Why Don't Ad Agencies Advertise?

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: simon.sinek@sinekpartners.com.

Comments

[knight online noah]

company to write cliched articles for industry rags?!

Out of curiosi

[Dwayne]

It seems the saying The Cobbler's Children Have No Shoes applies here. A web designer with no website. A real estate agent that owns no home. A dentist with no teeth.

[cuwn]

What a negative article!!

Look, the ad agencies help sell your company's confectionary or electronics or whatever, because they do it well. Even services are projected as products. But selling their own service does prove difficult and ineffective outside of the healthy networking they do everyday, their amazing websites, the awards they win (or try to), and the industry mags they can afford to be part of.

It's a visionary industry like no other, from the salespeople to the creatives to the press, and sometimes their time is best spent managing the accounts of their biggest and most solid clients, not looking for thousands more... That's what the smaller agencies are after, but they are often way too poor and conservative for costly self-promotion campaigns.

Advertising will always remain tight without the budget of big brands. That doesn't mean the big advertising brands should be out there trying to dominate the market. They are forced to expand slowly due to the COI from rival clients, and also cause the needs of existing clients can be extensive and overwhelming.

The corporate "sea of sameness" you may hate is what consumers learn to trust and it brings smaller brands to the big stage, yet any exciting new tactics get remembered. Either way the ploy works. And hey, maybe it's true that a decent product can succeed purely on it's own reputation. But who can lose trust in assisted expansion if merely word-of-mouth is exactly that? So yeah, just think, next time you hear an ad agency brag about the benefits of "enhancing your image", they ARE advertising themselves, directly to you, dumbass!

[Bruce Nagy]

This is a question of marketing strategy. Why don't ad agencies advertise? This is an old argument and those making it reveal that they aren't recognizing one, what an agency sells, and two, the scope of marketing strategies at work in today's world. Our agency sells advertising to clients for whom media ads are effective and we sell sales support or PR services to those whose products are better suited to these vehicles. An ad agency is a senior level consultancy. What senior management team scans billboards looking for a strategic partner? A good management consultant, law firm or corporate accountant is usually hired following a referral, some one-on-one meetings, etc. During these meetings some image brochures may be used and web sites reviewed, but most of the sale is accomplished through personal selling. On the other hand, no such personal selling is necessary to sell Ritz Crackers. With ad agencies clients are acquired using strong PR, RFP processes, pitches, a few ads, and so on. Every industry has different selling conventions. To say that ad agencies are cynical because they don't use a lot of ads indiscriminately is like saying a doctor should pop a lot of pills somewhat recklessly.

[Matt Loftiss]

Mass advertising works for companies that sell things in-mass.

[othemsthesk]

It's a funny topic!
Extrefox

[Michael Gass]

Having directed new business for 4 ad agencies I wholeheartedly agree with David. My experience has been that agencies find it hard to differentiate themselves. They also refuse to narrow their focus to their strengths thinking that this will cause them to miss out on opportunities. Just the opposite happens. They remain the same as most other agencies.

[David MacGregor]

The reason agencies don't advertise isn't because they don't believe in advertising. That's patently ridiculous.
Their real problem is that agencies find it hard to differentiate themselves. And they can't bring themselves to bring in objective outsiders to help them. Which is ridiculous - because objectivity is an ad agency's greatest strength.

The other issue is that agencies work with such a diverse range of clients that they feel uncomfortable expressing a voice of their own, rather than simply being a proxy for their clients.

That is why advertising awards have become the defacto for advertising advertising. Quite clever if one takes a dispassionate view of awards. In other spheres it's called user generated content - or 'other people's money'.

One of the reasons why I admire Kevin Roberts of Saatchi and Saatchi. He promotes his company superbly. In the beginning he was criticised for assuming too much of a role in the agency's voice. In fact he had to drown out the voice of Charles and Maurice Saatchi. His books, speeches and repositioning of the agency as The Ideas Company has been priceless.

Maybe the real message is that advertising as we once knew it is only so useful.

(For the record: I have no connection with Mr Roberts.)

[Barnabas]

Well well well... Not bad, not bad... Can better? ;)

[Franciszka]

Beautiful site!

[Mieczyslaw]

Very cool!

[Alphonsus]

So, what do you think about last comments ?

[Frank]

Very good web site, great work and thank you for your service.

[VEGREEMANNY]

Great site very informative two thumbs up!

--------------------------------------------------
http://www.earwod.com

[Ananta]

Hi I am new in advertising, I got task from my Boss to prepare strategy to promote agency.. Can i have some suggestions from eperts..

[Ron bloomingkemper]

I think ad agencies are too busy trying to win awards than focus on the real award, making their client money. They need a category in award shows that highlight the return on investment through their advertising. That would be an eye opening experience.

[Steve Roberts]

You have some great points Wordsmither. I've been around the block myself as a new business guy and as an account exec. Agencies don't advertise because it's just not effective, and if they do it's often to build awareness and to support the client relationship. You're right. There's bullshit...then there's actual work.

We all know that our business is built on existing client relationships, referrals and word of mouth. To expect new business from print advertising is pure folly. You might get a lead....sure...but to turn that into a paycheck is another matter and no amount of advertising will push that button.

Once you get past the capability question, it's all about added value and ultimately chemistry between those that are going to do the real work and the guy signing the check.

I like to think of our work as "holistic communications" rather than advertising. And we approach our client work the same way.

[David Maister]

For a further discussion of the pradoxes of the Shoemaker's children always going unshod, see http://davidmaister.com/blog/39/

[Wordsmither]

I tend to agree with keystroke here...
The best "ad" any agency can do for themselves is the continued excellent work for others. To me, it's no different than a creative type that's interviewing for a position within an agency. Yes, you might try some clever tricks to get your resume noticed, but at the end of the day, if your book and reel sucks, you won't get hired. It's that simple.

Beyond that, there's the simple matter of what to promote about yourself that will attract the right type of client (assuming the right client is the one who agrees with your approach). Tout that you're an award winner, clients may expect an award-winning ad but dictate a losing strategy. Boast your strategic abilities, clients might feel you "overthink" things. For this reason, agencies let their work speak for itself. If Mr./Ms. Marketing Exec at ABC company loves the ad an agency did, they're going to be more receptive to the kinds of suggestions an agency can make.

After 10 years, it's been my experience that the brands that advertise truly effectively, are those that don't just say it - they show it - whether they're speaking about quality, convenience, price or user experience. For an agency, every ad we do (which IMO includes collateral) is the smartest way to do this.

[Jorge Abellas-Martin]

Though I agree that agencies don't really do a good job of advertising themselves, as others have mentioned, the group that is being sold to is so small and so steeped in the industry anyways that there would be little point. I also think that the most dramatic number offered up, the $3.7 million spent by the holding companies on advertising is flawed in several ways: Holding companies have little incentive to advertise to anybody except Wall Street and stockholders. The real brands are in the divisions and the agencies held by those companies and as some have pointed out above, there is a fair amount of advertising going on. In any case, most ad agencies today are not just about traditional broadcast advertising, but are largely growing their below the line businesses.

[salesby5]

I agree with this article, I have worked with and owned an agency. I see most agencies talk about "results" but few if any define the word to their clients. It is often a mask. Example: if i say immediate response and ask 4 different people to difine immediate, one says 5-10 minutes, one says 1 hour, one says 24 hours the other is pondering for a while. I do not use the word results, I use sales. I increase sales for my clients, when asked how? By not making assumptions or doing the same thing over and over while expecting different results! Too often agencies are focused on pretty, clever or cute and are low on substance. I work with "THE GURU" Doug Hall (Eureka Ranch founder) who has recently hit the big time with his hit TV show, the clarity he can bring to a company really works! WHY: He uses his research of proven facts on why products and services sell dramatically better than their compeition!

I see one more mistake this article did not mention, agencies often forget to sell the external campaign internally before the ads appear! This causes the giant disconnet between the consumer and the advertiser and starts the failure, I see this often and will soon have details on my web site. Few advertisers like to sell, most agency account managers I have known hate to sell and it shows. This is sales, you must sell inside before you go out side!

Erik@salesby5.com

[Dave Dolak]

Interesting topic and I believe that many advertising agencies do not advertise precisely because they know *exactly* what results they would expect based upon the results they get for their clients. Can you really think of any other excuse?

I started commenting on this months ago when Al Ries made similar statements in AdWeeek
http://davedolak.blogspot.com/2005/08/ad-agencies-dont-worship-at-their-own.html

and believe that agencies would rather focus on "creative" that wins awards and dazzles clients than effectively (and measurably!) building brand equity through their advertising.

Perhaps there is a bit of arrogance, too. Perhaps agencies feel that their work on behalf of clients should speak for itself and generate new business.

If this is what they think then I've got news: You better start creating ads that quanitfy the results of those client campaigns and tell prospects why they should choose your agency.

Anyone can create ads that grab attention and/or are "catchy".

Creating ads that effectively communicate core brand values and build brand equity is a different matter.

[Shig Odani]

I agree that agencies overall do little to promote themselves. However, it's a difficult thing to do. First off, it's B2B with an extremely narrow target audience (basically CMOs, brand managers and client-side e-marketing managers). I think that there are very few channels which to reach these people through.

Then, once you've developed a brand message and gotten it in front of these people, I would wonder how effective it would be. Are client-side marketers going to be more influenced more by an advertisement or what their fellow marketing professionals tell them?

I think that at this moment in time, it's really a relationship business. I work with a bunch of vendors and media sites, and none of them advertise their business offering. Some of them work with a publicist, however, to generate some publicity.

Just a final, minor point - Omnicom, WPP etc. are not ad agencies in fact. They are holding companies. I currently work for Wunderman, which is owned by WPP, but all my stationary has Wunderman branding on it, and I don't think my clients know or care that it's a WPP owned company.

[Family]

Hmm, a client has about 100 million possible consumers. Thus, an ad has a lot of potential.

An agency does not have that wide of a base. And most client agency relationships begin internally, through recommendations.
Also, the future of client agency relationships is becoming more focused. We don't advertise because it doesn't work we don't advertise because it's not effecient for us.

[mz]

very insightful piece. however, in brazil it's rather common for agencies to have their share of self-promotion. africa, led by nizan guanaes (of dm9ddb fame) consistently advertises his agency through television, billboards, print ads, etc. they even released a 200-page glossy magazine with actual content last year (in both portuguese and english, no less). not to mention that they are an official sponsor of Cannes Lions.

other big-name agencies like almapBBDO, Y&R, F/Nazsca S&S frequently tout their won pitches and other noteworthy feats in print -- both in industry publications as well as in the general media.

i guess the culture of promoting one's own work really takes off when your competition is doing the same.

now, if any brazilian agency was to wake up to the importance of blogs... but that's a whole different story.