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January 2012

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Contact Ken Custer at 303-277-9840.


Changing Role of the Advertising Agency



Each year The Review asks agency executives to participate in a discussion about what is happening in advertising. With the demise of the commission system, advent of social media, and the need for interactive talent on staff, advertising agencies have had to redefine themselves and add many new services for clients. This changes the role of the agency in many ways.

Participating in the discussion this year were KATHY HAGAN BROWN, Co-President, Karsh Hagan; BRYAN THOMAS, President, gyro; and TRACY WEISE, President, Weise Communications. The discussion took place in the Ingather Research facility in Lakewood and lasted for one hour. Following is a transcription of the participants' thoughts.

Ken, Moderator: What have been the major recent changes in the advertising agency world?

Kathy -
I think the thing that is happening is that the agency business has become fractionalized in that the consumer now drives what we do now more than any time in the history of advertising. They have so many options, more choices and alternatives to radio, TV, etc. I think that is huge in how we approach the business. It was integration and now it is collaboration. Because of that we try to integrate everything. Now it is a collaborative effort with everybody, and everybody is digital.

Tracy -
There has been a significant change in the past year, but there was an even greater change over the past three or four years because of the economy. We have always been fully integrated but we saw a change in the type of services the customer wanted: from a majority of advertising and PR to all PR and now back to a mix of advertising, design, branding and PR. So the type of services the clients wanted have sort of ebbed and flowed over the past year. We have clients who want the consultative information and they want additional services and consulting, not just execution. Some clients are so specific about how much money they will spend and all they want is execution, which is hard because we are not a tactically-based agency; we are a consultative based agency. We have also been taken from integrated to integrated-and-collaboration. We were always there on the integrated side. We don't do PR without SEO. We don't do advertising without online. Everything we do is completely mixed together. We don't have any clients that just want one tactic; everything is mixed together.

Bryan -
I would agree with this consumer-empowerment that exists; it's grander and more complex than ever before. Because of that clients are looking for ideas that are sometimes not in the normal traditional context of agencies of the past 10 years. They are looking for ideas in product development, new technology and how to reach consumers…So I think it's about having human- relevant strategies and approaches that reach out and touch the consumer in some fashion that is very unique. Let's face it: for all of us there is a proliferation of media and we are being touched in so many places. It's a matter of focusing on what is really relevant.

Ken -
How does this change in the way you interact with your clients?

Bryan -
We talked about this fragmentation that exists out there. Clients look for expertise in certain areas depending on the context of the client. If they are a national, global type of client they want the best-in-class -- in this expertise with digital or search, or whatever. The pendulum is starting to move now and they are looking for those that can put it all together and be accountable from a brand standpoint, as well as from a messaging standpoint, ultimately moving the consumer to wherever they want them to go. You have to be very knowledgeable on a lot of different fronts and bring ideas that are not only accountable from a matrix standpoint, but ideas that are inspiring and different. We have one client with whom we talk about purposeful brands. That is very huge in this social media environment, where it's not just about an offer or just about controlling things and about bringing people to the altar, so to speak, but also having them participate in the discussion.

Tracy -
Our clients really want us to come to them with ideas that are not traditional. They would not normally go to an agency, but they want ideas that touch everything -- technology, communicating with customers in different ways -- and they are looking for more than just how to advertise. They really want to figure out how to better relations with their customer. In addition we are more-and-more having to prove the worth of everything we do. We really pride ourselves on getting results. It's no longer just enough to be a good campaign; we need to have measurement results in everything we do -- radio or TV, online, social media, online PR -- so we are measuring our work in different ways.

Kathy -
We are no longer an advertising agency or PR agency or marketing agency; we are in the idea business. We generate big ideas -- that's our job. ROI metrics are so important, analyzing everything daily making sure you're on track. If not, figure it out and take a step back and go another direction. It's exciting and makes for a lot of opportunity out there.

Tracy -
It means we have to work closer with our clients. If we are being asked to measure their bottom line business. You can't just track what we do or what advertising does or PR does. We have to show business results -- how many franchises are sold or product sales -- and we can't measure that if we don't have a stronger, very deep-working relationship with our clients.

Bryan -
It does require starting way upstream. It's not about advertising or even marketing. It's getting into their business model and understanding that. They come to us for the idea and they want us to dimensionalize their innovation, whatever that is.

Ken -
How does this restructure the agency?

Kathy -
It's torn down the walls in terms of defining what your role is. Your role is to solve problems. If your expertise happens to be in one area that's what you bring to the table, you're still solving problems. Everybody is digital. Media is the new creative. PR is the hero these days. Everyone may have a certain skill set, but they are all contributing. It is so much more collaborative: fewer silos and less emphasis on “Account” and “Creative.” Everyone is engaged in solving the problem. There is more teamwork and more brains are applied to solving the problem.

Tracy -
It hasn't really changed the role of our staff since we were always integrated. I don't have a PR or advertising account manager. Everybody has become content-focused; everybody has to develop content. That's what our clients need, no matter what project we are working on: figuring out new ways to develop content.

Bryan -
It's interesting. You have the old school, and this was a real problem even four or five years ago, where the creative said, “This is my domain and you don't cross the line.” Now, as Kathy said, the walls are gone. I just went through a process where we pitched national account. The creative department was not only working on the message, but tactically (exploring), “How does this live and how does this approach work?” It was such a collaborative process and powerful...It cuts across everything.

Tracy -
I've heard the term, “hybrid employee.” It's true that we may have a creative staff and they have to know how this is going to work in social media application, how it is going to work in Facebook, Twitter or integrate into PR. So our creative team has to think about that as much as the marketing account team. Marketing is coming up with great messaging; they have to figure how we are going to do this with creative execution. You can't just be an account or creative person anymore.

Bryan --
It also speaks to experience. The young kids coming up are in a whole different world and if you don't bring that kind of currency into the agency you will be left behind. They are so in-tune with what is happening out there, and there is quite a bit of youthfulness that is playing a larger role. Back in the day we would start you as an assistant account coordinator, and now they are the stars.

Kathy --
I think there is huge trend to not hire traditional agency people anymore. The account people are the curator for the account and they have to be metric specialists on the account. They have to be the measurement gurus, continually sharing with the client, “Here is where you want to go and here is where we are,” and (mapping), “How we are going to get there.”

Tracy --
I think as agency leaders you can't forget about those on staff who are older. We invest a lot of time and energy in webinars, seminars, conferences and practicing what we preach, like when we stated using QR codes. We spend a lot of time educating the senior staff and sharing the knowledge.

Kathy --
Sharing knowledge is so much more important because everyone is learning something new every day, no matter who you are or how old you are. Quickly sharing that information is so important to internal and external communications.

Bryan --
The depth of experience for those that have a little more seniority comes to play in this process. The sky is the limit for ideation and everything, but at some point you need to ask, “How does this apply within the psyche of the consumer?” That's where the wisdom comes from.

Kathy --
So we are still valuable. We found a role for ourselves even though every one is spinning around us.

Tracy --
The young people know how to do fantastic online campaigns, but they don't know how to communicate with CEO on the value of what they are doing.

Kathy --
They are not strategists.

Bryan --
They are very executional.

Kathy --
I love that they experiment and have no boundaries -- they are always trying to do something new.

Ken --
Are agencies moving from traditional commission compensation?

Bryan --
There have been all kinds of discussions on that and what the value is of a big idea that changes not only the client's business but a whole category. “Commissions” are really “old school.” That isn't even a conversation now. I think that in many cases you evaluate each particular initiative and then place a value on it. On a larger-scale opportunity, national and international procurement plays a much bigger role than I would like them to play. They will hammer you and hammer you and they want to know what your hourly rate is. That is so “80's,” and it's detrimental. It holds back the agency's ability to do what they were hired to do in the first place. Now, normally, it's based on the initiative, or if there has been ongoing compensation that identifies the engagement and the investment that both the client and the agency have made.

Kathy --
I think it became an adjustment when digital became prevalent. It takes four times longer to create a digital project than a traditional project. Adjusting to that was challenging in educating clients, people working on the projects, the profits and the budgets. I think we are getting there but it takes more time.

Tracy --
But the clients don't think it does (take more time).

Bryan --
That speaks volumes on expectations of clients. “I want everything in a week or two weeks,” and it either speaks to a lack of understanding or sophistication or a lack of respect at what a good agency does to get to that problem-solving and big idea.

Ken -
Timing, how do you handle this?

Tracy --
We are constantly raising everything to the top of the pile and then determining what we can hold off on. There isn't a magic way to do this.

Kathy --
When you work with a client that understands how to work with an agency -- works with an agency well and has that respect for that big idea that you bring to the table -- those kinds of things are important. They value the time you invest or are going to take to put into their business to generate a really good idea. If they don't, that's a client that doesn't really value you.

Bryan --
It will be a short-lived relationship

Ken --
A client says, “We want to do social media.” How do you answer that?

Bryan --
It goes without saying: that's part of the toolbox you have to work with. It's more about what are we are trying to accomplish, what's the overriding business or marketing objective, and then what tools we use to achieve that. That's the way you approach it. There are clients who are mystified by how social media works, but social media has to be a component of a 360-degree approach.

Kathy --
I don't think the client knows the answers. They depend on the agency to help guide them as well. They come to the table and think they know a little bit. It's our job to guide them, help them meet their goals and objectives and guide them through the paths that are relevant to their business.

Tracy --
We always try to look at the big picture when we talk to our clients about social media. They say that want to try this blog out for month and see what happens. “Now, why do you want to blog? How is it going to work? What are the results going to be?” If you get into social media. however, you get into it. It's a marathon, not a sprint. If you are going into it thinking you're going to do a short practice-run, you will fail. Just like one ad one time: it doesn't work.

Bryan --
It goes back to the old terms of “push” and “pull.” Normally clients are in a “push” mode. Social media is a “pull” medium and you need to understand how that is relevant to the objectives of the business.

Tracy --
There are a lot beautiful ways to use social media and a lot of different executions, B2B or B2C. It works either way you just have to figure what it is and how you going to work it in. It supports traditional campaigns or can be a stand-alone campaign. It goes back to, “What are the goals?”

Ken --
What do you see for the future -- where is the agency business going?

Bryan --
Economically, I think we are out of the woods. We're headed in the right direction. You will see more and more of integrated campaigns that are inspiring. I was looking at some of the horrid advertising during the holidays - “Here is a (price point) offer!” You will see more and more human-relevance approaches for the successful brands who are engaging consumers to take part and basically expand the brand's definition in the context of who the consumer is and how they see it.

Kathy --
We had a great year and things next year really look good as well. If we look at how we are to be successful we will have to continue to be nimble, continue to provide metrics and provide the magic. We can't be a commodity.

Tracy --
I think that the road we are going down of having to show business results for all clients is going to continue and be more relevant all the time. They are going to continue to look at agencies as a consultative group of people where we can bring more ideas to the table that are not just advertising or PR. We're trying to make an impact for their business. We know our clients and our industry very well. I think that will be essential: you can't make and create personal touch campaigns without knowing what makes your client successful, what they mean to the consumer. I agree things feel better. We had a fantastic year last year and I think things are heading in the right direction

Kathy --
Our job is to build clients' business and if we are not doing that we won't be around.

Tracy --
I don't know of anybody that is hiring just for brand recognition.

Ken --
Does the downsizing by companies leave them relying more on the agency?

Bryan --
I think in some case it does (mean more reliance on the agency). In others there is a lack of reality and this is usually in organizations that are heavily sales-driven type of organizations that don't understand the strategic nature of having marketing inside. I did a post for Forbes about five successful traits of a CMO. As I thought about it I remembered the CMOs that I was impressed with and those that were failing. The CMO really becomes the brand shaman and the strategic aficionado in the organization: they lend vision. Those organizations without vision will fail (by not recognizing) the sophistication of the consumer.

Kathy --
It also depends upon the sophistication of the client

Ken -
Anything to add?

Bryan
Back five or ten years ago there was the primary agency and then these other smaller agencies that had some discipline or function within the marketing mix. Now you find clients that say, “Here is a project or an initiative that we are going to bid out and select someone and do that with others.” That sometime wears an agency's enthusiasm down, as well as (allegiance toward) a particular client. I also see some clients understanding that, “If we have an agency that is continually and consistently bringing innovation to what we are doing, whether its in context of communications or marketing principles, we're going to give them more and more work to do.” That's where I see the winners are headed because they have proven to be a resource that is going to be totally vested in client success. There are clients who understand that.

Tracy --
For agencies to be successful they have to be very nimble. You have to be able change, to stay educated and be able to know what's going on -- be not one step but three or five steps ahead of the client -- so that clients will continue to come to us for the resources and bigger and better ideas we can provide. There is no opportunity for complacency. If you are going to be in an agency environment you cannot be complacent. That's just the world we live in. We have to be better-educated, faster, quicker and moving faster than any of our clients. The agencies that are doing that will continue to be very successful.

Bryan --
It speaks to an entrepreneurialism that clients come to agencies for. To be entrepreneurial on this particular problem or product or brand that speaks to the nimbleness and resourcefulness and ingenuity that an agency should be known for.

Tracy --
You won't get that if they cut back on marketing internally. I do think it depends: you typically are not going to get the entrepreneurial spirit from someone in the corporate world. I think there are fantastic in-house corporate people, but they have a different mind-set than agency people because they are focused on their company all the time and we are focused on so much more all the time.

Kathy --
I read recently that to be successful an agency needs to reinvent themselves every four years. And if they are hot they need to reinvent themselves every 20 months. That tells you that to stay in front is important. As well, we can't continue to try be all things to all people. You have to own what you're good at and be good at it. I said it's an exciting time because there are so many new things happening, but also the perceptions of who can compete for new business has broken down: you don't have to be J. Walter Thompson to participate in a pitch. If your agency can handle a piece of business and you can generate a good idea or solve a problem, then you can participate and that's not how things always were in the past: size-oriented or billings or whatever. Those walls have been broken down in a lot of instances, in the client perspective.

Ken --
Is there more profit in the hundred-million-dollar account versus a ten-million account?

Bryan --
Given what agencies do this these days there isn't because much of that is pass-through. If all you are doing is content and strategy, it's the same for $100 million or $5 million account, depending on what you are doing for the client. It's a very different animal now, which is great for agencies from that standpoint

Tracy --
It also helps the agency to become more profitable.

Bryan --
The power of an idea is not constrained to the size of an agency.

Ken --
When hiring what do you look for?

Tracy --
We look for multi-talent. I look for a copywriter that can do PR copy, online copy etc., and its hard to find. Account management needs to know PR, marketing -- maybe they're stronger in marketing strategy, but they can still pitch media to an account and pitch strategy, be able to pitch a marketing plan. They understand the industry were in. We don't hire the way we used to, traditionally. We hire art directors that can collaborate with a team.

Kathy --
There are still skill-sets that are challenging to find in the digital world that are very highly sought-after. We have an opening for an interactive project manager and we have been looking for six months. In general we look more for attitude, ability to write and read.

Bryan --
The standards we used 20 years ago still apply today. I want them to be curious about a lot of stuff, entrepreneurial, pro-active, taking risks, all above and beyond the raw talent.

Tracy --
They just have to be able to think. As we are a smaller agency you have to fit in because we socialize together and we work closely together.

Ken
How important is research?

Tracy --
Clients don't want to pay for it but it is so important.

Bryan --
It's essential. When the consumer is driving all the strategies, which is what this is all about, you have to understand them and be inside their head and heart -- everything from segmentation to database management -- all of that comes into play and I think it will become more and more prevalent to the success of any agency. Big ideas have to be based on some under-girthing of data and insight to a consumer and that comes from research

Tracy --
The client has come to us and said, “This is what we want to do.” Then we do research and they were so far off-base because they were basing it on something they had previously done.

Kathy --
I think research is so much more innovative, too. I don't have to do a focus group just to see how a consumer feels or what they think of an idea. You can do electronic research or online research that is so fast so cool and pretty accurate. It might not be the only mechanism you use, but it can be a piece of our research. Again we are talking about nimble, quick, real time. It just amazes me how quickly we can get just a read on something that we are doing and if we have an ides and we are not sure you can just throw it out there and in 24 hours we'll know.

Tracy --
We were talking earlier about ROI, being able to prove to the business side that the work we are doing is the right thing. We need research to do that.

Ken -
Some big accounts have left the Denver market. Can we bring some other outside business into Colorado?

Tracy --
50% of our business is not in Denver

Kathy --
50% of our business is not in Denver. There are not a lot of Fortune 500 businesses here. As (Governor) Hickenlooper works on economic development, hopefully it will bring some bigger businesses in.

Bryan --
I think that with the connectivity of our industry you could be in New York and read about this wonderful campaign done in Australia and think, “They sound very smart and I want to check them out.” I think the internet allows a lot of that, instead of back in the day when there were just industry hubs. A couple of years ago an ad that won the best of show from Cannes was a little PR tourism campaign for advertising the coast of Australia.

Kathy --
I think that the agency that just throws a bunch of ideas at you with the premise that, “We will generate a bunch of ideas for you” may sound like a great way to manage your business, but the relationship of our businesses in still really important. You want to work with people you like who are going to be fun and also are going to make you a star and meet your goals and objectives. I see a lot of things that are not relationship-driven and wonder if they will work.

Ken --
What's the future of advertising in Denver?

Tracy --
We have a really diverse group of people that work for us and I think that that is key. Having people who can bring different perspectives culturally, religiously, etcetera, to whatever account we're working on is important because we live in such an international world. I think Denver is a great place for great people.

Kathy --
The future is bright. It's an exciting time, with lots of opportunity. We like this business because it's changing and we like to change.

Bryan --
I agree. I think Denver has always struggled because the service industries are here, not the manufacturers. That's what the other “secondary” markets have. I think the lifestyle is important here. Today people can work from almost anywhere; they may be living in Denver but working with a group out of Chicago.

The Panel
Kathy Hagan Brown
Co-President Karsh Hagan
Encouraged to be an entrepreneur by her father, Karsh Hagan founder Tom Hagan, she launched her first agency at the age of 26 and has led blue chip brands and their integrated marketing efforts for the next 27 years. She has held numerous board positions and supports many community initiatives. She also led the Denver Advertising Federation as Chairman and was recognized as the Ad Professional of the Year.

Bryan Thomas
President Denver gyro
As a 30-year veteran of the advertising and marketing industry, Bryan is recognized for establishing Thomas & Perkins, one of the region's largest creative ad agencies during the '90's with flagship accounts including Pentax, Xcel, The Denver Post, AT&T Broadband and CellularOne. He also co-founded the inventive ad shop of Thomas Taber & Drazen with Bob Taber, Daphne Fink and Mike Drazen. He is currently president of the Denver office of gyro, a global ideas shop and one of Ad Age's top 50 global agency networks.

Tracy Weise,
President, Weise Communications
As co-founder and president of Weise Communications, which is celebrating its ten year anniversary this March, Tracy Weise is committed to helping clients achieve success with integrated marketing -- including strategic planning, branding, advertising, public relations, social media and online marketing. Tracy provides strategic counsel on national and international sales programs as well as local and national public relations initiatives. She also develops marketing and online sales campaigns. She works with a team of hybrid employees that oversee integrated marketing programs for clients in the health and wellness, franchising and business-to-business industries.




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