Branding ourselves experts - advertising agencies - The Consulting Conundrum

Chief Executive, The, Nov, 1997 by Martin Sorrell

Ideally, anybody looking after a project would be instantly able to assess, against a pre-ordained budget, how they were doing. At McKinsey, for example, the moment they take on a project, they go through, in exhaustive detail, the specifications for that project; if there's a change in specifications, they change the estimate. We tend not to do that in our business.

To some this may seem a long way away from the creative process. However, unless we more carefully analyze our revenue streams, resource allocation, processes, and organizational structures, we won't be in a position to respond to the increasingly competitive environment our clients face.

There are two other factors we have to consider if we are to stave off the threat from management consultancies. First is the issue of how we're paid. On the advertising side of our business, we're mainly paid for the execution, not for the thinking. In fact, we tend to give away the strategic thinking. If you look at any new business presentation, the first half is a strategic business plan - and we give it away for nothing. It's crazy.

If we worked on a fee basis, it might be easier for us to convey the message to clients that strategic advice on branding issues is a huge part of what we offer. But clients are comfortable with commission. Even when we go through exhausting fee negotiations, they always end up taking the fee, dividing the billing, and working out if it's more or less than 13 percent. If it's more than 13 percent, they get queasy, and if it's less, we get queasy.

The consultancies are not experts on how much money an advertiser should spend; but we can be. One of our group companies, Millward Brown, is probably the world's leading expert on that, but our agencies haven't necessarily merchandised that knowledge.

But the advantage the consultancies have over us is that they have a systemized approach, and they "talk the talk." We need to get systemized, in terms of our approach, so that our knowledge is not all contained in one person's head, so that when he retires it goes with him.

There's a real opportunity for communications services businesses here to move back up the value chain and develop even stronger strategic relationships with clients. But in order to do it, we have to change. Basically, we have to borrow some of the clothes of the management consultancies, add them to the very real strengths we already have, and then represent ourselves to our clients as what we have in fact always been: the leading source of advice on strategic branding issues.

Martin Sorrell is Group Chief Executive of London-based WPP Group, plc, an advertising and marketing services group of more than 40 companies in 83 countries. and annual revenues of approximately $2.72 billion.