Brad Rutledge

Companies have been working with advertising/marketing firms for nearly 200 years, and during that time, ad agencies have produced some of the best and most memorable creative work in the history of media. There is no doubt that marketing works – whether it’s traditional advertising, the powerful impact of public relations, or today the implementation of social media marketing.  Countless academic papers, research studies, articles and books have been written chronicling and validating the ability of various marketing strategies to create awareness, alter opinion & influence behavior. This blog will not outline the battles that have already been won – rather it will address the biggest threat facing the marketing agency in decades; and it has NOTHING TO DO WITH SOCIAL MEDIA!

The buzz around social media is justified. I personally view the social media movement as similar to the fax machine and email – but it is closer to the game-changer of the wide adoption of the Internet. We’ve moved from Broadcasting of Messages – to Conversations with Customers, and this change is significant. The reality is a lot of agencies today recognize the social media impact – just as those in the late 90’s all suddenly had a Web department with expertise in building Web sites, etc. – I would venture a bet that most ad/PR firms today claim some expertise in social media. So, relax, I realize that social media is a game changer – but it’s not what will kill this industry.

Ad & PR agencies today have strayed so far away from the initial vision of what an agency should and could be to clients. Looking at definitions from dictionaries, using legal standards and even looking at the AMC television series Mad Men, we can get a glimpse into the past of, quite honestly, a better time for both the client and agency.

An agent can be defined as an individual who is authorized to act on the behalf of another. Real Estate Agent, Sports Agent, Actor Agent – all of these use a portion of the meaning of Agent, and are legally able to act on the behalf of their client. In a different fashion, the agent, in a marketing-agency setting, is an extension of the client – a virtual member of the team, an individual or team who is employed not directly, but by contract, to help the organization advance its goals.

One of my first jobs was at the largest local ad/PR agency in Salt Lake City, a ridiculously named firm with too many partners: FJCNW&R. At the time, it was the place to work, if you wanted to work in this field – at least it was perceived that way. The agency employed an older account manager who I’ll call Neil, I guess in his late 50’s. He wore a derby hat and sported a distinguished gray mustache to match his receding hairline. He and I were the first to a large client meeting one day, when he vented out loud: “This just isn’t how things should be run,” he said, frustrated. It didn’t take much for him to open up to a young account coordinator – I think I simply looked up to acknowledge I was listening.

Neil explained how agencies used to be partners with their clients – sitting at the table with the client discussing challenges, opportunities, sales, products, services, and overall company strategy. “Today, we’ve become order-takers, where the only thing that matters is creative ads …”

Neil had hit on something vitally important – but I didn’t realize it until years later when I was on the client-side, operating as a VP of Marketing at Linux Networx. As a company decision-maker, I was accountable for specific measurable goals that were related to the company’s success, a budget, and ultimately responsible for the hard decisions that had to be made. I grew a small in-house marketing team, then, wanting to leverage the power of an outside agency, with it’s larger resources, shuffled through a variety of several ad & PR agencies to help me reach those goals. In working with these agencies, I saw value – creative ads were created, press releases written, collateral produced, etc. Yet in the end, I always became dissatisfied with the arrangement.

There’s nothing worse than being in an executive meeting, reviewing the marketing spend, comparing it to revenue goals, and feeling alone. What happened to your Agency – your Agent that is supposed to be that extension of your team; nowhere to be found when the heat is on. Now that’s the ticket that is killing today’s agencies.

Today’s agencies have created the absolute best world for themselves. Most can put out a creative ad, write & distribute a news release – the typical To Do list is what kills me. These agencies have created a relationship where they have next to zero accountability for helping companies achieve corporate goals. And it’s no surprise one of the biggest challenges with ad & PR firms today is client churn. Once companies begin playing by the rules of a game the agency established, the only way to hold the agency accountable is to fire it, which can be difficult to do. How convenient for the agency! To be honest, typically what happens is the person making marketing decisions is fired first, then the agency.

So I’ll hold up my virtual martini glass and toast going back to the good old days, where your agency was in the trenches with you; where companies literally had a virtual team on hand; and the account manager fulfilled the role of Agent. I call it having skin in the game, where the agency is held accountable for results that impact company objectives. If companies caught a vision for how this could work, things would change, and for those agencies with this vision, survival would be assured.

This works when companies open up their books, corporate strategic plans and key meetings to the agency. The agencies of tomorrow will thrive in this environment of accountability and rewards (yes I said rewards). Another problem with the current Agency-model, is the agency’s only reward for doing great work, is to retain the client (keep the client’s money coming in). Only when the outsource agency is treated like an employee or company department with incentives for success and repercussions for failure, will real value be achieved!

What do you think? Have you had experience on the Agency-side or Corp.-side? Been satisfied, frustrated, have you seen changes happening? Please leave a comment below!

– Brad T. Rutledge