talking about the same issues over and over again. Talking is talking. Only doing is doing.

Unless and until you translate your initiatives into action, the initiatives are really only intentions. And the only way agency initiatives will get done is if the top management of the firm models the behavior it expects of other agency associates. Commitment, discipline, and action start from the top. If it’s important to the CEO and the management team, it will be important to everyone else.

The main difference between mediocre agencies and great ones
is not vision, but execution.

Most importantly, if agency leaders have high expectations, they will get high performance. If they have low expectations, the status quo will prevail. In fact, research has shown that high expectations centered around a goal that takes unusual effort produces unusual results. Normal expectations centered around a goal that takes the usual effort produces the usual results.

Agency managers can’t delegate their responsibility for personal involvement in executing the firm’s initiatives. “Many people regard execution as detail work that’s beneath the dignity of a business leader,” observe Larry Bossidy and Ram Charan in the excellent book Execution. “To the contrary, it’s a leader’s most important job.” A leader’s ultimate success isn’t a result of strategy, but execution. Nobody has ever achieved greatness without results.

Deciding isn’t the same
as doing

There’s a story about five frogs sitting on a log. One decided to jump. How many frogs were left? Five. There’s a big difference between deciding to jump and actually jumping. Many agencies make the decision to change. But only a few transform their decision into action.

These are trying times in the agency business. The latest research shows that advertising spending is projected to decline well into next year. Marketers are spending less and expecting the same (or better) results. The response from agencies is to cut costs.

But is there another way to respond to the upheaval in our business? What would happen if agency leaders invested the same amount of energy in creating opportunities as they do in solving problems?

Growing vs. shrinking

Is it realistic to think that marketing communications firms could be growing, developing and improving in this environment? Some are. But it means agency professionals have to stop investing all their time in “yesterday” and invest some of it in “tomorrow.” Disruptive change must be met with disruptive change.

Writing in a recent issue of the Harvard Business Review, executives of the consultancy Deloitte believe that “Unless firms take radical action, the gap between their potential and their realized opportunities will grow wider…Institutions must increase not just efficiency but also the rate at which they learn and innovate…”

If you’re serious about growing, then developing new products, services, and approaches should be at top of your daily “to do” list. Don’t wait until your calendar eases up, because it never will. As successful entrepreneurs know, business building means acting rather than being acted upon.

In turbulent times like these, marketing communications firms are scrambling to identify the best business strategy not only to get them through this recession, but to position themselves for success once the recession is over.

The natural response is to “try a little bit of everything”; to expand your services, broaden your capabilities, and try to appeal to more clients. It seems like common sense, but it’s exactly the wrong response. The best growth strategy — in good economies or bad — is to decide what not to do.

Expand by narrowing

Imagine two architectural firms: one that’s extremely focused with a clear value proposition, and one with an unfocused business strategy that attempts to do everything for everybody. Which of these two firms would have:

• The strongest earning power?
• The largest geographical market area?
• The fewest competitors?
• The greatest degree of respect from clients?
• The most sophisticated clients?

The answer in every case is the focused firm. Let’s look at each question individually.

The greatest earning power. It’s a simple fact that the specialist earns more than the generalist. This is true in medicine, law, engineering, architecture, consulting, construction, you name it. This is because the specialist knows more, and we live and work in a knowledge economy.

The largest geographical market area. Focused firms draw clients from all over the globe, not just from their own Zip code. That’s because what they’re selling isn’t available down the block from some other firm just like them.

The fewest competitors. The easiest way to narrow your competition is to narrow your focus. There are far fewer specialists than generalists, and the law of supply and demand dictates that the less supply the greater the demand.

The greatest degree of respect from clients. Knowledge and expertise equals respect. An effective value proposition allows your firm to develop and leverage its intellectual capital. This makes you valued – and respected – not just for what you do, but what you know.

The most sophisticated clients. In the boardrooms of professional firms everywhere is heard the lament “If only we had better clients.” A quality value proposition attracts a quality client. A business that proclaims “we’re right for everybody” is logically going to attract both the good and the bad.

As business strategist Chris Zook writes in his insightful book Profit from the Core,

Having a clear sense of business boundaries and of the definition of your core is a critical starting point for growth strategy. Identifying the core of your business is the first step in determining how to grow.

The marketing communications industry has reached a point where radical change is now pragmatic change. Incrementalism is the worst possible approach, not the best – nor even the safest.

This is not the time to deliberate whether digital marketing will continue to grow (it will), whether mass media spending will continue to shrink (it will), or whether marketers will continue to want more innovative problem solving from their agencies (they will).

Needed now: a new creative team

Industry observer Warren Berger, writing in a recent issue of Communication Arts, argues that the writer-and-art-director-in-a-room-developing-big-ideas model simply does work in a world where brand building is accomplished through lots of multifaceted ideas that work in multiple formats on multiple devices, all seamlessly integrated. “What’s needed,” says Berger, “is a more wide-open, technologically sophisticated, collaborate, multidisciplinary team approach to creating brand communications.”

Most agencies are still organized in this old Bill Bernbach-inspired model. It worked effectively in the days of Mad Men, but it’s not what’s needed in a world where marketers need work that engages in technology-centric, consumer-controlled channels.

Trading analog dollars for digital pennies?

A recent study published in AdWeek by the IBM Institute for Business Value says that 65% of marketers will increase their digital marketing this year. The exact same number — 65% — said they would decrease their traditional marketing in 2009.

The means the scale of agency work is changing in almost every dimension, from production to media. The time-honored formula of dividing advertising budgets into 85% media and 15% production gets flipped on its head in the digital world. A recent paper published by the 4As cites research showing how money is moving in this value chain:

Source: Bear, Sterns & Co. “Advertising Outlook – Perspective from Wall Street,” 2008

As this study shows, the news is not all bad. The move to digital can actually produce more income for the agency, not less, but agency principals must change their perspective about where their money comes from.

So should you be working on incremental change at your firm, or disruptive change? I think you know the answer.

To understand the changing dynamics of the “value chain” concept, observe what’s happened to the music business.  Consumers are still spending roughly the same amount of money on music, but the money isn’t going to the record companies and music stores; it’s going to iTunes.  The money in the music business value chain is still there – it just moved.

The same is happening in the advertising agency business.  Marketers are spending, but they’re spending in areas of the value chain that aren’t owned by agencies.  Instead of trying to squeeze the last bit of value from traditional sources of revenue, agencies should instead be focused on finding a different spot on the chain.

Finding the most profitable areas of the value chain

To continue to profit in the marketing business, agencies must select a place on the value chain where the offerings are still underdeveloped. The problem is that most agency business models are still centered around the idea of “production and distribution of advertising” — a spot too far down on the value chain to have any real or perceived value in today’s multi-channel marketplace.

Here’s how to think about your firm’s value proposition:

Most agencies base their value propositions on overdeveloped services; they are placing themselves on the wrong side of the value chain.  By focusing on the underdeveloped features or benefits of the category, you are in effect not just positioning your brand for where the profits are, but for where the profits will be.

Underdeveloped offerings in the agency world include:

Online Account Planning

While many agencies have a well-developed account planning function, they have yet to fully realize the potential of the internet in gleaning customer insights.  For example, in addition to using traditional account planning tools Butler Shine Stern & Partners uses services like MotiveQuest to track consumer behavior for client Mini.

Analytics

Virtually every agency can benefit from adding the discipline of analytics.  Besides helping to meet clients’ demands for accountability, analytics can serve as the foundation for value-based compensation agreements.  Kansas City-based Bernstein-Rein promises clients the ability to “organize, evaluate, measure, and interpret the right data to make it valuable.”

Social Media

As the marketing value chain continues to emphasize non-paid online solutions vs. paid offline solutions, agencies must establish competent services and tools to help their clients maximize the world of social media. Media Logic, an innovative agency located in Albany, New York, has a suite of resources that help them monetize this important area.

Other underdeveloped agency services include:

Digital: Usability testing, behavioral targeting, software application development (think smart phone apps)

Branded Content: Custom publishing (both online and offline), branded channel development

Customer Relationship Management: Customer database analysis, customer service programs

Reputation Management: Online reputation monitoring and reporting

Conversational Marketing: Conversation strategy, online community development

Customer Engagement Marketing: Crowdsourcing, product co-development

Intellectual Property Development: Content syndication, sale or license of IP

And much more …

So now the question is, which side of the value chain are you on now, where do you think you should be, and what are you doing to get there?

By Tim Williams

Times are indeed tough. Most of us have never experienced an economic recession of this magnitude. Virtually every agency – from the smallest independent to the largest multinational – has experienced a wave of layoffs. Some firms have implemented across-the-board pay reductions, furloughs, or cut the length of the work week. Many have suspended 401k contributions and reduced agency-funded insurance benefits.

There’s no doubt that cost cutting is an absolute necessity at a time when clients are reducing budgets, delaying projects, or just cancelling work altogether. Clients are paying later and banks are cutting or freezing agency credit lines, creating a dangerous and uneasy cash flow crunch for firms everywhere.

You only have so much time in the day.  How are you going to spend it?

This is a time when our problems – especially those of the financial variety – confront us squarely every day that we come to work. Our natural reaction to income and profit pressures is to keep pruning; no more discretionary travel, no more administrative help, no more free parking, and no more complimentary sodas in the fridge. But there comes a point where it’s simply no longer possible to save our way to success.

The danger is that we’re devoting so much time and attention to the problems that we’re failing to pursue the opportunities. Peter Drucker believed that far too much time is spent trying to fix problems at the expense of developing all the remarkable potential that surrounds us. His philosophy “Feed the opportunities and starve the problems” is arguably even more relevant when times are tough. Cutting expenses may be necessary, but it’s hardly a business strategy

Trading problems for opportunities

If you put all of your time and energy into squeezing more costs out of the system, there’s no time or energy left to work on the very things that could help pull your firm out of the situation it’s in. Yes, even the very best agencies have had to reduce their expenses; so has virtually every company in America. But the best agencies are also continuing to innovate, develop new services, and find better ways to get paid for the value they create.

Perhaps you’ve eliminated all magazine subscriptions; but have you invested time and energy in developing a new social media capability? You may have a plan to ask everyone to take a week’s unpaid vacation; but do you have a plan to develop an analytics function that could help prove the value of your work to clients? You have spent late nights and weekends poring over billable time reports; but have you devoted time to developing proactive, game-changing ideas for your clients?

The decision to invest in yourself isn’t made by your balance sheet. As economist Alan Weiss preaches, “Money is never a resource issue; it’s a priority issue.”

What will your business look like?

“Feed the opportunities and starve the problems.” - Peter Drucker

When the economic crisis is over, what do you think the agency business will look like? Most economists believe the business world will be changed forever. Do you really want to emerge from the crisis as the same agency, or do you believe there’s an opportunity to emerge as an even better agency, prepared to take advantage of new waves of spending and investment? Instead of hunkering down until the storm passes, see this as the opportunity you’ve been looking for to reinvent your agency.

The future success of your firm hinges on how you focus our energy right now. Avoid the trap of being so consumed by today that you neglect tomorrow. Problems contribute nothing to your firm’s success; opportunities contribute everything.

By Tim Williams

While Ignition is known to be a strong advocate for specialization, there is nonetheless an important role for individuals inside the agency who are generalists – even inside specialist agencies.

While the exploding media universe calls for very specific skill sets when it comes to execution, knowing whether or not to recommend a specific channel in the first place is the job of a generalist; someone who knows enough about all of the options and possibilities to recommend the right one.

Generalists know a little about a lot; specialists know a lot about a little.

The people at your firm who must play the role of skilled generalists are those advising the client on the front lines – brand strategists, brand managers, channel planners, and content development (creative) professionals.

In today’s multichannel universe, the generalist must know the basics of:

Offline + Online
Paid + Non-Paid
Mass + One-to-One

If this sounds like a big job it’s because it is. Someone like a brand strategist must know enough about all of these potential marketing solutions to recommend them. Ignition has written many times about the need to fully integrate offline and online marketing within the agency. Some progressive firms have done the same with paid and non-paid. Cleveland’s Liggett-Stashower, who for many years had a reputation that was equally strong in both PR and advertising, made the bold decision to erase the line between these two disciplines so they could do an even better job of being channel-agnostic in their work with clients.

Enter the specialists

Alongside a small group of generalists is a somewhat larger group of specialists – professionals skilled in executing the recommended solutions. This isn’t to say that an agency must physically employ all these specialists; sometimes it’s more effective and efficient to use specialist business partners, especially when it comes to very highly-specialized work. In fact, the more specialized the work, the more sense it makes to go outside. Just as a television production project would rely on outside specialists for things like lighting and makeup, a digital production project would rely on specialist programmers and coders.

Complimentary roles

Here’s how to think about the interrelated functions of generalists and specialists:

Abolish the silos?

It’s fashionable to talk about the evil of “silos” but that really misses the point. It’s actually desirable and even necessary to have “silos” of specialists in marketing communications firms at certain points in the process. It’s impossible to have literally everyone in the firm fully briefed, fully involved, and fully integrated into every function and discipline. If you think there are too many meetings with too many people now, imagine a business model where everyone does everything. It’s just nonsense.

Instead of misdirecting your energy to “knocking down the silos” make deliberate decisions about who in your organization needs to be a generalist and who needs to be specialist. You need both, and both need to be great at their jobs.

What happens if the traditional marketing model collapses before a better alternative is established?

So asked Advertising Age’s Bob Garfield in his landmark article titled “The Chaos Scenario.” Garfield recently wrote the third installment in this series proclaiming that we’ve actually entered this scenario ahead of schedule.

Not linear, but exponential

Some of the changes we experience in this business are gradual and linear, but the movement to digital is exponential. Some agency executives continue to think of the digital revolution as “This year’s most critical issue for the past 8 years,” but even the most cynical will now acknowledge that the revolution has truly arrived.

The implications for marketing communications firms are monumental – some obvious and some not so obvious. Senior agency executives around the world report seismic changes in their client relationships brought on by not just the economy, but by the urgent need to find more innovative solutions to marketing problems.

Demonstrating digital leadership

Of course digital isn’t always the answer, but increasingly clients are turning to agencies not only for help but for thought leadership in digital marketing, and only the most progressive agencies are in a position to deliver it.

In Ignition’s consulting work, we regularly encounter agency principals who recognize the urgency and importance of the shift to digital, but are personally unprepared for the change.

Not just organizational competency, but personal competency

Ask a senior agency professional a question about broadcast production and they can usually answer it. Same with print, radio, outdoor, or even point of sale. But ask them a question about digital and the answer is often, “That’s a little out of my league – let me have the digital guys get back to you.” That’s a little like dodging questions about television if you were an account executive in 1954.

Agency leaders, managers, and senior executives all need to develop a personal competency in digital just as they have in traditional. And if you haven’t learned it already, you need to enroll yourself in what BBDO’s Andrew Robertson calls a “reverse apprenticeship.”

Senior professionals as students

If you can’t answer the questions of what, who, why, and when regarding digital, you need to enroll yourself in a program of self-study. If you’re in a general agency management position, your curriculum should cover such topics as:

• Digital terms and terminology
• Types of digital projects and solutions
• Identifying and mapping scope of work for digital projects
• Stages in digital projects
• The tools and methodologies of digital project management
• Managing technologists
• Marshalling and managing digital assets
• Experience design and usability testing
• The role of quality assurance in digital production
• Basics of online analytics

Most of the digerati are self taught

Think about the digitally-talented people you know and you’ll realize most of them are self-taught. They took an interest in digital and learned it on their own. You can do the same, especially because everything you need to know about digital is online, and most of it is free at sites ranging from the Interactive Advertising Bureau (IAB) to ClickZ.

Make the commitment to a digital apprenticeship this summer and assure your personal relevance in the marketing communications business.

In every category, it’s virtually inevitable that the brands and companies that market them will become more and more alike. In the seamlessly connected world of today, this phenomenon is both accelerated and exaggerated. Studies show that an increasing number of categories are becoming more commodity-like in the eyes of consumers. In categories ranging from home improvement to insurance, brands are seen as becoming less differentiated.

The copying mechanism

The underlying explanation is the “copying” mechanism that has allowed humans to survive and evolve for the past few millions years. The work of social observers like Mark Earls demonstrates the simple truth that humans are social creatures, not independent agents, and that as such rely on copying to learn and survive in society. In fact, says Earls, “Copying is our species’ number one learning and adaptive strategy.”

Thus products and product features are mostly copied rather than invented. Copying is perceived as less risky, and risk is what most humans strenuously seek to avoid.

There is, of course, an important difference between real risk and perceived risk; in marketing the real risk is simply copying what other brands do. Copying leads to undifferentiated brands, commoditization of entire categories, and erosion of pricing power.

Duplicating success?

The temptation to copy in business is irresistible. We logically conclude that we can replicate another company’s success by duplicating their features, attributes and capabilities. But copying diverts companies and brands from doing what they do best and instead puts them on what has been called “the long road to unfocus.”

The illogic of all-in-one

The other force at play that leads brands to become homogeneous is the natural tendency to define their value proposition solely in terms of product attributes. Believing that the more product attributes a brand can claim the more valuable it will be to the customer, brands continue to add more and more features until they become “all-in-one solutions”.

The problem is, of course, nobody buys a product because it can do everything, but rather because it can do something. Nowhere is this more apparent than in packaged goods, where most categories ultimately produce a “total solution” brand. Witness Colgate Total, Crest Complete, Olay Total Effects, and Tide Total Care. Can one laundry detergent really stand for protecting color, enhancing softness, cleaning thoroughly, fighting stains, and preserving fabrics?

After years of marching down the “complete” path, P&G is realizing that a single benefit brand is often stronger for the simple reason that it stands for something. It promises to do a specific job extremely well instead of attempting to do a lot of jobs moderately well.

What’s true for package goods brands is true for agency brands. There is no competitive advantage in doing simply what others do; or worse, attempting to do everything others do.

Over the years, business books have been filled with admonitions to create a “mission statement” that articulates your company’s reason for being. Decades later, most mission statements are still a mélange of vague hyperbole that hang unnoticed in the lobbies of companies everywhere.

What’s really needed in place of the tired mission statement is to articulate you organization’s sense of purpose. What is it that makes you and your associates get out of bed in the morning? Without exception, the most notable agencies have an ambitious reason for being.

The danger isn’t reaching too high, but too low

Barak Obama inspired the American electorate with the “audacity of hope.” Audacity is a good way to think about purpose, because a purpose is not only inspiring, but it’s exceptionally ambitious. The great Michelangelo once remarked that the danger is not that we set our ambitions too high and miss them, but rather that we set our goals too low and reach them.

The natural passion of purpose

The question of purpose is answered not by describing what you are, but why you are. Next time you’re on a flight surrounded by business people, one quick look around will tell you which ones are associated with an organization with a motivating purpose. While most everyone else is sleeping, playing solitaire on their computer, or solving the latest Sudoku, people who work for purpose-driven companies are usually working.

Because purpose is not about money, an agency’s “purpose” cannot be to run a profitable business. As Peter Drucker said, “Profit is not the purpose of a company, but rather a test of its validity.” He also believed that all people and all efforts should be focused on contribution – a meaningful end result that will make an important difference for the organization. This is especially true for knowledge workers, he says, who happen to be motivated by exactly the same things that motivate volunteers.

What drives us from inside?

Rather than being driven by external forces — the market, the competition, or the numbers — we have to pay attention to what drives us from inside. Our purpose has to be at the center of who we really are as an agency. In defining purpose, consider such questions as:

1. Besides making money, why are we in business?
2. What inspires us to come to work each day?
3. What would we want to achieve if we knew we could not fail?
4. What outrageous change would we like to make in our business or in the world?
5. What is the meaning in what we do?
6. What significant contribution do we make to our industry or to society?
7. What kind of lasting difference do we want to make?

The agency professionals who are most enthusiastic and contribute the most to the firm are the ones who are given big goals and big jobs. The truly outstanding agencies are not just trying to make money, but in some small way change the world.

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