This is a copy of an article from April 17, 2006 issue of BrandWeek written by SinekPartners CEO, Simon Sinek.
Advertising Execs Are Hypocrites
April 17, 2006
IF ADVERTISING is so effective, why don't ad agencies advertise? PR firms tout themselves in releases. Event planners throw their own parties. E-marketers use the Internet. These folks all believe in the effectiveness of their disciplines. Do ad agencies disagree?
In an increasingly cynical age of advertising and mass marketing, modern ad agencies work hard to reinforce the value of their product with their clients. "Studies" are whipped up to prove the effectiveness of the medium. And when client budgets are tight, agencies will provide data to show the importance of advertising in a down market. But this "do as I say, not as I do" mentality raises a suspicious eyebrow.
More than advertising, agencies rely quite heavily on pr. Getting mentioned or singled out in Brandweek, Adweek and other prominent newspapers and magazines supports an agency's ability to drum up business.
When Donny Deutsch took over leadership of the agency his father started, he tried to drive new business with a full page ad in the New York Times. The ad was ineffective at helping Deutsch attract clients. Deutsch abandoned his own product and hired high-priced pr mavens at Rubenstein Associates to raise his profile. And it worked.
In their own defense, agencies may point out that they operate in a business-to-business environment and their product is more effective in a business-to-consumer landscape. But the argument holds no weight because agencies routinely pitch and promote the value of ads to b-to-b clients, too.
If agencies hype the importance of branding campaigns for public companies to enhance their image among investors, why is it that Interpublic, Omnicom, Publicis and WPP don't support their brand images on Wall Street?
According to Nielsen Monitor-Plus, the four holding companies spent a total of $3.7 million to promote themselves in the U.S. in 2005, down 15% from the $4.4 million they spent in 2004.
Considering that agencies recommend their clients spend 10% of their revenues on marketing, the big four are spending .01% of their combined $29.3 billion in global revenue. Mull that for a second or two.
David Ogilvy once admitted, "99% of advertising doesn't sell much of anything." He was right. Fact is, most ads today are ineffective. "Effective" advertising can communicate the relevance of a company or product in a buyer's life, resulting in a visceral response to the message. Most advertising, however, does not create such value (there is some truth behind the old CFO joke that advertising is always on the "L" side of the P&L).
Companies that can quantify a rise in sales when they advertise and a decline when they don't aren't necessarily producing effective long-term value. A large contributor to such a correlation between ad spending and sales is based simply on raising awareness. Fact: consumers are more likely to buy a product they've heard of vs. one they haven't. Politicians know this and work hard to build better name recognition.
So if agencies aren't advertising, why should anyone else? Deutsch built his business without an ad campaign spare that one ad. So have Starbucks, Google and countless others. Two years ago 1-800-GOT-JUNK?, one of America's fastest growing franchises, relied heavily on pr to sell 50 franchises. They spent only $1,800 in ads versus the hundreds of thousands of dollars other franchisors spent to accomplish the same results.
In truth, it's what's in the advertising that is not working. Ad agencies are doing a poor job creating messages that affect long-term value for their clients. Along with the media in which it exists, advertising has been commoditized. Most agencies struggle to justify their own value in a sea of sameness. While they try to sell their clients on their "unique perspective" and their ability to balance "creative and strategy," other marketing tactics like buzz marketing and targeted pr are delivering long-term, measurable results for marketers and further eroding any perceived value advertising enjoyed.
Competition and apathy have left agencies struggling to define themselves. That's ironic for an industry that claims to be full of creativity and objective perspective. Their Faustian resistance to use their own product contributes to the slew of press predicting the fall of advertising and the rise of pr, buzz marketing, product placement or whatever fad is next in line to steal some of advertising's once mighty thunder.
Agencies should ask for help to get that message out and inject a spark back into the business. That would help build far more credibility with clients to use the product they sell. If you disagree, feel free to take out an ad to convince your clients I'm wrong.
Sinek is founder and CEO of SinekPartners, a New York consultancy that helps companies inspire employees and customers to action. He also teaches at Columbia University's graduate program in strategic communications. Contact: firstname.lastname@example.org.