Archive for the ‘Public Relations’ Category
Many of us are totally consumed by our jobs—answering emails, writing marketing and advertising plans, blogging, making ads, designing websites, sitting in meetings, taking phone calls…
So, most likely, you may have missed these vital news stories in the press about our industry. These are tough economic times, and though cutting-back agency spend is not new, one gets the feeling that this time the clients’ intention is more long term. Perhaps ad agencies need to redefine their value add for clients.
Proctor takes no Gamble.
Procter & Gamble Co. Proctor & Gamble Co. Chairman-CEO Bob McDonald recently said the company will cut costs totaling more than $10 billion over the next five years, including $1 billion in external marketing spending and a reduction of more than 5,700 jobs in non-manufacturing areas including marketing. The 5,700-employee headcount reduction includes more than 4,000 next year in addition to the 1,600 previously announced for the current fiscal year ending June 30. And even as the company cuts jobs, it will continue hiring in high-growth countries such as China.
The marketing savings will come from a combination of having fewer marketing executives and spending more efficiently, including using more lower-cost digital marketing channels to reach consumers one-to-one; and more multi-brand group marketing initiatives such as its program around the 2012 Summer Olympics that spans 30 brands.
The cost-cutting aims to streamline P&G to compete amid slow growth in developed markets and aggressive expansion in developing markets, such as expanding its toothpaste brands, including Oral-B and Crest, to just about every country in the world except Japan, Korea and Pakistan, by 2015.
The cuts don’t just focus on media or agency costs but on all areas of marketing. Marketing costs are the company’s third-biggest spend pool, behind people and materials. To cut costs without sacrificing impact, P&G is using technology to shift spending from more traditional vehicles like TV to digital and mobile advertising and more efficiently target consumers to build one-on-one personal relationships.
Upon reading this news from P&G , one reader commented: “After decades of investing to build some of the world’s most powerful brands, big Bob decides it’s time for him to slash marketing, boost short-term earnings, and stuff his pockets with bonuses for creating quick profits. Then on to his next corporate “turn-around.” He and P&G’s board of directors are the epitome of America’s 1%.”
Despite revenue surge, PepsiCo announces 8,700 job cuts
PepsiCo (PEP) proposed a devastating strategy to its employees by announcing it plans to cut 8,700 jobs, or about 3% of its workforce. This, it says, is to offset higher costs for ingredients and to shift more of its spending on advertising to North America—by $500 million to $600 million in 2012.
It expects the restructuring will save the company $1.5 billion by 2014. That’s on top of $1.5 billion in cost cutting it previously announced.
Pepsi announced the layoffs as it reported better-than-expected fourth-quarter profit, but forecast a decline in adjusted 2012 earnings.
Like most snack and soda makers, Pepsi is facing higher costs for materials it uses to make, package and transport its products, including aluminum. Many companies raised prices last year to offset the higher costs. But consumers are still cautious about spending in the uncertain economy, so some companies are moving on to Plan B: cost cutting.
PepsiCo expects 2012 will be the second year in a row that it will encounter higher-than-average costs for commodities.
CEO Indra Nooyi said although it’s cutting about 3% of its 300,000 worldwide work force, the reduction is spread over 30 countries. The company typically adds 10,000 to 15,000 jobs in any one year.
One analyst questioned whether Pepsi should spend more of its advertising dollars in other countries, including emerging markets like India. While Pepsi’s snack business is stronger than Coke’s, he reasons, PepsiCo has been losing ground to Coke on the soda side as its ramped up its overseas business.
Unilever cuts agency spending to get leaner faster
Unilever, the world’s third largest consumer products company with 180,000 employees worldwide, recently added to the writing on the wall for advertising agencies when it announced that it had cut spending on advertising agencies and production companies. Whilst Unilever boosted marketing spending a modest 2% last year to $8.2 billion, the agencies and production companies didn’t fare nearly as well from the giant cuts.
The company significantly reduced its production costs and agency fees. Surprisingly, they said this is “money that’s not directly driving the exposure of our brands to the community and consumers.” To make its ad spending stretch farther, they pointed to digital spending rising 15%, much faster than the overall rate.
Unilever achieved some of its savings in “non-productive” costs following a production roster review and consolidation. Currently, Unilever works with hundreds and hundreds of production companies, and thus launched a review in March of 2011, hoping to bring them down to a manageable number and to get efficiencies.
In February of this year, Unilever warned that 2012 would be a difficult year as growth in emerging markets slows and demand in Europe and North America stays flat at best.
The gloomy outlook sent the company’s shares price lower as it was revealed that emerging markets had slowed around 1 per cent over the past year after the group matched 2011 sales growth forecasts. Emerging markets are showing a little bit slower growth than two years ago.
Unilever controls subsidiaries in at least 90 countries. In England, Unilever workers at UK factories were on strike in mid-January, and the company refused to talk to unions about alternatives to its unacceptable and unilateral decision to close the final salary pension scheme. Unilever was founded on positive social principles but has aggressively followed a strategy of job cuts and outsourcing of over 100,000 of its global workforce over the last ten years, removing any semblance of social responsibility over work terms in the production of food and household goods.
Global companies pull the trigger
Global companies from NEC Corp. (6701) to PepsiCo Inc. (PEP) and AstraZeneca Plc (AZN) are chopping jobs more than three times faster than they did in 2011. They are bracing for deeper recession in Europe and a slowdown in China. The announced workforce reductions surged to 94,369 in February 2012, up from 26,561 a year earlier. Employers based in Western Europe accounted for the biggest group of job-cut disclosures, threatening to add to unemployment in the euro area already running at a 13-year high.
Such firings are now running at the quickest pace to start a year since a 2009 peak, when the European and U.S. economies shrank amid the deepest slump since World War II.
Adding to the squeeze on global companies is decelerating growth in China, whose projected 8.5 percent expansion would be the least since 2001 after the government moved to squash inflation and prick a real estate bubble.
CEOs have learned to pull the trigger quickly on cuts to keep profit margins in line with expectations when economic growth cools,
Less than optimistic
According to Publicis CEO Maurice Levy of Publicis Groupe SA (PUB), the third- largest ad agency group, its European clients have scaled back marketing plans because of the recession. While they still see growth this year coming from the London Olympics and the European soccer championships, companies are being more cautious.
In the latest Bellwether report from the London-based Institute of Practitioners in Advertising, U.K. marketing executives say that companies are the most pessimistic they’ve been since the last recession and plan slower growth in ad spending.
British companies ranked their business prospects for the first quarter of this year as the worst in 11 quarters and said their planned increases for ad spending in 2012 are weaker than in any recorded year before 2009, according to a survey of 300 organizations. Digital marketing has become the fastest-growing part of the U.K. advertising industry as companies look for ways to save money, according to the institute’s report.
Chris Williamson, chief economist at financial data company Markit and an author of the Bellwether report said, “There are signs that companies have become increasingly reluctant to invest in traditional media campaigns, instead diverting money towards the Internet and direct marketing. This reluctance reflects lower-than-expected sales and profits in recent months, as well as growing unease about the economic outlook.”
To combat slower growth this year some ad agencies are planning to purchase more digital agencies in emerging markets where growth remains strong.
Should ad agencies brace for slowdown?
Data shows that ad growth eased in 2011 as sectors such as automotive, telecommunications, department stores and food companies pulled back their spending. This was due to lingering concerns about the general economy and health of consumer spending.
“The whole world is nervous—and nervousness usually leads to contraction, both for consumers and advertisers,” said Bob Jeffrey, chief executive of JWT.
Though many economists wish to believe the economy will not fall back into recession, the risks of a double-dip economic contraction have risen.
Analysts say advertising cuts will most likely hurt traditional ad vehicles such as print and direct mail but online ads and TV advertising are expected to be more resilient. Stocks of advertising firms have taken a beating.
Fears about a deeper recession in 2012 are increasing. Despite the economic trends, many ad executives say they are surprised they haven’t already seen widespread ad slashing by corporations.
However, ad executives aren’t taking any chances. Many are keeping a very close watch on expenses so they are prepared for further cut backs by marketers.
“With the numbers I have in hand I should be at least feeling relaxed but I am not,” said Mr. Levy at Publicis. While Mr. Levy hasn’t reinstated a hiring freeze as he did during the last recession he has told his ad and marketing firms to be more “cautious” in hiring.
It is about making “sure we aren’t getting too far ahead of revenue,” said Laura Lang, chief executive of Digitas, a digital-ad firm owned by Publicis. Her agency is keeping closer tabs on expenses such as travel and training dollars.
During the last recession (2007-2009) when U.S. ad spending fell 16%, many global ad agency groups were caught by surprise and had to move quickly to reduce headcount to offset sharp drop-offs in revenue. While wide-scale layoffs aren’t currently in the works, a hiring slowdown seems to be percolating, according to several recruiters. For the ad business, employees, the biggest expense, can represent more than 65% of an agency’s expenses.
Cutting staff is a tough choice to make in today’s environment, but ad agencies are under extreme pressure to hire new talent as they try to keep up with the ever changing dynamics of a changing landscape.
Ad agencies have no choice really. They must continue to invest in talent.
It’s not wise to cut in a recession
Ad agencies have always argued that in times of recession it’s not wise s to cut spending.
A series of independent reports (compiled by the Financial Times) has demonstrated beyond any reasonable doubt that companies who maintain marketing spend – or even increase it – during recessionary times, perform dramatically better in the mid-to long-term than those who reduce it.
In a way, the logic behind these findings is simply common sense. When everyone around you is cutting their marketing spend and you are maintaining yours…your share of voice becomes relatively high and your brand share has a good chance of being greater when the good times return.
Spending during an economic recession is a brave thing to do. But it has its positive side.A recent McKinsey study identify a group of companies which ‘made strategic decisions that defied conventional logic’. During the recession, these companies maintained investment levels not just in marketing but in all key areas – deal making, R & D, advertising – arguing that tough times required greater effort and offered greater opportunity. Following that logic, many of them, perversely, had spent less in the above areas (relative to the competition) in the more benign market before the slowdown. The McKinsey study demonstrated that a contrarian approach to operating expenses improved the overall commercial performance of companies by no less than 17.4% relative to all industry averages between 1989 and 1992.
Less surprisingly, those market leaders who had maintained spend over the same period were shown to have extended their lead over their immediate challengers: whereas those who had cut back had lost share to their competitive challengers.
Given these facts, one could argue that it is self-evidently more cost-effective to attempt to build share during a downturn, than in economic high times.
Mike Fromowitz
OCTANE
I think many readers of this blog need to see this article edited by Frédéric Filloux (the general manager of the French ePresse consortium). The information here is very important for both marketers and adverting agencies. This comes direct from mondaynote.com and is based on new information from Nielsen’ Global Truth in Advertising survey released this month.
The survey underlines one key finding: For the vast majority of digital users, trust lies first and foremost in recommendations and opinions from their peers. As for the bulk of formats found on web sites or on mobile (such as various flavors of display advertising), they fall to the bottom of the chart. Nielsen’s study, based on 26,000 respondents in 56 countries, was conducted in Q3 2011.
By themselves, these figures provide the perfect explanation for the current state of the advertising industry and, more specifically, for the digital ads segment.
Then, superimposing the ad revenue structure of most news medias companies would show an alarmingly symmetry: these businesses derive most of their revenue, allocate most of their effort to the least trusted ad vectors: display banners of various forms (on web, mobile or social), online video ads, etc.
The survey also provides a grim view of what people trust: they put more of their faith in a branded website (58% positive), a brand sponsorship (47%) ad, or even a product placement in a TV series (40%) than in a display ad on a website or on mobile (33% each)!
Even worse is the general distrust of advertising: on this list of 19 ad vectors, only 5 are are trusted by 50% of the respondents.
Let’s focus on a few items:
Recommendation from people I know: Trusted: 92% Not Trusted: 8% Consumer opinions posted online: Trusted: 70% Not Trusted: 30%
Problem is: traditional medias don’t own these two segments. Social networks and consumer websites do. It’s a key Facebook’s strength to have people engage in conversations around brands and products. (IMO: a pathetic waste of time). Interestingly enough, the social network environment doesn’t boost the despised banners that much: When served on a social network, banners gain a mere 3 percentage points (at 36%) against a plain website or a mobile context. This must be a matter of concern for Facebook’s revenue stream: its unparalleled ability to pinpoint a target doesn’t raise the level of trust.
Editorial content such as newspaper articles. Trusted: 58%, Not trusted: 42%
Not surprising, but worth a bit more thought. It pertains to the level of trust readers put in the medium of their choice — carbon or bits. As expected, a fair and balanced product review written by a non-corrupted journalist (every word in the sentence counts) will be trusted. That’s what I call the Consumer Reports syndrome. This organization deploys 100+ professionals testers — and no ads beyond the ones for its own paid-for services and extra publications. Among its enviable base of 7 million subscribers, half pay $6.95 a month (or, a much better deal, $30 dollars a year) to access ConsumerReports.org — this is good ARPU compared to other digital medias who only make a few bucks per year and per viewer in advertising revenue.
What does this mean for online outlets?
They should consider beefing up the volume of product reviews, while preserving the reliability of their coverage. This also raises the question of the separation between journalism, advertorial and plain advertising. By no means should a publisher accept blurring the lines: beneficial on the short term but damaging on the long run. Having said this, when I see a growing number of anglo-saxons magazines making big money from high quality advertorials, I tend to believe online medias should consider sections of their websites or applications harboring such content.
But two requirements need to be met: (again) no confusion whatsoever; and editorial standards for what will indeed carry commercial content, but in a well-designed, informative, visually attractive package. One important point to keep in mind: this type of service is typically out of reach for a Facebook, a Google or a Microsoft. But moving in such a direction requires unified thinking between publishers, the sales house (and the ad agencies they are dealing with) and the editorial team. A long way to go.
Ads served in search engine results: Trusted: 40% Untrusted: 60%
Speaking of Google, here’s another interesting finding in the Nielsen survey: by and large, readers doesn’t trust search ads. To many viewers, text ads popping up on pages, on YouTube video or on emails, are seen as intrusive and irrelevant (to say the least: look at this hilarious site featuring inappropriate ad placements.) Still, search ads account for about 60% of online ad revenues. Why? Essentially because it provides a cheap, convenient, and totally disintermediated way of promoting a product. On this count, Google makes no mystery of its intention to vaporize the advertising middleman thanks to its superior technology.
The digital advertising party is just warming up.
The business will continue its ongoing transformation. Currently, digital accounts for 16% of the global ad spending. It is likely to gain 10 more percentage points over the next five years. Not all markets nor products carry the same potential: According to the Financial Times, Unilever currently spends 35% of its US budget on digital, compared with 25% in Europe and only 4% in India.
For news medias, the opportunity is that brands and agencies are still searching for the right formula. Brands face an incredibly complex challenge as they have to play with many dials at the same time: traditional ads, digital, web, mobile, apps, social, behavioral. And all are tightly intertwined, creating flurries of new metrics: ROI naturally, but also engagement, sentiment, feelings.
Like elsewhere in the digital world, the most successful players will be the genuine tinkerers. Software giant Adobe is said to spent 20% of its digital budget on experimental campaigns. They test, measure, adjust and iterate.
It is up to digital medias to go from passive to active in the quest for the right model.
Their economics depend on it.
MIKE FROMOWITZ
Octane
This year, I have had several requests from several SME companies of all sorts to work for them—literally for free. As an ad agency, we need to charge a fee and earn a profit or we’ll go out of business.
Not sure if it’s because of the economy, but our agency is being approached, more often now than ever before, by clients who say they can’t afford to pay the usual service fees and would like us to consider some other means of compensation for the agency: “There must be a way we can work together?”
One potential client, a start-up technology business, came through our doors recently with his latest and greatest “opportunity”. The company, he said, has very little capital, has limited resources, and has had very inexperienced people create marketing and web design. “We are trying to raise money and hopefully will do so in the next few months.”
He added some icing to the proposition with: “It is open territory for people with your talent to really fix it. We have no dollars to pay at this time, we’re almost out of cash. Your fees need to be 100% in shares.”
Of course the client knew that asking us to work for shares was a long shot, but he wanted to give it a try.
Promises. Promises. Promises.
My partners and I have gone for a few of these deals in the past because the business ideas looked splendid. Shares are promised. Options are promised. Some fees are promised too—”when the company is making money”. Or a percentage of sales may be offered—”once the company is selling product”. Even a small percentage ownership in the company may be promised.
Perhaps the opportunities reflect our passion for new ideas and new technologies, and in some ways, how innovative new products can be of help in our society. Sad to say it, but a good number of these “opportunities” have turned into a big waste of our time and effort.
There is a problem with doing things for free. Here’s one example:
Guess how long we’ve been trying to work with one of these technology companies? Since July, 2006. That’s 6 years! And I could write a whole list of promises made over that period of time.
And guess how many hours of our time we’ve wasting on this one? Sorry, we didn’t keep time sheets, but I assume it’s between 5,400 and 5,600 hours, (for all our people involved). That’s about $700,000 worth of time (at $125/ hour—our lowest preferred rate).
It’s a given that most high-tech start-ups are high risk – the mortality rate is astronomical. If you are dealing with start-ups—which can be some of the most exciting businesses to work on—you must understand from the outset that this is about the ad agency taking some risk too.
When it doesn’t work out, you have to simply write it off without too much disappointment. What we’ve learned over time is, if you are going to work with start-up companies, make sure the payoff matches the risk, and make sure it’s only a small part of your business effort.
The hazards of working without proper fees
Doing things without a proper fee can be hazardous. Some people assume that because you’re not charging a fee for your time, your time isn’t worth anything.
I can’t begin to tally up all the hours we’ve spent doing inane things over and over again, either because the client CEO doesn’t take the time to read things carefully, or because he thought we can just wave our magic wand and spit out great work. The CEO only sees a few shares going out the door—not fees. Of course, if this was a pure fee assignment, the clock is ticking. And that ticking focuses the mind, and the CEO is less inclined to screw around because time costs money.
No doubt about it—charging a fee both for services you receive and services you render – focuses the mind of both parties.
Recently, I had the following message sent to me by a friend who runs a small ad agency:
“I spent my second day in a row working on my “freebie” projects and have had maybe 45 minutes to do any actual work for paying clients. Somethings wrong here! Still, putting one of these projects to bed today gave me a sense of satisfaction, whereas wrestling with one of my paying clients and doing his third round of corrections made me feel like I’m just spinning my wheels. Which makes me think of a quote I read recently: “Time: the most important non-renewable resource.”—Roger H.
The “small” favours can hurt
The problem with doing work for free—without a proper fee, is that it’s just that: free. Because you’re good at what you do, it’s hard to put less effort into a project, no matter what you’re getting paid. This leaves the burden of recognition for the favour on the receiver and it’s a long shot that they’ll remotely understand the time and effort you’ll be putting into their “small” favours.
As soon as those emails start flying, you take the role of the battered advertiser and they the role of a high roller client that you can’t afford to lose and will do anything to keep happy.
Suddenly, your no-fees project is going through hours and hours of time and actually eating into your work for paying clients!
People don’t respect things that are free
Free advice. Free ideas. Free work. None are valued.
People associate the value of service with the amount of money that is exchanged for it. How else do you think that lawyers can get away with charging $400 to a $1000 an hour? When you or a friend is in need of surgery, do you choose the heart surgeon who charges $200,000 per surgery or the one who works for beer? Some people naturally make the assumption that if it costs an arm and a leg, then it must be worth it.
My partner sums it up well: “In the context of shares instead of cash, it’s not “free”, it’s earning your shares. Truly free work in the hope that it will lead to something better, is the real folly.”
They will expect it forever
Gamblers playing at the craps table look at the past behavior of the dice to, mistakenly, assume that the good luck will continue. Clients will figure if you did work for them once without a proper fee, you’ll do it forever for no fees. There is no reason why they should respect the hundreds of hours you have spent learning and researching the project. There is no reason that they should respect the professionalism you hold. When they come back and you try to get fees, they will meet you with resistance in the form of guilt. “I thought we were friends”.
From the onset, you have to set up the expectation that they are going to pay you a fee. It’s the only way to demand the respect that you deserve. Make sure they understand you are a professional. After all, that is the difference between a professional and an amateur. Professionals get compensated for their skills.
It may give you butterflies, but ask for the money. Do it openly and notoriously. Your clients will take it as a sign of confidence.
Conclusion
At some point, we all swear we’ll never take on another no-fees project again. But I must admit, we still suck at making good on that promise—especially when someone comes to our door with the “next new revolutionary product.”
What horror stories do you have?
Do you have a horror story about a project you didn’t charge a fee for? Or one that promised you shares or fees based on sales?
We want to hear about it! Leave a comment below with any tips you wish to share with our readers.
Mike Fromowitz
OCTANE
You see much written today about a technology, data and analytical driven marketing future. Whether it be location based activity or marketing automation, we are seeing swathes of new opportunities arise that allow brands to better engage with audiences.
While the talk of ethics is relevant, those that innovate and dream to create better brand future through new techniques and tools simply have a progressive view. When direct marketing boomed in the 90’s, opt-in /opt-out legislation protected audiences and I see that this approach will also evolve in a brave new world. Governments will, or should, inform and protect their citizens. Ethical brands will support this.
Also, audiences will opt-in because they see value in doing so and I am keen to showcase the opportunity for marketers when audiences do opt-in. In particular, I want to show that data and analytics are not just for digital and mobile, but can be used in events.
I am not talking about virtual events / exhibitions or things that look to replace face-to-face. They have their time and place and events are still hugely popular. I am talking more about how people are now using the cloud to continue to build upon the equity that “event brands” have built with their respective target communities. Give event access to people who are not there and stimulate on-going engagement.
Being a passionate bodyboarder, the evolution of the International Bodyboarding Association (IBA) has really caught my eye (http://ibaworldtour.com/). With the right vision and plan they have made our sport into somethingway more accessible, yet hold competitions in some places not accessible to most of us (or most of us dream about getting to). Through the web we can now watch live feeds of the competition, access on-demand podcasts, get inside stories and share these with friends. But more than a competition, it is also an opportunity for niche surf riding misfits to stay connected and informed. It becomes a place where the community gathers. This is all built around event equity and gives the brand custodians the much needed finger on the pulse they need.
Many public events have looked to execute a similar formula. Many public events and their participants fail to capitalize on the equity they have. More so, many marketers feel that they cannot afford the investment to capitalize on the equity of their private events because of cost.
Terms such as hybrid events do not capture the essence of what is possible. The creation of apps are great, but also often hastily proposed because they are popular and the best returns-on-investments are often missed. The challenge facing marketers is that many providers are focused on providing tactical solutions as opposed creating strategic backbones that allow for community creation, broader and on-going engagement.
In a recent discussion with Kenes Asia, they revealed to me quite simply how their strategic view to how their clients should engage with audiences is creating more value for their clients. Kenes are in the business of Medical Congress Organization and Association Management. They are very clear on why the target audiences attend their client events – the content and to stay connected with their peers. What Kenes have done successfully is that they simply have made it easier for this content to be captured, distributed and used.
At its heart is a technology backbone which neatly plugs together all the elements of mobile, engagements, touch, scan and web into a cloud solution. Delegates no longer have to travel home with extra kilograms of paper. They have more room for gifts for the wife and kids so have no excuses now.
However, the strategic value lay in the ability for other community members to access this content through integration and syndication through existing communities. Creating strategic value through the ability to provide their clients the opportunity to continue to engage with their audiences after the event and deliver on on-going education needs through such engagements as e-learning. Knowledge on personal preference and behaviour allows for improved value creation by allowing clients to design the next engagement better.
Given the on-going investments made on events in B2B and B2C marketing, there is room for improvement where marketers can create better value from their investments whether it is a corporate conference, product launch or road-show.
The view of an event as being simplyfour walls and a roof needs to change. An event is simply one engagement in a lifecycle of engagements. The engagement at event happens on the show-floor, but can also happen in the cloud. The opportunity of data and analytics is not just for better event operational management. With a long-term view on defining how events should be run, marketers can look to take advantage of the interconnected world.
And for the doctor in Tokyo who could not travel to Glasgow for the congress he attended last year. He does not need to miss out.
Our daily life increasingly revolves around blog posts, emails, and status updates.
Is this messaging overload? I think so. What do you think? How much of our time are we really wasting on the Internet?
Take a look at these startling numbers below:
In one day, enough information is consumed by internet traffic to fill 168 MILLION DVDs.
294 Billion emails are sent.
2 Million blog posts are written. (That’s enough content to fill 770 years worth of TIME Magazines.
172 Million people visit Facebook. And spend 4,7 Billion minutes a day.
40 Million visit Twitter.
22 Million visit Google+.
17 million visit Pinterest.
532 Million people update their statuses every day.
250 Million Photos are uploaded to Facebook each and every day.
864,000 hours of video are uploaded to YouTube… each and every day!
Internet users spend 14.6 minutes a day on average viewing porn online.
Every day there are 1288 new apps to download and more than 35 million apps have already been downloaded.
iPhone sales outpace the human population: 378,000 iPhones sold per day vs 371,000 babies born
We are in the midst of a creative revolution.
It’s a time of great change and innovation—thanks to the “creative economy” in the digital age.
What do you think?
Here’s a great example of where we are going.
I’m a big fan of the newsletter Brainpickings.com. Recently they posted an article about one of my favourite thinkers, artist and writer Austin Kleon who has written two books called Newspaper Blackout and Steal Like an Artist.
Kleon is one of the most interesting people on the Internet. His Newspaper Blackout project is essentially a postmodern florilegium (compilations of excerpts from other writings and newspaper articles, where he mashes up selected passages and connects the dots from existing texts to better illustrate a specific topic, doctrine or idea.) Kleon uses a black Sharpie to make art and poetry by editing and altering information on a similar theme from multiple sources and turns them into a single work.
Recently, he was invited to give a talk to students, the backbone for which was a list of 10 things he wished he’d heard as a young creator.
In this excellent talk titled Steal Like an Artist, Kleon makes an articulate and compelling case for combinatorial creativity and the role of remix in the idea economy. Kleon believes it’s our ability to tap into the mental pool of resources — ideas, insights, knowledge, inspiration that we’ve accumulated over the years— enables us to combine them in extraordinary new ways. In order for us to truly create and contribute to the world, we have to be able to connect countless dots, to cross-pollinate ideas from a wealth of disciplines, to combine and recombine these ideas and build new ideas — like LEGOs. The more of these building blocks we have, and the more diverse their shapes and colors, the more interesting our creations will become.
The following illustration by Kleon is a list of 10 things he wished he’d heard as a young creator.
So widely did the talk resonate that Kleon decided to deepen and enrich its message in Steal Like an Artist – an intelligent and articulate manifesto for the era of combinatorial creativity and remix culture that’s at once borrowed and entirely original.
Kleon delineates further the qualities you’ll need to cultivate a creative life – things like kindness, curiosity, “productive procrastination,” “a willingness to look stupid” – demonstrating that “creativity” isn’t some abstract phenomenon bestowed upon the fortunate few but, rather, a deliberate mindset and pragmatic ethos we can architect for ourselves. As he puts it, “you are a mashup of what you let into your life.”
Immersing yourself in Kleon’s book Steal Like an Artist is as fine an investment in the life of your mind as you can hope to make.
Read it and let us know what you think.
I believe we still need real, “person to person” face time.
I’m finding that most clients today prefer to Email you rather contact you with a personal telephone call.
They seem so darn busy that they prefer to Skype, email and text if they need to pass along information. Is this happening to you?
I believe we still need real, “person to person” face time. After all, we are suppose to be in the people business.
What does this mean?
You are most likely not going to share the most important information in an Email. Over a coffee in a cafe or a quick lunch, the client can let you know far more, even stuff that’s off the record. In person, the client can explain a situation, add more light to a subject, and tell you what he believes or thinks about a strategic direction or campaign idea you’ve presented.
Good business relationships happen when people talk. Talking face to face creates bonds. It’s more natural than being buried behind an email.
When you visit a client at their office, don’t you learn much more? I do.
I think emailing is making us lose our ability to communicate on a personal level?
I could never understand people sending me e-mails when they were just a few offices down the hall. I questioned why they couldn’t have just as easily walked over and told me, face to face, what was on their mind. Maybe they thought it was more convenient to tell me by e-mail.
I admit, I send e-mails to people who I could just as easily call on the telephone. Some people spend hours typing e-mails when picking up the phone would get it done in 30 seconds. Besides, not all writers of e-mail make their messages clear, concise and to the point.
It makes me wonder whether this impersonal style of communications through e-mail is making us less able to converse in person—turning us into communication weaklings, lightweights, cowards, or wimps, unable to speak our minds, disagree, be the bearer of bad news, or just talk openly and directly.
Stress expert Professor Carey Cooper at the University of Manchester Institute of Science and Technology, said: “E-Mail is now the biggest way in which staff working in the same company communicate. They think that sending a message means they have got rid of the problem and the responsibility is with someone else”.
Because of e-mail’s anonymity, it’s easy to duck confrontation and deny the other person an immediate reaction. Today, e-mail makes it a whole lot easier to tell people something that is unpleasant. Like, “Don’t come into the office tomorrow. You are terminated.”
There’s an even greater risk of people losing critical personal skills. E-Mail doesn’t allow you the ability to read a person’s body language, or to look them in the eye and tell them “no,”. Nor does it allow you to state a point or argue in a direct, real-time, give-and-take debate.
Look around you. People aren’t talking, they’re texting on their mobile devices. We are now in a slapdash culture of e-mail, texting, tweeting and other social networking methods. Is this really “communicating”?
E-Mail certainly can be beneficial. But it shouldn’t always replace personal interaction. If it does, there’s a good chance that many of us will fail to be able to communicate on a person to person level.
Imagine the thought.
Mike Fromowitz
OCTANE
In a three-minute video that is now posted all over the web, TBWA\Worldwide Chairman and Global Director of Media Arts, Lee Clow is seen speaking his mind on the present agency compensation system. Advertising agencies, he believes, are woefully underpaid for the value they provide to brands.
Rightly so, he puts the blame squarely on ad agencies for allowing it to happen. “Unfortunately, in our business, we get paid like we’re doing our clients’ laundry. Somehow we’ve managed to commoditize what we do.”
As he sees it, every other creative art form (photographers, filmmakers, directors, musicians, performers etc.) has “managed to figure out how to get paid for the value of what they create. Get paid, get residuals, allowed to own what creative idea they have delivered to the world.”
What strikes home for me more than anything in Lee’s message is his viewpoint about ideas: “Many of the ideas we create for brands could be listed on the balance sheet of our clients as an asset with millions and millions of dollars in value.” For example: It was TBWA that came up with the Control Wheel device on the iPod (or so the story goes). That’s IP.
It’s no secret that it takes brilliant creative people working in a highly-creative agency to create brilliant ideas. For Apple, that agency was TBWA. One such campaign idea was ‘Think Different’, created when Steve Jobs returned to Apple. Job’s wanted a spot that reflected his philosophy—a philosophy he thought would reinforce his then struggling company. The breakthrough TV spot ‘1984’—the most famous Apple ad ever, and probably the most famous commercial ever, introduced the Apple Macintosh personal computer for the first time, symbolizing the idea of empowerment, with the Mac as a tool for combating conformity and asserting originality.
These were ideas of the highest caliber. And no doubt TBWA was paid well for their effort—but how much could they have made if their fees were tied to sales? Just imagine.
Most ad agencies don’t consider their ideas as Intellectual Property (IP), and I think, in some cases, they should be doing just that.
I’m not sure what the outcome of the “Agency Thought Leader Compensation Summit” will be or whether it will have any effect at all on the future of agency compensation.
Personally. I’ve always believed that agency compensation should be tied to sales.
The formula we’ve use in my agency Mantra Partners, has been:
- An agreed upfront fee to cover the agency’s costs of doing business, and
- We get paid based on sales (derived from the success of our advertising work). This also includes initiating brand building ideas by providing a combination of entrepreneurial counsel and advice on product design and development, technology support, service improvements, distribution, and packaging.
When we have the opportunity to create Intellectual Property that adds value to the client’s bottom line, we are further compensated based on sales. In some cases—for smaller clients and some technology clients—we have taken a small percentage of their business, becoming a ‘real’ partner. We have been able do this because one of the principals in our agency is a successful high-tech entrepreneur with software and hardware experience. His abilities provide our high-tech clients with ideas and solutions that go beyond the usual “digital” offerings.
When you consider that the whole idea of what advertising is about—to drive sales and brand awareness—it seems odd to me that most ad agencies aren’t willing to tie their services to sales. They don’t do this because they don’t want to take the risk. In the present model, the client is the one who takes most all the risk. Surely, if agencies want clients to take a risk on creative, shouldn’t they do the same? And if an agency wants no risk, then fees for service is entirely fair. You just can’t have it both ways.
To get another view on this subject, I spoke with a friend and ex-client of mine who runs a brand across Asia. “It’s all about risk and reward, “ he said. “If you take more risk you should be entitled to more reward. However, I think Lee Clow’s comment about “ideas being worth millions on companies’ balance sheets”, while true, smacks of greed. If agencies want to share in the reward, then they must shoulder some of the risk too. To look at the result of vastly improved sales and attribute it to the value of the advertising campaign and then start whining that they didn’t get paid enough when they took no risk is over the top”.
Under their traditional (and outdated) regime, most agencies continue to give their ideas away for a set fee. And, if creative ideas are the cornerstone of the advertising and design business, why do agencies insist on charging service fees for account management and other esoteric services rather than charging a fee or royalty-based payment for their ideas?
Agency service fees and media commissions have been our industry’s traditional sources of revenue. But these can become minor forms of remuneration if ad agencies seek higher compensation for their IP.
Perhaps now is the time for ad agencies to stop bitching about how they are underpaid for their services, and create a compensation system with their clients that exploit the success of their advertising ideas and campaigns. Agencies can be remunerated through a licensing of their IP and royalties can be linked to the success of the campaign, or on climbing brand sales. Under such a scheme, clients would not have to pay as much as they do now for dud campaigns.
“We’re supposed to be a creative business,” Mr. Clow says, “but I think we have been probably the least creative industry in the history of the world in terms of figuring out how to get paid.”
No doubt ad agencies have lost their way when it comes to being fairly compensated, and like so many things today, there is no simple answer to help us find our way back. Lee’s comments call attention to this fact and they should motivate us to give this issue the consideration it deserves.
I like this one… In her recent article about Lee Clow’s video, Rupal Parekh of AdAge noted that the going rate for laundry service in New York City is 95 cents per pound for wash and fold, and a 8% gratuity is expected if you want it delivered”.
But wait. There‘s more! There’s a cheaper way to do your laundry in New York.
Their are coin Laundromats that charge only US $2.25 for a small machine and US $4.25 for a medium one. And 25 cents for 6 minutes of drying. Some use “Professional Series Washers” which they claim are the “Best in the World”! And they stay open late. They’re “fast, more efficient and provide the brightest and cleanest wash ever!”
Or so they claim.
Commodity advertising. Commodity laundry services. Much the same I suppose.
Here’s where you can view Lee Clow’s video: http://www.viddler.com/v/13ebb19a
Mike Fromowitz
OCTANE
