Branding ourselves experts - advertising agencies - The Consulting Conundrum

Chief Executive, The, Nov, 1997 by Martin Sorrell

With every new buzzword, advertising agencies lose a bit more of their bread and butter to management consultancies. To get our business back, we have to shape up, restructure, and reclaim our status as the true brandmasters.

Had Shakespeare's Hamlet found himself the brooding chief executive of a late 20th century advertising firm - rather than a brooding heir to the throne with vengeance in mind - his deus ex machina might have been slightly different. For when it comes to staying competitive in the communications services industry, surely the brand's the thing - wherein we hope to recapture marketshare from steadily encroaching management consultancies.

Once upon a time, the business of brand-building belonged almost exclusively to those of us in communications services. But times have changed. Management consultancies have exhausted their opportunities on the cost side of their clients' businesses - in business process re-engineering, delayering, outsourcing, and all the other buzzword-driven areas - and are now starting to examine the revenue side. Realizing that all business strategy is marketing strategy, they have begun to target the areas of brand-building and the more "touchy-feely" areas of marketing - areas that have always been definitively ours. And unless we rapidly rethink the way we operate, we're vulnerable to losing even more business to them. In order to restake our claim as the branding experts, we need to add value to our operating companies by: adopting new organizational structures; increasing knowledge sharing; improving time and process management; and 'adding greater systemization.

As a result of competitive pressures, the communications services industry is becoming more and more executional. Creative hip-shooting to solve marketing problems has become more important than strategic thinking. Sadly, if you asked clients why they employed a management consultancy to look at brand development instead of turning to their agencies - which, incidentally, have billions of hours invested in these brands - they may tell you they never even considered that. We're in danger of being seen as just the "guys who do the ads."

And this despite some acute advantages, not the least of which is a real understanding of the way consumers see brands, both traditional and corporate. Our companies are in the communications business, and our people have learned the hard way that the only true judge of successful marketing is the consumer. They know that a brand only becomes a strong brand when the consumer appreciates it not just functionally but emotionally. They've learned how to work backwards from existing consumer perceptions, to create realistic strategies for companies and brands and invent new communications bridges that bring sustained profit to clients. These are skills of extraordinary value to clients, and ones that no management consultancy possesses.

But we seem to be tripping over our own archaic structures. The communications services industry is perceived as being modern, revolutionary, and on the cutting edge of progress - but nothing could be further from the truth. We are probably more conservative than accountants, investment bankers, lawyers, and even actuaries. While it's true some of our specialist communications companies, of a more recent vintage, may have flatter, more process-driven organizational structures, our larger, well-established in its have gone through little or no significant organizational change in decades. Most communications services companies remain rooted in the past, with vertical, functionally driven, silo-like structures. And though the strengths of well-established agencies certainly do include their institutional qualities, they can also be their Achilles heels if they are not prepared to change. Sadly, human nature being what it is, change tends to happen only after disaster.

Advertising agency structures, for example, remain very much as they were 50 years ago. They are organized vertically by function, rather than by client, which means each of the various departments - strategic planning, account handling, creative, media, financial, etc. - have to pull together for every account. Opportunities abound for miscommunication, confused briefing, and the development of turf and territorial barriers.

One of our strengths, however - perhaps it's our instinct for survival - is that we do observe closely the strategic and structural changes our clients are making. Probably the single most common feature among all our clients is their desire to coordinate their functional and geographic activities more effectively. In essence, they are seeking economies of knowledge or coordination, not economies of scale, and are seeking to avoid constantly having to reinvent the wheel.

In order to provide these services, agencies will have to adapt their organizational structures to more horizontally, client-driven structures. These changes will require the skills and qualities of long-forgotten organizational and methods departments - and a rigorous analysis of the process by which creative work is developed, approved, and implemented. Once the process has been analyzed, the appropriate organizational structure can be developed.