Category Archives: procurement

iMedia Brand Summit 2010 Closing Keynote Talk.

The brand marketers who attended iMedia  2010 were kind enough to vote this the best presentation of the summit. Where I ran videos in the actual presentation you will find pages with the links to the relevant videos on YouTube and, if Steve J hasn’t changed his mind and taken down the iPhone OS 4 / iAd streaming presentation, at Apple.

My thanks once again to:

Ken Mandel of Yahoo and Agatha Yap of McDonalds who recommended me to Ad Tech / iMedia ; Joe at ComScore who provided data; Tom and Jerry (seriously)of MobileNow, the iPhone, iPad & Android app developers in Shanghai for data, insights and magic; Benjamin and Christoph of Wildfire Asia WOM in Singapore and Shanghai for insights, POV and reference leads; Eddie Chau of Brandtology for the topical case study, other great charts and your vision; Josh Sklar of Heresy in Austin, Texas for your insights, the reference links and 15 years of partnership in digital.

It’s all about the Social Graph in action and you guys helped prove it through your excellent input. Again, Thank you all.

There’s a lot happening out there!

View more presentations from Innovize.

Why Marketing & Procurement Are On A Collision Course In The Web 2.0 Universe, And Beyond.

The environment for most brands is changing fast. A stream of new opportunities keeps flowing – social media, word-of-mouth & location – based mobile marketing right now – and the means to take advantage of them comes increasingly from start-ups. In this universe being entrepreneurial is key to Marketing success and a well-intentioned but misguided Procurement department can be as great a threat to brands as the competition.

Differentiation is Both Quantitative and Qualitative.

Companies have to differentiate what they produce in a relevant way. That makes them stand out against competitors and makes their brands valuable. Ad agencies often do this through distinctive creative output. When they resort to scam ads it suggests they haven’t grasped the ‘relevance’ issue. What marketing service providers must do is to price the value they add, or the savings they generate, for clients. If they don’t their service may seem generic, inviting client Procurement departments to squeeze them on price.

Most procurement methods originated to reduce production costs by managing how standardized commodities and homogeneous goods and services are bought. They are fundamentally quantitative, which leaves qualitative, ideas-based or creative services particularly vulnerable to being under-priced. Recent trends toward quantitative RFPs submitted online with no Marketing department participation and no qualitative performance measures, are clearly misguided and a cause for grave concern.

Don’t get me wrong,  Procurement management is critical for all forms of production. However, marketing services contain creative problem-solving elements – not just ad ideas – which are not homogeneous, and which even their producers struggle to value accurately. I went into this earlier in the post on Creative Services and the Vicious Cycle of Procurement.

Wisely applied, Procurement is Good.

The thing is, successful supply chain cost management is vital to business success. If a company can produce consistent, sustainable, marketable quality at a lower price than its competitors it will tend to gain market share and benefit from economies of scale, all increasing ROI. Marketing services companies need to become just as savvy about Procurement as their clients and must apply it in their own businesses too. That TBWA recently appointed a global head of Procurement makes an interesting statement. That their competitors responded with a deafening silence does too.

Where problems arise is with the “consistent” and “sustainable” aspects in that previous paragraph, especially producing the specialty services provided in marketing communications. For example, media agencies slicing income to win business volume for larger buying discounts, a process rampant for a decade, is an unsustainable “Race To The Bottom”. I wrote on this in ’03 working at Carat (Media, 23 March).

What happens is this: after winning a new piece of business with a low bid, a media agency can only afford to staff it with cheap, lower quality staff, overseen by an overstretched senior if they’re lucky. Procurement is happy but Marketing soon complain of weak advice, errors and unresponsiveness. When it comes to a head they put the media account up for pitch again. Procurement lends a hand and the account goes to the lowest bidder. Work into a lather. Rinse. Repeat. Soon nobody in Marketing has much hair left and all the media agencies are producing poor service and making no money.

What Happens When It’s A Race To The Top?

Procurement departments not used to valuing and buying marketing services often have unrealistic expectations. Network media and ad agencies with big holding company parents have helped those develop. As a result many believe that if you lean on a marketing services supplier they’ll find a way to drop their price and keep providing the service. The near sweat-shop conditions in some major agencies probably prove their point.

However, real trouble strikes when Procurement meets Entrepreneurs. The company best positioned to offer cutting edge social media and other innovative services needed for a brand, is increasingly a relatively new start-up. These new firms are staffed with very focused people with little knowledge of procurement methods, nor time to learn them while pulling 18 hour days. Critically, they have limited funds.  To survive and prosper they must build their business up to long term health as fast as possible. In pioneering fields, for start-up founders, and their angel investors, it’s really a Race To The Top.

Start-ups need business, but not on destructive terms. They realise that quickly, or die. However, as any entrepreneurial 21st Century marketer knows, you need these specialists and their new services to differentiate, defend and build your brands in these exciting but complex new arenas. Currently it’s social media, search, and location-based mobile marketing. There’ll be something more within a year.

The Procurement Curse/Benefit Analysis For Marketers.

Whether it all ends in success or tears for any given marketer depends on three main drivers:

1. the marketing company’s culture – exploratory & innovative Vs scared & defensive;

2. that company’s senior leadership & vision  – supportive Vs punitive and;

3. how well their  Procurement department is trained and for what purpose – pure cost saving Vs helping brands be as competitive as possible.

In the bigger picture this applies to dealing with long established ad and media agencies just as much as to social media engagement experts and branded app developers.

If Marketing gets only what Procurement lets them pay for, the question facing marketers has to be: “Does our Procurement department have the skills to help us buy these services successfully?”

If they do not, they will compel you to use and become, second best.

Explore the Polls: What Will Replace Ad Agencies?

Yesterday’s “Ad Industry Leaders Storm the Exits & Start Innovative Marketing Communications Companies.” triggered lots of comments, emails and calls. Clearly very topical so let’s explore further.

What do you think will replace the Ad Agency? Several forms of organization are being experimented with. Take the poll. Even suggest your own vision.

Ad Industry Leaders Storm the Exits and Start Innovative Marketing Communications Companies.

Thermal Image LED lamp. ©NatGeo/Tyrone Taylor/WWF

Escape To Entrepreneurship

Increasing numbers of senior people are quitting their ad industry jobs. Some out of sheer frustration or exhaustion, but others are starting innovative new marketing communications firms. This is a critical time for an industry in desperate need of reinvention. By joining & supporting these start-ups we can help build a better industry of Marketing Communications Professional Services.

Nine months ago in “Leadership, Management & The Rising Tide”  I wrote of the 150% jump in already employed people looking for jobs. There were 3 main reasons for the surge:

1. my company is going nowhere and our management is clueless at the helm;

2. our bosses keep beating us up because their bosses keep beating them up;

3. my company retrenched so many colleagues I can’t stand working here.

Most wanted a new job because their managers were too useless, too awful, or had damaged companies too badly for quality people to want to work near them any longer. What had been a growing problem before was magnified by the pressures of the Great Recession. Poor managers had been shown up and quality people wanted out!

Now that the economies of many countries are improving and marketers are increasing their communications budgets, people are on the move as predicted. However, there is now a further and more vital driver of their movement – the Escape To Entrepreneurship.

Talented Leaders Are Quitting, but not Leaving.

In June 2009, Omnicom announced Michael Birkin’s resignation as Vice-Chairman of Omnicom Group Inc and CEO of Omnicom Asia-Pacific. Birkin is no holding company leech. He was global CEO of Interbrand for 8 years, during which he invented their Brand Valuation model. He sold Interbrand to Omnicom, who were so impressed they made him head of Omnicom’s Diversified Agency Services division – half the revenues of the entire holding company, then later, CEO of Omnicom Asia-Pacific.

Last month Birkin launched The Red Peak Group. Brand Strategy & Design, Experiential, CRM, Sponsorship… Their clients? Anheuser-Busch, Intel, McDonald’s, Sony Ericsson… Birkin isn’t just the CEO. He’s hands-on as their Chief Strategist and leader of the Intel relationship. How many other CEOs, Presidents and similarly rewarded heavies can you say that about? Most clock few if any billable hours against paying clients. Ask any agency group CFO.

Last week the two top leaders of JWT North America quit to start their own company. Colleagues in JWT and seniors in WPP expressed surprise; even shock. There was probably envy and shame too.

Recently, self-styled “working class heroes” Iris Nation relocated their founder CEO and several top leaders to Asia. They have made it clear they’re not your average UK- or US-centric network. They know where their future revenues, and retirement funds, will come from and have the independence and wisdom to act on it.

Ad agency leaders feel like they’ve been tossed in a river with their arms and legs bound. They get no respite from holding company strictures, so the best they can hope to achieve is to keep their heads above water and be carried down-stream. It’s soul-destroying and prevents them delivering the service improvements marketers need. Rumours are now circulating of breakaway talks among top mar-comms industry leaders, and those talks are including marketers who are equally frustrated with the situation.

Entrepreneurship To The Rescue

There has always been a healthy trend of entrepreneurship in the marketing communications industry. A steady flow of visionaries, and of the frustrated, leaving to do their own thing. It used to keep the industry fresh, creative and adapted to the changing world, but in recent years too much of that innovative energy has been siphoned off into holding company acquisitions and management service fees.

Many of the best brains in the business work in the holding companies which acquired their businesses. From there they can do little, despite all their talent and skill, to reinvent the industry that made them rich and famous. These are the people who have done it before, know how to succeed, have the money to break away again and are a powerful force for good in starting or helping new ventures in marketing communications.

Rumours are that more of these, like Birkin, are starting to move en masse. If so, that’s great news. It couldn’t come at a better time to save the marketing communications industry.

Critically, marketing communications entrepreneurs must address the 7 pressing issues of:

1. Delivering consulting grade recommendations with fully integrated planning, technology, content management and business building ideas;

2. Getting paid fairly for all that despite the rise of qualitatively illiterate Procurement departments;

3. Tracking and proving the value they add, instead of just winging it old-school style, which will help keep Procurement at bay;

4. Recruiting, training and retaining top quality people including industry outsiders with the new skills needed – content strategy, mobile technology, data analytics and visualization & neuroscientific research included;

5. Rewarding all their people honestly and properly for their efforts;

6. Staffing to the right levels instead of driving their people to exhaustion, stress, despair and depression, none of which produces great thinking, unique ideas or added value and;

7. Resisting the temptation to sell to one of the holding companies as the exit strategy. A good-sized block of stock in a thriving independent will make a much better retirement annuity.

It takes the right people in the right environment with time to think and work things through to deliver a professional service. Pressure, fear and panic give bad advice.

Treat them any other way and quality, professional people simply storm the exits.

How Job Insecurity & Professional Cowardice Made Bud Light Stumble For The First Time Ever.

Ads blamed for Bud Lite sales fall.

A  US Budweiser campaign, “Drinkability”, is being blamed for the first full year sales decline in Bud Lite history. This in a recession when beer sales are often one of few things that go up. A firm of consultants  was  involved. Apparently their recommendations became ad briefs which DDB and Euro anwered by coming up with the “Drinkability” campaign.

Lots of voices are now being heard from all quarters about why this happened and who is at fault.

A Wide Range Of Differing Opinions.

A number of points have been made including:

“Were the spots entertaining? No. Were they loaded with brief-filling, focus group-tested, chest-puffing talking points? Yes.” – Adman blog posting

“Consulting doesn’t boast creative expertise nor does it have any interest in “starting a turf war” with creative agencies.” – A consultancy spokesperson

“…some clients will pay consultants millions to rehash research and refine positioning, but then they pressure agencies to lower costs on the thinking/ideas that positions and builds awareness of a brand and ultimately sell products.” – online comment posting

“Unfortunately, too many people are willing to blindly accept whatever “dictate” trickles down and don’t bother to question the validity of the premise or invest themselves in its integrity. This is a cause for shame in our industry. It opens the door for spectators to broadly crucify agencies and consultants, wastes money, damages brands, and demoralizes everyone involved.” – online comment posting

“Agency creative directors tend to do more damage to brands if left unchecked. They too often develop high concept ads that win awards but do very little to motivate consumers in any way. The examples are endless.” – online comment posting

Others attribute the Bud Lite decline to Anheuser-Busch being bought by InBev.

Then of course there’s the question of whether one can or can’t directly correlate advertising and sales. Well, one can’t have it both ways.

All these points have merit to a greater or lesser degree. However, I think there’s a simpler, deeper issue behind all this.

When you’re scared you tend to make bad decisions.

Let’s face it, those ads are weak. The consultant-driven briefs that Budweiser Marketing pushed on DDB and Euro should have been declined immediately for what they clearly were: weak, lacking compelling beer consumer insights and likely to generate poor advertising harmful to Bud Lite in the competitive context.

Next, the agencies should have proposed better briefs, drawing on what was useful from the consultant reports, avoiding what wasn’t or was clearly going to harm the brand. At that point the Bud clients needed to listen carefully, debate it skillfully and collaborate on agreeing powerful briefs.

The Great Recession is partly to blame, as is unchecked Procurement thinking.

Budget cutbacks and the retrenchment of expensive but experienced ad talent have taken a toll. We seem to be left with scared ad agency people lacking the experience and the faith in their craft, and thus also the confidence in it, to do their jobs bravely and professionally. To say a professional “No” instead of an easy, but ultimately ruinous “Yes”.

Advertising is an industry with a high proportion of people eager to please and who are in fundamentally weak positions relative to their clients. As a result they are thus very vulnerable to being bullied by equally scared, inexperienced or under-qualified marketing staff.

The result of all of this seems to be increasing levels of professional cowardice. Among advertising people, and among Marketers too.

That old Young & Rubicam house ad nails it. The one that shows a spinal column from the neck to the coccyx with the headline, as I recall it:

“This is a backbone. You can’t run a good ad agency without one.”

Actually, you can’t run any good business without one.

(PS, if anyone has a copy or a link to that Y&R ad please link it in the comments below or email me. Tx.)

“You have 5 mins To Fix The Ad Agency Business Starting… NOW!”

Maybe they didn't notice 'cos it didn't tick...

Last week while I was posting  that ad agencies should innovate – perhaps even embrace crowdsourcing – something strange was happening at the Hilton Union Square, San Francisco. I wish I’d been there. Here’s what I’ve found out.

The AAAA (American Association Of Advertising Agencies) combined for the very first time their Leadership Conference (ad agency types) and their Media Conference (yep, media agency types) into one conference: “Transformations 2010”. Flailing to be seen as up to date, they called this “the mash-up (sic) of the association’s Media and Leadership Conferences”.

Are you struck by some puzzling questions? I was.

Why wasn’t this always one event? Isn’t there just one purpose for all those people – to help build their clients’ business through marketing communications? Isn’t this symptomatic of why marketing communications, and the ad agency business in particular, are in turmoil?

To the A’s credit, they did invite some “digital” speakers. Carol Bartz and Arianna Huffington. Google, the giant of online advertising wasn’t there. Nor was Facebook, the next online ad giant. The mightiest of the search and social media players. Either of them is more important to the ad business now and for the future than Yahoo and Huffington Post combined. Maybe they couldn’t make it.

The 4As also didn’t invite BootB or IdeaBounty which I linked to in last week’s post. No surprise.

“The goal of the conference is gathering the entire media and marketing ecosystem into one room and onto the same page,” said 4A’s President and CEO Nancy Hill. “In a world where everything is digital and global, the conversations about the transformation of the business needs (sic) to be held together, so that we can cooperatively find solutions to the challenges ahead.”

For those of you without a Babel Fish in your ear that’s Adfolkian for “The ad agency business is screwed. Fine, we admit we don’t “get it” and that we really are all in the same business. Now, will you please explain where the life rafts are”.

The 4As also boasted of “18 women speakers, roughly one out of three, [which] marks the highest percentage and number of women in the history of 4A’s events”. Wow! In an industry where the proportion of women is closer to double that and those 18 speakers included outsiders Ms. Bartz and Ms. Huffington.

It sounds like the real highlights of the conference were the “seven guest, five-minute sessions from the winners of the 4A’s Transformers Contest, which asked users to submit their own ideas and concepts for revolutionizing the advertising industry”. That’s right: “You have 5 minutes to explain how to fix the massively screwed up Ad Industry. Starting…. NOW!”

Here’s the best I’ve seen or heard. Sean Boyle, Global Planning Director of JWT taking 2 deserved minutes longer than the 5 allowed for his witty, wise presentation: “The Stop/Start 10 Commandments”. It’s a hand-held wobbly vid, but worth it.

There’s a .pdf of Sean’s presentation here.

The 4As also included in the seven winners, to their credit, the uber-cranky George Parker of AdScam – think gonzo without Hunter T -who described last year’s 4As Leadership Conference as a “Giant Wank Fest!” Google him. That’s a  comment well to the “G” end of the Parker ranting-scale.

Here’s my own short rant:

I’ve built and run some ad agencies and I’ve co-founded and run a digital heavy hitter. I’ve run some media agencies, a network of CRM companies and two networks of “activation” companies. My conclusion from those nearly 360 degrees of experience is the only thing more mindless and unprofessional than scam ads is the silo-ed, paranoid, “We’re better than you are. Nyah nyah nyah nyaaah nyah” way those 5 disciplines have failed to pull together to build their clients’ business. Now, get on with it!

There is light, though.

Here’s how the 4As recognizes the mess when promoting their “highly successful and in-demand 4A’s workshop “Agency 2.5: How Agencies Are Transforming for the Future” [which] looks at the traditional agency model and discusses what to relinquish, what to rework, and what to reinvent”.

“It’s time for marketing communications firms to address the realities facing our industry:

  • There’s less demand for what agencies traditionally have to sell.

  • Clients need more help in online marketing, particularly social media, but agencies aren’t set up to provide it.

  • Agencies are spending their energies above-the-line while clients are spending their budgets below-the-line.
  • Agencies are stuck in a structure that churns out “advertising” ideas instead of “business-building” ideas.
  • Clients are hammering agencies on price and speed for work they perceive as a commodity.

  • There’s a strong movement toward accountability that agencies aren’t prepared to address”.

Now if only there was hint of this recognition, and of this commitment to doing something about it, among the ad industry in Asia.

How Ad Agencies Could Learn To Stop Worrying And Love Crowdsourcing

Is crowdsourcing a riot that'll wreck ad agencies or an innovation that'll save them?

Mention crowdsourcing over a meal with ad agency pals you’re likely to put them off their food, and you, for some time.

For a creative, liberal, experimental, edgy, fashion-aware, up-to-date industry, it seems advertising is very conservative and defensive about crowdsourcing ideas for their clients.

The most common reaction is “But ideas are OUR business”.  Perhaps. Even if you aren’t getting paid for your ideas because much of the industry is half-way between the old commission model and being hung on the FTE cross by Procurement (see earlier posts on this blog).

Last year Unilever used it, for Peperami in the UK, causing lots of dark muttering in the trade press. They used IdeaBounty (Slogan: “The best ideas get paid“) as lead agency and dumped Lowe from the brand altogether. Another key crowdsourcing player, BootB call themselves “The Borderless Creative Engine”. Their web-site runs in 14 languages including Arabic and Simplified Chinese, proving their point. Check out the clients listed on both web-sites. Big names.

For Peperami it was discovered, once the feathers had been swept away, that the winning ideas were thought up by a copywriter in London and a Creative Director in Munich, both of whom had recently been made redundant. The selected ideas were produced through a specialist agency called Smart Works.

In the USA, Frito-Lay brand Doritos has made a Super Bowl Special out of crowdsourcing. This is the fourth year that they’ve put crowdsourced ideas to work. 4,064 videos were submitted this season and they’re all available on the Doritos “Crash the Super Bowl Contest” site. The landing page features the four winners and two runners-up. The rest are in a 362 page gallery. The Herbert Brothers (two then-unemployed guys from Batesville, Indiana) who created the Doritos big winner for Super Bowl XLIII in 2009, are also featured.

The top 20 commercials aired at Super Bowl XLIV this year include Doritos in 2nd, 11th, 14th and 17th places as ranked by the USA Today AdMeter poll. They also topped the Visible Measures most watched viral videos listing week commencing 1st March 2010.

Marketers turning to crowd-sourcing seems to reflect a combination of 4 things:

1. Frustration with the speed and calibre of ideas from their agencies;

2. Giving their less adventurous ad agencies a firm shove in a new direction;

3. Exploring ways to get more for their money, including better results;

4. Getting their feet wet for educational and publicity reasons. It certainly did the latter for Unilever with Peperami and seems to work well for Doritos where the crowdsourcing idea has become a key brand attribute.

Instead of panicking, perhaps the ad industry should take another look at crowdsourcing but with their innovation hats on. There’s a whole new model for the ad business here and when it takes off …

For those who still don’t want to look too closely, think of it as bringing in free-lances. From the whole world. And you only pay for the ideas you use. The best ones.

There will still need to be a strong ad team at the core representing all disciplines and collaborating closely with clients. Their responsibility, finally, will be the Brand itself. The core idea of the Brand will remain the preserve of that marketer/ad agency team, as will the management of the communication platform. It’s expressions of that core idea that will get “free-lanced”.

I wonder which ad agency will crack first.

Oh, hold on. Goodby, Silverstein & Partners managed the entire “Crash the Super Bowl 2010” process.

OK, then I wonder which holding company will crack first and buy BootB. Anyone care to bet?