Archive for CMO
David Lubars Thinks You’re Dumb
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I belong to a group on LinkedIn called “Re-inventing the Advertising Agency Business Model”.
Here is where my advertising and marketing brethren pontificate on the future of advertising. In my mind it’s a useful exercise if only someone would actually do anything about it.
Lately, this issue is one of the most widely discussed topics in the marketing/advertising community. Forrester has several reports on the matter. Fast Company is planning to dedicate the December/January issue to the “tumultuous state of advertising.” As a part of this issue they recently asked the three top creatives of three very different agencies to visually demonstrate the future of advertising.
David Lubars, BBDO’s chairman and chief creative officer said this, “Everything will continuously change, but people will always stay the same. Go back 70 years, go ahead 50 years, a human is a human. There are primal things that will always drive us: Will this product be better, will it help me succeed, will it make me more attractive? So the technology and the way we to speak to people will change, but those fundamentals will never change.” How he visually represented this is pictured above.
Herein lies the disconnect between the consumer and marketers.
One of my previous blog posts was about the chaos that is today’s consumer marketplace. These days we can’t even agree whether or not to call ourselves consumers. Alex Bogusky wonders if the term is a dirty word. Grant McCracken offers the term “multipliers.” No matter what, they’re far more diverse, sophisticated and interesting than we’ve ever given them credit for. And while we try various new means of reaching consumers such as geo-tagging, QR codes, harnessing viral and so forth, at the end of the day on the whole, we default to the same old same old. No disrespect to David Lubars. I don’t even know the guy and am not so sure they’d let me in the building but the same old same old is generally what agencies like BBDO produce. Advertising to the lowest common denominator.
Don’t get me wrong, BBDO has done some amazing work and continues to do so and the sheer size of BBDO globally is beyond intimidating. Nevertheless all too often it seems like big agencies are in protectionist mode as the biggest purveyors of disruption marketing.
Every day, the 30-second spot is becoming less and less relevant. Commercials are background noise. Banner ads have become plain beige wallpaper. Brian Morrissey recently pointed out that click through rates on banner ads have stabilized. Phew. Good. At .09 percent. Ummm Houston… we have a problem.
Grant McCracken has a wonderful section in his book “Chief Culture Officer: How to Create a Living Breathing Corporation” where he refers to the “American scholar Lewis Mumford [who] offered his vision of the world created by commerce.” It looks something along the lines of the set of “The Truman Show”. As McCracken says, “This became the intellectuals favorite thing to say about popular culture: that culture touched by commerce must be diminished by it,” when in fact the exact opposite has happened. So while Lubars would have you believe that we as consumers are primal and simple the reality is we have evolved considerably. Sure there are ways to simplify explaining consumer purchase behavior but in general consumers are extraordinarily complex.
In Mark J. Penn’s book “Microtrends: Small Forces Behind Tomorrow’s Big Changes” he says, “With the availability of choice has come a rise in individuality. And with the rise of individuality has come a rise in the power of choice. The more choices people have, the more they segregate themselves into smaller and smaller niches of society.” In his book he offers glimpses into 82 of these “niches”. To me, that’s relatively daunting.
We talk about the notion of true change but the reality is we continue to produce mediocre dumbed-down work largely at the request of the client.
Agencies are still effectively layers upon layers of management with peer-to-peer alignment with clients. That being said, clients haven’t asked for it to change much. When the ads aren’t performing, fire the agency!
In my humble opinion it’s going to take CEO/CFO level leadership on the corporate side to force their CMOs and marketing organizations out of their comfort zones to explore agencies with new business models and to change the way in which they interact with those agencies and who takes responsibility for idea creation. And to consider bringing some of those people who generate ideas in-house.
I don’t think there is one standard “agency of the future”. I think there will be numerous solutions providers who all find unique ways to solve client’s problems and I think the more flexible and nimble those types of “agencies” are the better they will succeed.
And in fact according to Fast Company, Kraft appears to be on the cusp of doing it.
“For the enterprising client that can see clearly through the chaos, this new world holds promise. Kraft, for instance, has assembled a growing Rolodex of 70 new specialist partners. This isn’t some fringe brand — it’s Kraft, the country’s largest food marketer, which spends some $1.6 billion on marketing every year. The company is so open to new thinking that it recently hired a startup called GeniusRocket to develop a new campaign for the relaunch of its Athenos Hummus.”
My bet is that agencies will look a lot more like production companies and content will be king. I am also betting that audience segmentation will be far less about traditional demographics (age/race/HHI) and will be more about lifestyle/lifestage/interests. As we know Facebook is betting most heavily on “groups” and I guarantee you they will mine the data of the largest groups and offer up “access” to the largest groups at a steep premium. Social media in general has proven itself as a place where people with like interests congregate irrelevant of race or household income but don’t think for a second the consumer isn’t hip to what’s going on. We as marketers must be respectful and creative as to how we segment consumers.
May the best content win.
Leaves
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Recently I was having a conversation with a colleague. She’s a director of marketing at a large .com enterprise. We’ll call her Julie.
She was describing to me how hard her job is these days and how little confidence she has in decision making.
When I look at advertising today and most marketing for that matter I believe that this is a sentiment shared by many a CMO/Director of Marketing.
We’d like to say there is tremendous innovation going on but if I’m not mistaken, didn’t the Super Bowl ads sell out a full three months ahead of schedule this year?
If you live in places like New England, around this time of year you’re faced with having to deal with leaves. The once beautiful foliage is now dispersed all over your yard and to preserve your green grass you’re advised to do something with it. Techniques vary, my personal favorite is to pay someone else to deal with it but my wife has frugal sensibilities and thus there I am on a lovely Sunday with this 2-stroke contraption strapped to my back known as a leaf blower. This is hardly a precision instrument but useful.
As leaves are flying about it dawned on me, this is what Julie was talking about. This is what consumer marketing has become. An exercise in trying to corral leaves.
Once upon a time, they sat on trees and were easily categorized. Oak, Maple, Redwood, Japanese Maple and so on.
But then they all changed colors, fell to the ground and there was no order anymore.
And so is the job of anyone who works in marketing these days. To try and create a natural, efficient and sensible order to the chaos of these leaves being blown amok.
Looking at the Past to Arrive at the Future
Posted by: | CommentsI’m a partner in a start-up agency called Pomegranate.
Like many of my brethren in the industry, we’re working hard to address the question of the business model as well as the compensation model. I think plenty of agencies have tried to address the compensation model (which in some instances led to huge industry shifts e.g. the segregation of media) but few have tackled the actual business model.
We’re not necessarily sure we’re going to create the template for the “agency of the future” but we’re certainly hoping to not look anything like a “traditional” agency. This is probably easier said than done but we’ll die trying and hopefully all remain housed, fed and clothed in the process.
Our bet is that it will look something like what Joseph Jaffe proposed which is sort of a hybrid model. Incidentally, Bud Caddell did a great blog post rounding up the latest and greatest pontifications on what the “agency of the future” will look like.
One of our key goals is to address the issue of extensive overhead. And not necessarily so we can put it back into our own pockets. Of course we’d like to make a nice living but don’t feel a need to be obscene.
In any event one of the first people recruited was a CFO. He’s hardly the CFO type actually but his acuity with all things dollars and cents (and other things too) is astounding. We also wanted someone from outside of the ad/marketing business. This was very much by design.
In recruiting someone with no real marketing experience let alone advertising experience required me giving him a sort of Agency 101 tutorial. This was a wonderfully helpful exercise for me because looking at the model of yesterday really got me to think about how and why we will do it differently today.
I’d love to get feedback and encourage discussion about what’s missing or am I completely off my rocker?
What drives costs at agencies is overhead. Space and people. Roughly 6-10% of an agency’s revenue goes to space. Every big agency is in A-class space and spends a boatload on it. Then it’s people who drive costs and everything essentially boils down to billable hours. (New business pitches drive costs as well but that’s a whole other blog post.)
Agencies have traditionally been built based on mediums (ways to reach the consumer) and there were four basic mediums:
· Advertising (TV and print)
· Direct marketing (direct mail, direct response, 800# call to actions)
· Public relations
· Digital (web sites)
There are also media companies which are responsible for buying ad media (places where the ads go e.g. TV, online magazines, sponsorships).
All of this is based on what’s known as disruption marketing. In other words, I as the consumer am interrupted from a program and fed an ad, like it or not. These days the world is moving more towards permission-based marketing. This is where I as the consumer am largely in control of which “content” ads or otherwise I’d like to see. There may still be some disruption marketing there but companies have to be much smarter about placement because if marketing is not aligned with content appropriately I’ll find something else to watch.
So what does this have to do with the hybrid approach? It’s acknowledged that for any client it’s imperative that we know our client’s business inside and out and we understand their customers and everything about those customers. However, gone are the days where we “push” a message out to the broadest amount of people and hope that they’ll respond which is basically what :30 (thirty second) TV spots are.
Now, for any given effort we may decide to develop say… a mobile phone application. This requires idea creation and oversight from the principals, a little art direction and then programmers to develop it. The heavy lifting is done by the programmers but that’s not a function we want to own, nor should we because every client is different every client’s need is different and every client’s customer is different and how we reach them is inevitably going to be a broad mix of mediums.
I’ll use Sunoco as an example. Sunoco’s retail strategy for the past several years has been “The Official Fuel of NASCAR”. So they put the signage on everything and then some and do a few ads with NASCAR drivers and sprinkle it with a loyalty program and presto everyone comes running. Not so much. They’ve effectively made NASCAR “the” strategy as opposed to being a part of “a” strategy and in all likelihood have probably alienated anyone who isn’t a fan of NASCAR.
An approach might be to have NASCAR as a part of a greater motorsports strategy. Sunoco is also the official fuel of Porsche Club of America (not sure how many Porsche Club folks are NASCAR fans). This is a great affinity group and ones who are likely to evangelize the brand. Sunoco also happens to be in Philadelphia within maybe two hours of something like a good 3-4 nationally known Porsche tuners. Another part of the strategy might be supporting those groups with a little more TLC and letting them organically help to grow a loyal base of customers. The bottom line is it’s an effective strategy that doesn’t require the full-time hierarchy of agency staffing that you need to find ways to keep busy.
Typical agency staffing looks something like this:
CEO
Creative (develops ads/strategy)
· Chief Creative Officer
· SVP Creative Director
· VP Creative Director
· Associate Creative Director
· Art directors
· Copywriters
Account Management (client relationships/strategy)
· SVP Group Account Director
· VP Account Director/Management Supervisor
· Account Supervisor
· Account Executives
· Assistant Account Executives
Account Planning (customer insight)
· SVP Account Planner
· VP Account Planners
Studio (prepares creative for production)
Traffic (manages timelines and information flow)
Broadcast Traffic (manages timelines and insures that TV ads get to the right networks/stations/etc)
Then of course there are the support functions for all of this (HR, admins, finance/accounting).
Mirror all these people for all of the different mediums I told you about and you’re talking about a lot of frickin’ money in which people scramble with timesheets to account for the billable hours agreed upon. As advertising agencies battle with corporate procurement, agencies are now butting up against the evil they’ve in essence created.
Our CFO also asked how long clients stayed with agencies.
It used to be forever. Literally. Up until the 80s, accounts stayed with shops for 20+ years. Now days, agencies are lucky to hold onto business for more than a few years. This is largely a result of a three things. 1) Quarterly earnings – if you’re not moving the needle, you’re out. 2) CMO tenure – on average I believe it’s less than 24 months. This is also tied to quarterly earnings. 3) When the CMO goes or there’s a significant shift in the agency such as a creative talent leaving, business often shifts with it. There is very little loyalty left in the business anymore. There are other reasons why client’s part with agencies related to poor client service management or not delivering solid creative product as well but the bottom line is agency/client relationships are often pretty tenuous.
Now after re-reading all of this I’m wondering why I signed up to help these guys?
Oh yeah I love it.
Oh and while I can’t fully predict the success or failure there is one thing that I do know and that is for an agency like thisto succeed is going to require a first client who is willing to take a risk to help the industry evolve and know that mistakes will be made but figured out. Kind of like this whole social media thing.
Who Will Be the Next Bill Bernbach?
Posted by: | CommentsYesterday on NPRs Marketplace with Kai Ryssdal, I listened to an interview with Director Doug Pray who talked about his film, “Art & Copy,” which explores the creative forces behind some of the most famous ads of the 20th century. The film has been out since last year (Aug 2008) and was produced in conjunction with The One Club.
The film is enjoyable especially to those in the ad/marketing world. Ad people love looking at and critiquing ads and we all have our favorites (my personal favorites were Fox Sports/NBA-Alan and Jerome).
But I digress…
The interview was interesting in my mind because at one point Pray says, “Myself, Shirley, and everybody in the movie would agree that 98 percent of most advertising is pretty much garbage.” This I agree with. There’s a lot of crap work out there without a doubt and people’s filters for advertising are outstanding. Most of it is just white noise. The issue that I have is with Pray’s rationale for why there’s so much garbage out there. He continues… “A lot of businesses and certainly advertising has kinda fallen prey to this idea [that] market research and analysis and everything is what it’s all about. And if you can figure exactly what the customers are already buying, then you can figure out what exactly they’re going to buy, and then you know how to advertise it.”
First let’s look at the rationale for purchase decisions. Purchase decisions boil down to two fundamental things:
Needs and Wants.
There are certain things that I don’t really care about that I might need to purchase and advertising may or not have an effect on my purchase behavior. Let’s say my wife politely suggests as she gives me a kiss goodbye before I leave for work, “You might want to pick up some gum.” Read: Your breath is kickin’.
I stop at a store and am faced with a wall of chewing gum and breath mints. I’ve noticed Stride gum commercials lately and because it’s in my head I give it a shot. It’s all pretty much the same. I don’t care but advertising has done an effective job of driving my decision just by being in my sub-conscious. Gum is a category where being remembered is half the battle because for the most part, people don’t care.
Now let’s say I need waterproof rain jacket. Here is where a need and a want come together. This is a purchase I actually care about and several factors go into my purchase decision. Among them are brand, price, functionality and look. All of these things fall into the category of a quote from a previous blog post “Often what we buy is not some thing but some idea that is embodied by that thing.” Because this is a product that I’ll wear and will be noticed in, I’ll fall prey to this phenomenon. Understanding where brand, price, functionality and look rank as purchase drivers is helpful but perhaps most important is understanding how much anyone cares.
I spent most of my career in advertising and I’m staunch defender of great creative and despite having been on the account service side of the business, some of my best friends are creatives, and good ones. Seriously, though, I’ve thrown down with clients on behalf of creatives I’ve worked with and have earned a good deal of respect in doing so.
One point: We should make a distinction between great, really good and good. Great should be designated as once in a lifetime… we talk about it for years. Really good means it stands out in the category and continually performs well and perhaps is imitated. Good means it basically does its job. And let’s not forget, the company and product have to stand behind the work.
The latter portion of my career has been focused more on account planning, strategy and research. So here is where I disagree with Pray. I don’t believe that the fault of bad advertising is “research and analysis.” Of course there are always instances of analysis paralysis and research that goes right to the bookshelf and we all know the story of the Herman Miller chairs. The flaw of the Herman Miller chairs research was the design of the research not the design of the chairs. At the end of the day, you get out of research what you put into it.
I approach research with the mindset of “this is what I think, we’ll see if I’m right.” If I’m wrong I’ll seek to find the value in that and chart a new course. Lately, my view is that segmenting your customers based on how much they may or may not care about any one product or category is a critical jumping off point. It’s not however “figuring out what they’re already buying” because trends move far too quickly.
In my view, research and analysis isn’t the problem. Often it’s clients who are inherently averse to risk and who wouldn’t be with the brevity of CMO tenure and accountability to shareholders in what is arguably one of the hardest disciplines to defend.
I would also argue that bad work has more to do with too much of a continued mass market approach which insures a lowest common denominator approach to creative. Clients are too fearful of disenfranchising potential customers with any creative that may push the envelope. Undoubtedly it’s a numbers game which is built based on market opportunity. Clients have to show the greatest market opportunity which means the widest swath of people must be reached.
This is as opposed to accurately identifying sustainable groups of your customers and presenting to them in a manner that allows for less watered down creative. This however continues to challenge the existing models as we know it. But if networks only account for 30% of the pie things have to change soon. There’s also the distinct fact that as Bill Bernbach revolutionized the advertising world in the 60s pairing together art and copy teams which represented a shift in advertising we should also admit that we’re probably at the precipice of another shift.
The question is who will be the next Bernbach?
