Golden Propeller Presentation 2009

1. A Conversation Starter Clients and Agencies – A marriage in trouble? Golden Propeller 30 September 2009 FUTURELAB

2. This may hurt a little….

3. FUTURELAB THE ARCHITECTS We assist  Marketers to maximise the return on their marketing investment.  Innovators to come up with meaningful propositions.  CEO‟s to grow profits through customer-centricity. Some Credentials Astra Zeneca Deloitte Fortis Investments Heineken Hewlett Packard Lego Nokia Orange Mobistar Sanoma Unilever Vodafone Athens Brussels Bucharest Chicago Hamburg Helsinki Iasi Kiev Melbourne Miami Moscow Shanghai

4. FUTURELAB Across the board ... The Client-Agency Relationship is troubled

5. FUTURELAB Prelude: How will Agency‟s Fare in a Market Where Clients are Dissatisfied? Net Promoter Score™ by Industry telco advertising automotive -6% -21% © Stockphotonyc | Dreamstime.com -48% The Net Promoter Score ™ is a registered trademark of Bain, Satmetrix and Fred Reichheld

6. Prelude: Are Marketers Held Hostage by the Advertising Industry? High Hostages Loyalists Likelihood to repurchase Defectors Mercenaries © Alexey Avdeev | Dreamstime.com" Low Low Likelihood to recommend High FUTURELAB

7. First, we talked to the agencies First, we talked to the agencies….

8. Recognise these? Sources of Client Frustration Henry Ford-style sales techniques in a solutions market Creative talk where ROI language is needed Media intransparency A „pleasing‟ attitude vs. „doing what is right‟ An addiction to saturation bombing vs. engagement Lot‟s of digital talk, but no integrated action Insufficient understanding of retail/sales reality Insufficient C-suite air cover Lack of international integration Orthodoxy where fresh thinking is needed • • • • • • • • • • FUTURELAB

9. FUTURELAB “We knew that it wouldn’t work, but the client wanted it. So we made it happen. After all, under all the gloss, we must accept that we are prostitutes.” Head of Business Development commenting on modifications to a global campaign you know. Prostitutes & Thieves? © Jose Antonio Sánchez Reyes | Dreamstime.com

10. FUTURELAB Then, we talked to the clients….

11. FUTURELAB WHAT CAN YOU DO ABOUT IT AS A CLIENT?

12. FUTURELAB 10 THINGS YOU CAN DO AS A CLIENT 1.Don‟t ask for integrated solutions from those that can‟t give them 2.Give hard ROI & business targets to your agencies 3.Call in media auditors to validate effectiveness and the efficiency 4.Encouraging your agency to challenge your beliefs 5.Insist on engagement and relevance in stead of saturation bombing 6.Validate an agency‟s digital capabilities and then forget about technology. 7.Ensure every initiative connects to the retail (or B2B sales) floor 8.Clarify your expectation for analytical/strategic C-Suite support 9.Make sure your people speak to your agencies with one voice 10.Break industry orthodoxies (also on compensation), and hire more people Also see appendix!

13. Is this fair? Is it all the agencies fault?

14. So, then we put them together in a room…..

15. We, the Agencies, hereby commit to abide by the following rules:

16. I will always offer objective solutions

17. I will always make sure that I understand your product, your market and your company

18. I will always be expert in what I talk about – or bring an expert to the table.

19. I will always offer you the best solution to fit your situation

20. I will always understand that you need to sell products, not win awards at the next festival

21. I will dress and speak properly when dealing with your senior management

22. I will help you write a good brief

23. I will confront you when I think you are wrong

24. I will offer you practical and implementable ideas

25. I will honour your deadlines

26. I will monitor what is going on, and have the courage to say stop, or change course

27. I am willing to accept financial consequences for my work

28. We, the Clients, hereby commit to abide by the following rules

29. I will always provide a solid brief written with insight and understanding of our own - and the agency‟s - business.

30. I will always base my planning, choices and decisions on objective criteria

31. I will be open to discuss and consider well-structured and presented experiments.

32. My legal department will be aware of the realities of marketing. I will share my strategy and my research with you

33. I will make ROI my guiding objective, even if it scares me too.

34. I will take a long term view of the needs of my customer and my business

35. I understand that you have processes and deadlines too

36. I will provide you with a clear decision making process

37. I understand that I have bought your time, not your soul

38. I understand that cheap, fast and top quality do not normally come in one package.

39. I will say thank you, if you have done a good job

40. This presentation (soon, extended version): http://www.futurelab.net/presentations Reports: http://www.futurelab.net/publications/papers/publications Recondisering the Advertising Industry (also in Russian) Bridging the Brand Agency Divide (also in Russian) Manifesto soon to come Read and Contribute

41. Now what? We need your input.

42. A Conversation Starter Clients and Agencies – A marriage in trouble? Appendix FUTURELAB

43. FUTURELAB #1 Solutions Instead of Products Services that Fit the Model A Truly Tailored Approach Many agencies don‟t really tune in to the client‟s needs. Instead, they listen to the client‟s request for a solution and come back with an answer that fits their in-house capabilities and compensation model. 75% of senior brand decision makers that approach a communication agency seek to buy solutions for their business problems (*). They want a strategic partner, not a service provider. Agency Response: Client need: Only ask solutions from agencies with a strong strategic planning team which: Client-side Suggestion: Focuses on your business issues, numbers and customer journey. Pro-actively liaises with other parts of your business to ensure that any initiatives can be implemented at every touchpoint of your brand. Has sufficient political clout in the agency to “make things happen”. • • •

44. FUTURELAB #2 Return on Investment We Are Very Creative … and Big … Show me the ROI CMO‟s are under increasing pressure to prove that if a million is spent, more than a million is made. And agencies need to help in this analysis. Agency Response: Most agencies don‟t talk ROI. Instead, they emphasise the budgets they manage and the awards they have won. Client need: Disregard the traditional agency rethoric and focus your agency on results, not awards. Client-side Suggestion: Give them hard targets where possible. Encourage their creativity, but ask for the business rationale behind each initiative. Request impact scenarios for the various media-message combinations that were considered.

45. FUTURELAB #3 Media Transparency Be a Trusted Media Partner Bad Apples At best, the advertising and media industry, can be called intransparent. This is causing brands world-wide to request a better insight in their agency‟s dealings. Especially on the media front. Agency Response: While pressure mounts, agencies are not easing the minds of brand leaders. •Continued intransparency •Underperformance & creative math •The occasional scandal Client need: Always appoint an independent media auditor who validates – with the agency – that a proposed media strategy makes sense, and that everything is delivered as promised. Review the compensation models you force upon your vendors. A key reason for them to make under the table deals may be that they simply aren‟t able to make a straight living. • Client-side Suggestion: •

46. FUTURELAB #4 Creative and Operational Integrity We know many admirable agency executives. But sadly, they are matched in numbers by those who have less regard for their client‟s best interest. Whether this is driven by cynicism, questionable motivations or competitive pressures is hard to assess. Clients want their agency to be a trusted advisor. Agency Response: A mental sparring partner. An asset manager for their marketing investments. Someone with the flexibility of a great vendor, yet the resolve of a doctor who is not prepared to give bad medicine. Client need: Trust your agency, but test. See how it reacts when presented with the occasional red herring and opportunity for abuse. Client-side Suggestion: Say something silly. Propose a non-sensical modification to a campaign. See whether people agree. If they challenge you back, praise and encourage discussion in the future.

47. FUTURELAB #5 Engagement Instead of Noise Engage Our Audience Saturation Bombing Brands want and need to engage with their customers. They need to conduct conversations. Build communities. This means that they need to develop marketing messages which their customers WANT to hear rather than force-feeding them through intrusion. In spite of all the talk at conferences, many agencies are still in the business of “saturation bombing”. Brands still get recommendations to buy enough GRPs to break through the clutter and maintain their Share of Voice. Agency Response: Client need: Make it clear in the briefing that you will ask for every proposed initiative: How it will capture the attention of the targeted audience, rather than intrude on it? • Client-side Suggestion: • How the proposed media/message combination is relevant to the audience‟s situation? How it will make their conversations and life more interesting? How it will help the target customer progress on the customer journey? What is the next communication? •

48. FUTURELAB #5 Engagement Instead of Noise Engage Our Audience Saturation Bombing Brands want and need to engage with their customers. They need to conduct conversations. Build communities. This means that they need to develop marketing messages which their customers WANT to hear rather than force-feeding them through intrusion. In spite of all the talk at conferences, many agencies are still in the business of “saturation bombing”. Brands still get recommendations to buy enough GRPs to break through the clutter and maintain their Share of Voice. Agency Response: Client need: Encourage your agencies to embrace a media-neutral, customer-centric approach to communication planning. Client-side Suggestion: Ensure that your budget, negotiations and actions do not re-enforce the existing agency silos (media, creative, …). Request various specialist agencies to cooperate on one “holistic” view of your audience‟s communication landscape.

49. FUTURELAB #6 Walk the Digital Talk Talk Digital Walk Digital Most agencies “talk digital” at conferences, but many don‟t act on their words: With consumers massively shifting online, marketing budgets are following. Brands need their agencies to handle digital media with the same facility as traditional media channels. Agency Response: Client need: • Traditional agencies talk well yet often can‟t back their digital claims: • Digital Agencies often miss depth in communication and strategy Audit the digital skills of your agency, not in words, but in actions. If techno-buzzwords are used in pitches or proposals, question why. Client-side Suggestion: Consistently shift technology conversations to the topic of engagement.

50. FUTURELAB #7 Think of the Shopper Shopper Marketing Retail Ignorance There are those who consume, those who buy, and those who influence the two above. Recent research in word-of-mouth has only re-emphasised the importance of these influencers and consumers on the actual purchasing decision. This puts shoppers at the centre of the marketer‟s agenda. Agencies struggle with the retail floor. Their people typically never worked in stores, never sold to real consumers. Don‟t know how a cash-register works. Agency Response: Client need: As retail (B2B sales/showroom) situations are alien to most agencies, force the conversation. Always ask for the salesfloor implications of every iniative. Introduce retail metrics. Insist creatives talk to real shoppers. Have their account managers filling racks on the salesfloor, or assist in the warehouse. Make it clear the job isn‟t done until the customer has bought. Client-side Suggestion: