Logic and Data Do Not Convince C-Suite Executives: Transformational Change Remains Difficult for Madison Avenue
The enduring strength of the industry's creative culture is a formidable barrier, standing in the way of C-Suite executives who know that major changes are required.
Credit: Charles Barsotti, The New Yorker, The Cartoon Bank
Madison Avenue was an amazing place to work during the days of David Ogilvy, Bill Bernbach, Leo Burnett and the Mad Men of the 1960s. Ad agencies were rich, clients were growing, and ad agencies were in charge, driving marketing strategies at their long-term clients. The excitement and wealth of the creative advertising industry was the cover story of Newsweek’s August 1969 issue. If you were an entrepreneur, starting an ad agency in the late sixties was like starting a software or AI company today. Nearly one hundred new agencies were launched in the first seven months of 1969. Each of them strived to lure clients away from the industry’s less-creative agencies. Client wins were very, very important.
Madison Avenue’s cultural foundation sits solidly on two pillars: “pushing the boundaries of creativity,” on the one hand, and “winning new clients,” on the other hand.
Madison Avenue’s culture remains intact. Creativity is celebrated even more strongly than in the past — the Cannes Lions International Festival of Creativity received 30,000 entry submissions in 2023. Along with creativity, client wins are celebrated and reported on extensively. New business development is a major activity for today’s agency C-Suite executives.
The industry’s cultural continuity has survived the body-blows of changes in remuneration (from media commissions to man-hours), the rise of holding companies, the empowerment of Procurement, and the fragmentation of media due to digital and social advertising. These changes have been mastered, but mastery is not enough. These changes have not transformed agency cultures.
Can we ignore the extensive data that demonstrate, beyond reasonable doubt, that ad agencies are playing a losing rather than winning game today?
Agencies are doing more work for less money than at any point in history, creating a stressful working environment for their overstretched and underpaid people.
Client relationships turn over routinely, every 3-4 years. Clients view agencies as service-oriented vendors. Client results, measured in sales growth, are meager.
“Making the numbers” has become the dominant third pillar of Madison Avenue’s culture. Downsizing is routinely used to boost profit margins, adding employment uncertainty as a routine feature of agency life.
Working in an agency is nowhere near as satisfying or as much fun as it used to be.
I have certainly rattled on about the negative direction of industry metrics for many years. In Madison Avenue Manslaughter (2019), I argued that agencies need to measure their growing scopes of work and be paid for the growing work they do rather than accept arbitrarily-determined client fees, which seem to decline every year. In Madison Avenue Makeover (2023) I showed how Mat Baxter, then CEO of Huge, revised Huge’s mission to “create accelerated growth for clients” rather than “provide pure creativity,” and how he abandoned man-hour billing for productized billing.
Logic and data, though, have been ineffective motivators for change.
Culture creates a sense of belonging, and a vast majority of today’s industry information, focusing as it does on creativity and client wins, creates the sense that agencies are pursuing noble ends that are worth fighting and staying for — even if the data tell a different story.
What if the pursuit of employee satisfaction / career longevity, the creation of long-term client relationships and the delivery of improved client performance replace “winning new clients” as pillars in Madison Avenue’s cultural foundation?
C-Suite executives would then have a new and effective basis for transforming their agencies.
They could then reason that excessive work, downsizings and ineffective scopes of work have to be eliminated.
Instead, workloads will need to be measured and used for fee-setting purposes; downsizings will be avoided as management failures, and agencies will strive to work in partnership with clients to bring about performance improvements — rather than merely acting as service-providers who do their clients’ bidding and accept their meager fees.
Refocusing agency cultures to celebrate employee retention and improved client duration would go a long way to restore Madison Avenue to the glory days of the past.
It is time to find new ways to make it easier for C-Suite executives to transform Madison Avenue’s agencies.
We have a choice...
Let AI replace most of us...
Or harness it and do what Farmer says!
AI can help stem the greedy tide of declining profits and high workloads.
But repairing short client relationships will take a level of character and respect ... Requiring equal amounts of therapy and revamping of business models.
Farmer's utopian aspirations are wonderful... But can you really imagine shifting agency culture towards valuing employee satisfaction and improved performance over solely winning new clients?
I can... but only in a fraction of the agencies I've met.
Maybe that's it- fractional everything... The ultimate Hollywood model. Clients have needs and we get managed by a blockchain based AI driven portal of productivity.
Remember, you will not be replaced by the robots you will be replaced by your competitors that know how to dance with them.
This transformation involves measuring workloads for fee-setting, avoiding downsizings, and working in partnership with clients for mutual success.
So we have to retrain clients and agency leaders.... Hmmm.