The Ad Agency tends to move from one emergency to another. If the emergency is not fixed, it becomes a crisis and even more resources are focused on it. Given this frenetic environment, it is not easy to pull back and identify the underlying reasons that cause this terrible cycle.
More often than not, the issues are caused by problems in one (or all three) of these three key processes.
The Idea Generation/Selling Process
This is the most important process in the Agency. It starts when the Client provides (or not) a clear brief. This document is translated into a Creative Brief, which in theory should contain a Creative Idea. The Creatives will then execute the Idea, present it internally and get agreement on the best option. At this point it is presentable to the Client.
Sounds simple, right?
In reality, going from one step to the other can be a slow, painful process. Departments work as silos and documents move up and down and back and forth across the silos. Work in progress is seldom shared. Disagreements arise over basic items such as how the Idea should be expressed, whether it is more important to be creative or “give the Client what he wants” which for the Creative department is often a fate worse than death. Eventually, with time running out, someone will decide what should be presented. This decision will be incorrectly driven by position or personality, not by consensus.
Then they move on to the Client Presentation. All too often there is not enough time to review the work properly or to prepare and rehearse the presentation. Clients often find it difficult to understand the work itself and do not see how this will solve the Marketing problem. So they will not approve the work and the Agency is back to square one.
However, this time around they have less time and more pressure so the process tends to be more stressful than the first time around. The pressure only gets worse with every failed presentation.
The New Business Process
While the previous process is slowly grinding, the Managing Director of the Agency is still tasked with ambitious new business goals. Given that it has become virtually impossible to negotiate a fee upward, new business has become almost the sole vehicle of growth for the Agency.
However, the success rate on pitches is often low, hovering in the 10-15% area.
This is a sign of an Agency that has not clearly understood and embraced its positioning in the market. It has not come to grips with what it does well and, importantly, what it does not do well. It will never say no to a pitch because it has not clearly defined who its prime prospects are. It has been unable to differentiate itself at a Credentials phase and has been unable to close the deal when given the chance to participate in a final presentation.
At this stage it finds that the only effective way to bring in new business is by lowering the price to the point of not making money on the account. This defeats the whole purpose of the exercise. If new accounts are lowering overall profitability, why bring them in?
Every failed pitch brings the Agency back to square one, only this time they have less time left in the calendar year to deliver results. And the pressure keeps building.
The Account Management process
While the Agency is churning on existing business and using up scarce resources on new business, it is the role of the Account Management person to hold down the fort with existing Clients. To be able to do this, he must have strong strategic skills that allow him to have a point of view on the Client’s business and what he needs from a communication standpoint. He must be persuasive enough that he can influence his Client accordingly. He must be a master negotiator who can finesse Clients into agreements that not only do the right thing for the Brand, but also protect the Agency’s business.
None of this is easy under normal circumstances. If it has to be done while the Agency is grappling with problems in the Idea Generation & Selling area and on the New Business front, it can lead to catastrophic results. If Clients are lost, the pressure on the whole Agency increases and desperate Agencies do dumb things.
If the Agency does not break out of this cycle, the senior people in the Agency will either be fired or start to leave. Eventually the Managing Director and the Creative Director will be replaced.
And the Agency will be back at the start, only this time with fewer Clients and a damaged reputation to re-build. This cycle can only be repeated a few times before the Agency Brand is totally destroyed.
The only way to avoid this is to make sure the three key processes are working optimally. This can only be done by clearly identifying the issues that got the Agency into this vicious cycle and critically re-inventing the way the it works.