As I travel around the world working with Agencies I am confronted by the sad fact that Ideas are seldom sold through in the first presentation. In fact, I sense a certain complacency setting in- Agencies are starting to see this as some sort of a cat and mouse game played by Clients who do not, on principle, approve work on the first go around.
This is not “normal” and is not good for the Agency. Beyond not getting the work they love approved, here are five hidden, damaging, and largely unrecognized costs for the Agency.
Profitability is negatively affected: When the work is not approved, it sets off a round of re-work. This increases the cost of the project without generating any additional revenue. With every extra round the cost goes up. The extra cost goes directly against the Agency’s bottom line. And very few Agencies, if any, have an accounting system in place that will let them know that they are bleeding cost on a project. As an example and just for perspective, one of my Clients in Mexico, a major multinational Agency, calculated that it lost four full margin points to re-work.
The quality of work suffers: Clients believe in continuous improvement and this has proven to work very well on production lines. It works less well on Ideas. Very seldom will an Idea look better after the fourth presentation than it did on the first. In fact, chances are that by the fourth presentation it has lost its essence and become a mash-up of “issues” and “concerns” that the Agency has been forced to address. And this is not the worst of it. When this “Advertising Frankenstein” goes on air, the Agency will get “credit” for it. This is terrible for its reputation.
Motivation suffers: Success leads to success and failure foretells failure. When the Agency is faced with the constant rejection of the work that it believes is worthy to be approved, it is only normal and human that motivation suffers. It is not realistic to expect that the fourth go around will be approached with as much passion as the original Brief. After enough rejections a “make the pain go away” mentality will set in and the Agency will agree to any changes just so the project will end. This does huge damage to morale. The Client will develop a reputation of being “difficult” and the best people will try to stay away.
The flow of projects in the Agency will be affected: While the Agency is not a production line of Ideas, it does work within the normal constraints of projects and limited resources. If one project falls into the re-work cycle, it inevitably takes up resources that would, under normal circumstances, be dedicated to something else. If two or three projects are demanding extra resources, bottlenecks will appear and the negative effects will be seen on other Clients. The only way to avoid this is to consistently sell through work the first time around.
The Agency will lose credibility: This might be the most dangerous cost. If an Agency is a business partner and an expert in its field, what sort of impression is it creating when it cannot convince its Client to approve its recommendations? What sort of credibility does this give the Agency? And does it not become harder to sell something through when the previous experience was not positive? Agencies often feel that are being treated as suppliers and not partners. As harsh as it may sound, this is one of the reasons for that treatment.
These five hidden costs do huge damage to the Agency. It is for these reasons that Agencies cannot accept the status quo of not selling their work on the first go around. Agencies need to recognize and address this issue head-on. Otherwise, they are only adding another major problem to a long list of challenges that have put their future in question.