Elastic Thought

Can DIGG save Washington?

So we've all seen and heard the news this week.  The "Bailout" failed to pass the House, Wall Street reacted with a 778 drop, and then went back up 485 after coming out of their temper tantrum.  This is not a post about why that happened or who is to blame.  It is a reaction of sorts to one comment I heard in the wake of all the media this has attracted.  The specific comment (roughly translated from memory) is this: 

"I think this is a failure in marketing.  Had we talked about this as an economic rescue plan rather than a Wall Street bailout, we would have seen much different reaction in the House [of Representatives] and from Main Street."  (Martin Kady II,  Politico.com)

I found this of interest as a marketer, but more of interest in thinking about how politics works and how everyone says Washington is broken.  And what I mean by that is in the statement of marketing to the constituents.  We are a representative democracy.  In theory, we threw a bunch of tea in the harbor and campaigned that we no longer wanted to be taxed without proper representation.  We formed a government "...of the people, by the people, for the people..." so that everyone could have a say in their government.  In modern times, we can add party loyalty, administration, and special interests.  But the system is very much a participatory government rather than something that needs to be marketed.  And this is why I wanted to add a comment on "fixing Washington."

We often write about social media being participatory.  We read the Cluetrain Manifesto that talked about how companies needed to relate and engage with consumers rather than market to them.  And I don't think that stops with consumer brands.  I really think government should look at this model as well.  In fact, it really was founded on these principals and has moved away from them a bit.  (OK, a lot)  Are we really a representative democracy when our elected representatives need to market and spin legislation so as to keep us happy?  Does the proper wording of the "explanation" of pending legislation change the meaning of that legislation and what it actually does?  Or more to the point, where is the dialogue with the people in our politics?  You can learn more on the process at The Center on Congress.  Or remember back to the learnings of Schoolhouse Rock.

So, without opening up a debate on how we got here, I'd like to have some fun and see if we can call on social media to help us get back.  In theory, the representation on the Hill was a mouthpiece for the people.  Without a robust mail system and before the Pony Express, this is how the masses were able to communicate to the leaders their opinions on their governing officials and pending legislation (plus, real people can debate better than a piece of mail).  But the system relied on that representative spokesperson to be in touch with their constituencies.  And in cases like we have going on now, where speed is of the essence (if that is your belief), how do you get a pulse of your district/state beyond the emails and phone calls that come to your office?

The Internet has played a big part.  We can read opinions in blogs and editorial pieces.  But politicians don't rely on those solely because a lot of opinions are extolled simply on emotion and what little information they got from the media.  And besides, sometimes their constituents wouldn't understand the full reason for the vote because they "didn't have the full background."  Well, how many pieces of legislation are seen by anyone outside of Congress before the final vote?  How do we get the full background?  Drafts are released to the media, but generally the full detail doesn't fit into the short segments they have to air their reports.

So, what if they were available?  What if legislation was displayed online for all to see?  And what if it were broken into "chunks" that can be commented on and "voted" on (DIGG style).  Opinions discussed point by point (like they do in the House and Senate chamber).  This would show full detail.  It would show the nuances being discussed.  It would show those earmarks we've heard a lot about in this campaign.  And it would give almost instant feedback to the representative what a large part of their constituency is feeling, and in much more detail than the general comments they receive now.

Let's look at the bailout...I mean economic rescue plan.  Debates outside of Washington are often centered around if this is simply helping out the Wall Street CEO's.  Some dove into the points of CEO pay restrictions, Government ownership of equity and assets, oversight, how much money and in what phases, etc.  But there is more to it.  There are clauses and amendments we don't see that effect the vote.  For instance, not enough protection for those in foreclosure, or too much regulation on a "free" market.

Look at the recent debate between Senators McCain and Obama.  Sen. McCain accused Sen. Obama of not voting for more funding to the troops.  Sen. Obama responded that he had voted for the bill to fund troops, but the one attached to a withdrawal time-table.  He then countered and stated Sen. McCain voted to not fund troops, but that was the bill that had a time-table.  He had voted to fund the troops with no time-table.  This pointed out how transparency vs. spin can help restore some faith in Washington.  They both wanted to fund the troops.  Neither were against helping our military.  They just didn't agree on a time-table.

We had to see a debate many months later to see and hear that.  In the mean time we were wondering how a politician could actually vote not to fund troops and protect them.  Well, what if those options had been posted?  What if we saw, real-time, what our politicians thought about the sub-issues contained in the legislation, not just the resulting Yea or Nay?  And what if we (the people) could comment, vote, and discuss these sub-issues point by point in real-time online?  Would it change anything?

I know that the online population is not representative of everyone in this country.  And a DIGG vote doesn't speak for everyone.  But the media that reaches the masses beyond the computer and mobile device get their information from somewhere.  Getting it from the online forums maintained by Congress and representing viewpoints from all aspects of the online user base, and reporting on that activity would extend this new-found democracy and maybe even promote more responsible journalism.  Or at least provide a more democratized place than independents like Factcheck.org to work through the spin.  (Factcheck.org and other watchdog agencies are doing a great job, by the way).

So, can DIGG save Washington?  Not by themselves.  But transparency, dialogue, and some creative uses of social media technology tools like DIGG and Twitter's E08 just might be a great first step.  Oh, and DIGG this in the links below the post.  I'd love for them to see this (or anyone really).

More to come...

LinkedIn with a Spy? - Cities I've spied in

Previously, I mentioned FaceBook as a tool in the spy trade.  Chris Matyszcyk points out in his blog Technically Incorrect today that the UK's MI6 declared that it is using Facebook to recruit new devotees. I'm sure that TripAdvisor can come up with some great apps for their profile pages.  Though spies are covert by nature, is there something to crowdsourced global intelligence?  Might be a good mashup application one day.

Elastic Marketing - Moving to a new model

Recently, I was answering a question regarding if Digital agencies were capable of being the lead agency on LinkedIn.  It reminded me of a question Public Relations agencies are pushing--that of who is the integrator?  The thesis of some of the answers on LinkedIn sounded very much like the speeches I've heard from various PR agencies.  The proposition set forth by these PR agencies is that their profession is much better situated to be this integrator than Ad agencies because they have spent years working in an uncontrolled medium.  They talk about Word of Mouth and using earned media experience to better navigate the uncontrolled nature of online communications.  I even heard blogger outreach described as being no different than pitching traditional media.  Probably irresponsible training for new recruits and definitely a good indication why bloggers still complain about being pitched by those not engaged in the conversations on their blogs.  However...

The Digital agencies in LinkedIn had a similar approach in that they talked about how they were better suited to lead the programs because of their unique experience in working in the new landscape online.  They point to their experience in leading similar campaigns and point to the inefficiencies and intellectual gap of the digital communication medium between them and the larger, traditional agencies.  This is definitely starting to get to the point, however, they should not lead (or be the integrator) solely because they are digital.  This assumes that all campaigns should be online, or at the very least, heavily centered on digital strategies and minimally augmented by traditional means.  Chris Rock was on Larry King and said "I'm proud Barack Obama is running for president.  You know?  If it was Flavor Flav, would I be proud?  No.  I don't support Barack Obama because he's black."  Digital agencies don't lead because they are digital.  They can lead if they have the broader skill set and planning foresight.

Though I put forth  a short statement on vision--stating that any agency can lead (or be the integrator) if they had the vision to see the entire picture and appropriately craft the multi-channel campaign.  And that they could be this integrator if they had access to a network talented enough to pull off the program according to the scope of the creative vision (and budget).  Yet, I think there is more to it than that.

What I noticed between the PR agencies and the Digital agencies is something I've noticed in the Ad agencies and marketing agencies prior to the whole Digital debate.  The foundation of their arguments is that their particular focus--their tactical expertise--is what should lead.  You'll see this in the programs they put together.  For example, a direct mail marketing agency will push direct mail.  An ad agency will talk about the places they can get a media buy and therefore jump start the message with "guaranteed" exposure.  PR agencies will talk about the major papers they can get to tell your story, Digital agencies will start online and expand from there (as described above) and so on and so on.  So really, we haven't set up a working scenario for a true integrator.  Letting any one particular agency built on a tactical expertise be the integrator is sort of like letting the fox guard the hen-house.

So, what's the alternative?  I'd like to propose that it's what some colleagues of mine and I call "Elastic Marketing."  (and hence the name of this blog--Elastic thought).  The theory is simple, really.  Don't have a tactical expertise.  Focus on all the communication channels, build on the synergies created by messaging across the channels, and leave the execution to the companies that truly are experts in their fields.  Of course, this requires constantly learning from them what the latest tactical expertise are, and building strong relationships with them so we can continue to provide world class results.  However, bringing a hybrid group together that has expertise in the multiple disciplines and focusing on how the program is strengthened by the various channels is opening a whole new type of marketing group--the Elastic marketing team.

This also relies on a model that begins and ends with the target audience.  Effectively, it looks at how and where the audience consumes media and stretching the campaign to meet those needs.  If it's digital, we go to those channels and come up with creative tactics to best fit those channels.  But that's not the start or end of it.  That audience also consumes media offline.  And if we can harness the power of the back and forth nature (seamlessly offline/online)of the evolving consumer, we'll be sure to have new techniques and new strategies to more effectively communicate.  We won't care if online drives offline engagement.  We won't care that PR traditionally shuns humor or sex, or other creative flexibilities Ad agencies have enjoyed.  And we'll know that audiences don't want corporate speak anymore--no matter what the channel.  A blog that doesn't take itself too seriously and shows the company as "human" and engaging will go further than any story in a paper that has a declining subscription base.  And tomorrow, when the consumer changes again, so will the elastic marketing team stretch and adapt.  They don't have a business model stuck in the execution of a particular communication channel.

They have relationships and flexible communication styles.

And so, clients can now feel safe.  The jury is no longer stacked against them.  I've been in conversations where account teams felt they were "wasting the client's money" continuing to lead programs with outdated strategies based on the "core competency" of their agency.  You don't need to look further than PR agencies to see this in action.  Programs continue to center on getting the story in the major papers and then, as a bolt-on, there are some digital strategies and word of mouth "stuff" they can do to support the story in the wings.  Not all do this, as one former exec at Edelman told me.  Though, he mentioned that it was like "drinking the Kool-Aid" in that EVERYTHING had to digital--even when it didn't need to be.  Again--leading with tactical expertise.  On a side note, I speak to PR more than Ad agencies (lately) as I feel that with a fundamental shift, they are poised to lead.  It appears that their core model can be more easily shifted.  Though...that would take them to actually shift their core model.  That's easier said than done when the executive teams worked their way up to the top using the old, outdated methods of communications.  "Why fix it if it ain't broke?"  Well, it's broke.  You just don't want to see it.

But look for more of these agencies to start popping up--these Elastic, hybrid groups.  It's a great point:  "Who is the integrator?"  I don't believe it is any one existing practice.  It will be a new creation -- much like technology evolving, a mash-up.  Why adapt and force an old model to be the integrator, when you can create a new entity built to be the integrator.  And you can build it with parts of existing models very easily.

More to come...

How to pick an Agency - emphasis on Social Media

So let's put the pieces together on all this agency stuff.  We've made the case to let small agencies come to the table, but how do they stack up once they get there?  How do they compare to the large agencies?  Well, let's put together some questions that will help your company pick the right agency with the right experience.  This is something pretty big to discuss in a few paragraphs, so let's focus on new communications methods and then open this up for discussion in the comments.

Organization:

There is a lot of ideas and good thinking that can fall through the cracks if the agency is not set up to best help you.  Here are some questions you should ask:

1. Who's working on our account?  Specifically:

a) Who filters the ideas?  Reason:  This goes back to the comment in an earlier post about being promoted beyond the point of competence.  Is there a structure that places a partner in the way of you getting the ideas?  Is that partner someone who will think that text messaging is "just for youth audiences."  Or worse, is that partner someone who doesn't know anything about bebo, but says you should stick something up there just to say you did?  Interview them.  Ask questions.  Get that partner on the phone, or in person and ask them their philosophy on social media, and how best to incorporate it into the program.  Don't trust the powerpoint slide.

b) How is your digital group integrated?  Reason:  everyone says they have an integrated digital group, but do they really?  Often times, it's a group that has it's own P&L.  And what that means is that they are scrapping at the table with the account leads and fighting over who gets what share.  They say they aren't, but trust me, what's a traditional PR or Ad guy going to say when their practice group is shrinking in retainer money and the Digital group is growing by leaps and bounds?  They want control of that money.

Now, there is some talk about Hybrid groups, but I haven't seen one yet.  We tried one a year or so back, but they missed the Hybrid part of it and sent the Digital group reporting to someone who has never managed Digital before.  Not exactly what we were originally planning, and nothing Hybrid about it.  I would like to see this happen, though.  Somewhere.  I've often been asked to run the new Digital group and I usually respond that there shouldn't be Digital groups.  Just people with full understanding of the Digital channel working in and among the existing practice groups.  But then, that's just too hard.

c) Where do the digital ideas come from?  Reason:  this is a lot like "Who filters the ideas?" but this one goes to bandwidth.  What you are looking for here is the man behind the curtain.  Most agencies now have their digital guru.  But if s/he is busy putting together the strategy for the next client since they are the only ones that really know what is going on, what happens to your account once you've signed the dotted line?  Perhaps it's a brainstorm (if it's billable!) but what I really want you to have at your disposal is a team that knows what they are doing so that the program team handling the touchpoint at every turn of your program is thinking about ALL channels, and can react appropriately when the time comes.  Let's not have the 2nd year PR flack spam a blogger they've never read.  And let's not have the agency's HR department putting "Hiring PR peeps" in their Facebook status and broadcast to the 100 people they just fired yesterday.

d) What is your philosophy?  Reason:  I know this sounds like a "touchy-feely" point, but what I'm trying to get at here is how the agency views the new medium.  You may get the group that thinks Digital is putting up another micro-site.  Or you may get the account team that thinks Online Reputation Management is deleting bad comments from the blog.  I really want this question to drive to the section here which is...

2. It's a participatory medium.  Are you participating?

a) Look at their agency's participation as a whole.  Do they have a blog?  Is it just the CEO's blog?  That could be bad.  Read this.  Do they have any participation in conversations outside of their own one-way channel of discussing what they want to discuss?

b) What have they done for others?  Do they think that they are going to pull off the next big video contest and that is the big idea they are pitching to you?  View how that contest went.  It may just suck (read here -- and yes, it's the same blog, but I couldn't resist not calling out Denny's).

c) But the main one here is the account team's participation online.  Have them send you their profile pages, their blog posts, their comments in other blog conversations.  Show something that is NOT a ONE-WAY post.  Have they answered anything in Linked-In, participated in Yelp, bookmarked something, updated their knowledge into Wikipedia (beyond corporate messaging for their clients)?  Oh, and having 200+ contacts in LinkedIn and 100's in Facebook (most of which are other people in the agency) doesn't really count as participating.  What do they DO with those contacts?  Do they really UNDERSTAND online conversations and can they APPLY that knowledge in a real world scenario?

But the biggest question I would have over all of this...

3. Do they care?

Again, "touchy-feely," but it makes a world of difference in the execution.  You don't need an agency that doesn't care about what you are trying to achieve.  It shouldn't be about retainers and ground-breaking creativity just for the sake of using technology in a new way.  This is where it really matters.  No one wants to hear your message if they don't care, so why not pick someone who cares, is tapped into why other people care, and can execute on that?  I promise you, that person will find ways to get your message out.  I still can't believe how much money Leona Helmsley left her dog Trouble.  I guarantee you that someone that loved dogs that much (or hated people that much) would outdo Nestle/Purina in any pet social networking site if they put their mind to it.

More to come...

The Case for Small Agencies (Part 3)

Motivation, Experience, Client Lists, Network Reach, and Brainstorms

I love listening to successful people.  Especially in business because what they tell you has nothing to do with what they taught you in Business school.  In fact, usually what they tell you has nothing to do with the foundation of your MBA classes at all.  I was thinking back to one particular piece of advice and I pass it along here as well.  The gentleman was explaining to me how he always hired salespeople that were married and had a family.  While most of the larger agencies didn't like family people since they had family commitments that got in the way of client work, called in sick more to take care of their sick kids, and couldn't travel at the drop of a hat...(seriously, they said that)  he liked to hire them because they were committed and motivated.  They were motivated to provide well for their family, so those salespeople were more "hungry" and often outperformed their counterparts.

I thought about that a lot.  And now in applying that to the argument of large agency vs. small agency, there seems to be a large discrepancy.  Now, everyone is motivated by different factors, so the following is a generalisation.  However, there is enough evidence out there to really look at this point.  At small agencies, the motivation is providing for the staff.  The agency is doing everything it can to stay in business and fight it's way up the reputation ladder.  Their name is on the door, pride is at stake, and most importantly, they will do whatever it takes to please the client and provide a top-notch product so they can get repeat business.  Like Avis, "we try harder."

Now, I was working on a proposal team at a large agency, and heard more than once this: "why are we going to such great lengths to prove we can do this job?  we're one of the top agencies in the business and they should hope we take on their business."  The motivation, the "hunger" is not there.

Now that's not to say there is no motivation in large agencies.  There is.  Junior account execs want to work their way up the partnership ladder, so they will go to great lengths to prove their worth.  But there is a stronger motivation: profit and loss.  But let's look at network reach to really drive this point home.  One of the top reasons a large agency will prove their worth is in how many offices it has and how that network reach of offices, affiliates, etc. can bring resources to bear on your project that smaller agencies simply can't do.  Now, the interesting point here is that large agencies beef up their network through affiliates.  Look at the maps on their websites.  Look closely at the squares and triangles and diamonds and see what each represents.  It's a pieced together network of entities that are not under complete control of the agency.  So now, to compare apples to apples, how does that network compare to the networks of sister agencies that small boutique agencies belong to?  The reach issue tends to be mitigated a bit.

But those networks of separate entities don't necessarily work as a cohesive whole.  Let's go back to the motivation argument.  The companies, heck, the individual profit groups and cities within the actual company owned offices aren't motivated or incentivized to work as a cohesive whole.  More often than not, the groups compete for work, and when they do have a multi-office project, it becomes a political firestorm if anything goes wrong.  The finger pointing, and more importantly, the unwillingness to help the other group because it doesn't benefit them or their city's P&L sheet becomes a hinderance to the overall success of the program.  Much to the contrary of what the PR and Marketing of the agency says.

You can see this in the brainstorms as well.  The hallmark of creative firms, and a staple of new ideas, the brainstorm can be seen as the central impetus behind the success of any program.  So let me ask you this...when an invite to a brainstorm is sent out, and the question most asked is "...is this billable?"  do you think that the best ideas are being brought to the table?  Maybe, if you are paying for it.  But what about the brainstorms that are not billable?  Who goes to those?  Some do, but the creativeness that you so need in your program is probably busy being billable on another project.  But this goes back to the motivation factor again--billable.  Not great work, not achieving business goals, but billable percentages.

One last thing that has come up a lot in competing between agencies is the age old client list.  Hire [insert agency name here] because we have experience with top companies in your field, just like you.  And then the parade of names starts.  Now, I can't deny that larger agencies have longer client lists, and usually larger-scale projects.  Yes, between many years of business, thousands of employees, and acquisitions of other companies that have good client lists as well, the cumulative of work is going to be impressive.  But let's go back to the initial argument a few posts back:  it's about people.  So before we begin to think that every employee has all of that experience built in, let's ask what projects the account manager has worked on.  Let's ask how many projects of this size this particular project manager assigned to your account has.  It's going to be a very small subset of the larger master list.  And let's hope that true.  You may get the new employee that was hired to staff your new project because the group was running lean and hires contractors to expand with the workload.  What is his/her experience since they'll be doing the day to day work on your project?

Now, small agencies hire contractors too.  The only difference is that those contractors are supervised by a lead person that had enough client experience at the larger agency to break off and create their own boutique agency.  And they are small enough that that supervision is more than just looking at the numbers.

But in totality, the large agencies do good work.  That's not the argument here.  It's that small and boutique agencies are every bit as qualified to produce the same caliber of work.  If there is anything that needs to change in the cycle of competing agencies, it's the "get out of jail free" card that decision makers (and check-writers) seem to feel they have with hiring a large agency.  I hope that the decision of agency goes back to when the quality of the person and team mean something.  And that the "board" takes this decision seriously enough to know that just hiring a large agency may actually be a detriment to the success of the program or the company's goals.  Instead of saying "Nobody ever got fired for hiring IBM," how about looking at the way we view government overspending and start saying "Can you believe Bob hired that overpriced, underperforming group, just to save his own reputation.  There went my Christmas bonus."   Or better yet... how about "Nobody ever got fired for hiring a smart agency that did what it said it would do."

More to come...

LinkedIn with a Spy?

I was in Washington DC all last week talking to several agencies about new methods of communication and how to reach niche audiences in ways that perhaps the agency hasn't thought of before.  Or... "how can we do something different than the same old Ad Council campaign?"  Of course, there are so many things that we can suggest.

More about that in a second.

In a separate plot line, there are issues with "selling" social media (or new tools, period) to companies looking for new ideas.  And even if they do want to go forward with a program utilizing these new tools, they often force their opinion on HOW they should be used.  Most often, not appropriately.  The toolsets are maturing, and just because you put up a Facebook page (fan page or otherwise) doesn't necessarily get to the point of HOW you used that resource.  As Ash Patel of Yahoo! said:

"That ship has sailed, between MySpace and Facebook and Hi5 and Bebo and other reasons. Even with that, there are 1.2 billion people on the Internet, and only 150 million are using social networks. That's a lot of greenfield."

Now, let's tie in a third idea stream here so we can then bring this all together and get to the Spy stuff.

A technology reaches a critical milestone and is considered a success when people begin to use the tool for things the developers of the tool never imagined.  This is a great marriage of creativity of the users fully understanding the potential of the technology and the developers of the tool creating enough flexibility in the tool to accommodate for these other uses.

So, back to the DC trip.  In talking about creative uses and using the toolset beyond simply being in it, we were talking about moving beyond the profile page and looking harder at the event streams and other capabilities of the interactions in the tools.  What comes next, I can neither confirm nor deny in case anyone of consequence is reading this :), but it was discussed how US spy networks were using a technology similar to Facebook to communicate and pass information and sensitive intel back and forth.

I found this of special note beyond the cool factor of spy vs. spy in the social networking realm, but how important the tools that allow for seamless communication are to sensitive projects and moving beyond the "poke" and the "send me a star wars figure" functionality that the clients we speak with will tend to gravitate towards in an effort to debunk Social Networking as a legitimate strategy in the overall program.  To date, there are few other tools that allow the type of back and forth conversations with a multitude of people that is so important in campaigns.

So if trying to bring a Facebook (or other social networking strategy) to the table as part of an integrated campaign, and when faced with either a) the propensity to be satisfied with just a profile page, or b) the push-back of "it's just for kids," think about the crucial nature of foreign intelligence and the true power of conversation buried at the heart of the program.  It may get you a second look at that social media proposal you have in front of your client.

Oh, and if "Curveball" starts following your Tweets...  

More later....

The Case for Small Agencies - The People

As we look into the case for smaller agencies, it all begins with the people.  Even though all agencies tout a lot of services they provide, they are actually all selling one main thing: hours of a person's time.  So the product is really people.  The core asset of any agency is the caliber of people they employ and staff on your project.  Though I think this is nothing new to anyone reading this, it does tend to slip from memory when the agency lavishes other credentials in their proposals.  After all, where do the bios go in the proposal?  At the back.

When looking for an agency, it's very much like hiring on an extension of your team.  When interviewing for a position in the company, there is much more scrutiny.  Why not in looking for the right agency?  Or, rather, it tends to become more like buying a name brand product.  Is a top brand product really that much better than the off-brand product?  Perhaps that off-brand just needs a better marketing campaign to prove it's product is superior?

So let's look to see if it is a comparable product:

Companies are often a product of their leadership.  In terms of thought leadership, organizational structure, and otherwise.  This brings up the Peter Principle which holds that "in a hierarchy, members are promoted so long as they work competently.  Sooner or later they are promoted to a position at which they are no longer competent, and there they remain.  In time, every post tends to be occupied by an employee who is incompetent to carry out his duties...[so]...work is accomplished by those employees who have not yet reached their level of incompetence." (Dr. Laurence J. Peter and Raymond Hull).

Though humorous, it does hold validity.  Especially in an agency with a steeped hierarchy.  Translated, the partners who run the practice groups are beyond their level of competence, so the real work is done by the more junior staff.  Though rational sounding, it does pose a problem.  Ideas are promoted or squashed at the partner level in most cases.  Thus, ideas are triaged at the level of incompetence.  In other words, the senior level people in the agency are the filter that all ideas go through before you see them.  And that filter may not be the one most current, or relevant to you or your business goals.

Another question you would ask in interviewing a candidate is their salary expectations.  Is their salary commensurate with their experience?  Now let's apply that to agency rates.  Why does the same creative director bill out $150/hr at a small agency and nearly $350/hr at a larger one?  Does s/he have better ideas at the larger agency?  Probably not.  Coke costs more than Vess mostly to bear the cost of marketing.  Higher agency rates cover overhead.  Though you'll hear that it covers training their people to be more effective (among other arguments), usually its something else.  In some instances to the tune of $6000+/mo per "head" beyond the margin already calculated in the hourly rate.  Oh, and I'd look further into that training claim...

These arguments only work if the smaller agency does not adopt the hierarchy model of the larger agencies.  They are prone to this as well.  However, most are flat in organizational structure, the principal (who's name is usually on the door) stays current, and the overhead is low.

Still more to come.... Motivation, Experience, Client Lists, Network Reach, and Brainstorms...

A Case for Small Agencies (Part 1)

Where to start? I guess it was yesterday when I finally realized we should probably start to speak up a bit about what's going on with creativity in agencies today. We're working a bit on preparations for the 2010 Census (be sure to mail in your forms when you get them) and investigating working with a larger agency in Chicago that has the umbrella contract for communications. To cut to the chase quickly, the thing that came up the most was that they were a fantastic creative firm, but when they were bought, it became about the numbers and not the work. Unfortunately, that didn't strike me as an overall negative since I've become accustomed to hearing this. I can say in all honesty that I've spoken with everyone from account leads, to creative directors, to technology in at least 4 of the major holding companies' portfolios and all have said the same thing. And usually is sounds like: "I spend more time looking at spreadsheets, WIP reports, forecasts, justifying revenue targets, and then double and triple checking these things, than actually working on the client's work. And when I do have the time (which ironically, is the thing all those tools are meant to measure), we can't simply concentrate on good work, but rather how quickly, and how cheaply can we achieve the goal?" (Usually what that means is a hierarchy of younger, less experienced staff members doing the bulk of the work since they have lower costs and lower bill rates).

It sounds like the free market could quickly change this, right? Sub-par work would lead competition to come in and take the work away with better work at lower prices. Yet, this does not happen. That confused me for a while. Another example: I had a consultancy that was comprised of 5 top-notch strategists that had been in leadership positions at larger agencies prior to coming on board with me. We were successful, but never so much as when we subbed for those larger agencies. At one client, their CTO became one of our advisors on our board. After just one of our consultants displaced 3 people from the incumbent agency (and at a lower hourly rate than just one of theirs), we asked him why we have so much trouble, and why companies continually choose lower quality at higher rates. His answer really shed some light on the situation small agencies have to deal with:

"If I go to my board and suggest we work with [insert small agency name], the burden is on me to defend this group that they may not have heard about. And if the project has problems, that will reflect negatively on me as the person who "gambled" with the "unknown" agency. However, if I come in with a large agency proposal, my board will be familiar with the name, I won't have to defend them, nor do I take the heat if they screw up. Remember, no one ever got fired for hiring IBM." 

This was not something to take lightly. It meant that quality, customer service, creativity, and talent were not enough.

Now, this is not to say that there are no talented people in the large agencies. There are. I've worked with them, and they're great. And this is not to say that small agencies are doomed. They are not, and many of them thrive on doing excellent work on the handful of clients they do get to concentrate on. Yet, those talented people in the large agencies are typically frustrated and eventually pull clients out of the large agencies to start those small agencies with the intention of "doing it right."

But how do they grow beyond the anchor client(s) that they pull? And how does the agency that doesn't start from large agency roots with a built-in client begin to compete in the agency world for top-notch clients and projects?

I fully realize that part of the answer lies in doing great work, networking with the right people, subbing with the larger agencies, starting small, and forming great relationships with the client (among others). However, I think another part of the equation is to shed some light on the other side of the coin: the large agencies.

Over the next few blog posts I'd like to discuss and bring some clarity to the arguments of scope, reach, talent, and especially accountability. I'm not out to show that the large agencies are incompetent, but rather to show that small agencies deserve to be at the bidding table, and that the "nobody ever got fired for hiring IBM" argument should be retired. That a decision to bring in less experienced people that bill at rates well over $200/hr. is not always the most intelligent choice, and possibly could get you into hot water for not researching all the options.  More to come...