I hope one day I have business worth defending. I have read plenty on the costs of defending and pitching new business. I have seen Agencies walk away from contracts worth hundred's of millions. You only make that decision if the Agency-Brand relationship is dysfunctional or antagonistic.
Often by that time it is hard to repair something that is broken. But that is not always the case.
It would be bad business practice for a company spending tens to hundreds of millions a year on advertising not to look at other Agencies or at least hear their pitches/advantage claims. You always want to have best fit and keep your Agency from becoming passive. When this occurs there is a good chance the incumbent will keep the business. If your operating honestly and in the best interests of your client all the time, there should be a good relationship between the two parties.
Whether or not Mindshare not only defended their Unilever account for the US and gained Canada Media Buying duties as a strategy or lucked out, it should be strategy. A review should be looked at as a prime opportunity to not only defend, but increase your market share with that client. The major advantage is while the competitors will be showing what they 'would' do for your current client, you get to show everything 'you have been doing' for the client. And if you have been doing a great job this is the perfect time to ask for more business.
Think about the potential to use guilt ethically and honorably without much effort. Your being asked to spend money to defend business your excelling at. Your client knows this. And if your working together properly they will feel like a partner, who is being forced to look around. Kind of like your dating someone who insists every 2 years to date other people just to ensure they are with the right person. Then when they realize they are they feel bad and buy you gifts or take you out to make up for it.
Obviously Agencies are not pleased when they are requested to defend in a 'review'. They know whether they have been performing and if they have been, this is a great time to gain business.
Tuesday, February 9, 2010
Thursday, February 4, 2010
The Convoluted Advertising Ecosystem
Yesterday I wrote about the Media/Entertainment world. Today I wish to discuss the world we operate in...Advertising. I am new to Advertising. Only 2 years in and I have an outsiders view. My background in B2B Sales, Business Development to Major Industrial Businesses like Lockheed Martin, Chevron-Texaco, Exxon-Mobile, Raytheon, Ford Motor Company etc really is completely foreign to Advertising to consumers. I have a Finance Degree but my social life is mostly around creative types in music, art, performers etc. Since I have always championed my customer, always sought to add value, and refused to take money just because I could unless I helped my client, I am actually the type of person the staid and entrenched entities in the Advertising-Media World love and loathe. I can help a Brand focus better to maximize their Ad Spending. I can help an Agency prove their worth to Brands to help them increase their value which always seems to be fuzzy.
The biggest issue with marketing is two fold. First is how do you connect marketing with sales. How do you value the different areas to prove you spent the Brands money well. Secondly is how complicated media plans are, especially today and now they are getting even more complex. To top this all off Agency's tend to specialize in certain niches like Mobile, Digital, TV etc, as well as for the actual Media Buying. And when you operate on a national scale combined with the fickle and chaotic decisions people make when they buy, I truly feel this is just as complex a task as when I worked on Missile Defense Programs for the Department of Defense.
Plus there is competing interests all over the place. I might tell Pepsi they can cut their advertising budget by 15% and they won't lose a penny in sales. Pepsi's Agencies will hate me for this reduction in revenue...even if it is true. It is not in an Agency's best short term interest to be honest if it means reduced billings and profits to be honest. But not being honest leaves you open to being exposed and have your business put out for review, which for long term is not in your best interest. This is why the review process sucks and hurts incumbents. Is the reason for the review a problem with creative or a problem with costs in the view of the Brand's CFO. As much as all you Creative types hate us Finance types, we control the purse strings. And while you may feel we aren't willing to spend money to make money, you should go see the expense reports for the sales team. It is the inability to measure the return on investment that creates all this chaos. And Brands and Agencies feel helpless.
Think of a nationwide media blitz for an upcoming Blockbuster Movie. You can spend all you want and force feed the information to the consumers but if the movie sucks it will bomb. How many times do I need to see a trailer? If I see it 25 times isn't 20+ of those times wasted money? And billboards and poster work across the nation? How do I know the placement is good? No one can do that on a massive scale. No one not even a media buyer/planner. They trust the local folks and take their word for it. And what about digital? My trailer had 1 million hits on You Tube. That was free yet I was told 20 million saw the TV trailer but that can't be proven because we are not in people's living room.
So a CFO who see's that his star salesperson spent $25,000 in entertainment expense brought in $30 million in sales. But the Ad Agencies can't truly prove their value which creates friction, distrust, and animosity...even if the Agency is kicking ass on behalf of their client. and sadly a product that sells itself, like an IPod often the Agency takes credit. And when the Agency kicks ass, but the product fails because it sucks, they get blamed.
At least with Missile Defense I can see if the interceptor hit the target, and how often.
The biggest issue with marketing is two fold. First is how do you connect marketing with sales. How do you value the different areas to prove you spent the Brands money well. Secondly is how complicated media plans are, especially today and now they are getting even more complex. To top this all off Agency's tend to specialize in certain niches like Mobile, Digital, TV etc, as well as for the actual Media Buying. And when you operate on a national scale combined with the fickle and chaotic decisions people make when they buy, I truly feel this is just as complex a task as when I worked on Missile Defense Programs for the Department of Defense.
Plus there is competing interests all over the place. I might tell Pepsi they can cut their advertising budget by 15% and they won't lose a penny in sales. Pepsi's Agencies will hate me for this reduction in revenue...even if it is true. It is not in an Agency's best short term interest to be honest if it means reduced billings and profits to be honest. But not being honest leaves you open to being exposed and have your business put out for review, which for long term is not in your best interest. This is why the review process sucks and hurts incumbents. Is the reason for the review a problem with creative or a problem with costs in the view of the Brand's CFO. As much as all you Creative types hate us Finance types, we control the purse strings. And while you may feel we aren't willing to spend money to make money, you should go see the expense reports for the sales team. It is the inability to measure the return on investment that creates all this chaos. And Brands and Agencies feel helpless.
Think of a nationwide media blitz for an upcoming Blockbuster Movie. You can spend all you want and force feed the information to the consumers but if the movie sucks it will bomb. How many times do I need to see a trailer? If I see it 25 times isn't 20+ of those times wasted money? And billboards and poster work across the nation? How do I know the placement is good? No one can do that on a massive scale. No one not even a media buyer/planner. They trust the local folks and take their word for it. And what about digital? My trailer had 1 million hits on You Tube. That was free yet I was told 20 million saw the TV trailer but that can't be proven because we are not in people's living room.
So a CFO who see's that his star salesperson spent $25,000 in entertainment expense brought in $30 million in sales. But the Ad Agencies can't truly prove their value which creates friction, distrust, and animosity...even if the Agency is kicking ass on behalf of their client. and sadly a product that sells itself, like an IPod often the Agency takes credit. And when the Agency kicks ass, but the product fails because it sucks, they get blamed.
At least with Missile Defense I can see if the interceptor hit the target, and how often.
Wednesday, February 3, 2010
The Convoluted Media Ecosystem
I have been thinking about this for quite a long time. My view point comes from several places. First is my Finance Degree and CFO view. Second is my many years in Sales/Business Development. Third is my new Advertising Career. Fourth is my view as a consumer. When it comes to Business Models Media is the hardest to be successful in because of all the competing special interests. It is almost like Politics. People love entertainment. They spend a lot of money on entertainment. And without the content the rest of the ecosystem is dead. We all love great content.
But to create great content and be profitable you need your revenues to exceed your costs. And the middlemen inflate the costs and your end user views of your content's value after all the middlemen add their take onto it. And there are parasites like Journalists and Media that use the content for monetary gain without being forced to Ad Value. But the parasites can often Ad more value to the content creator than the middlemen. And everyone wants to defend their business/revenues even if you don't have an inalienable right to exist. See I told you Convoluted.
One great example is the music industry as it was vs. how it is now. The old industry is crying because revenues are down. But consumers and the content creators are consuming and selling more than ever, just cutting out the old industry middlemen. Who is being cut out? Record Labels. Packaging Companies. Radio. Media like the Grammy's. Do we need them? Not really. When CD's cost $14 each the artist only got $1. $4.50 was for packaging. And a band with 4 members plus management if they sell 1 million units making them platinum only made $1 million to split between them all. A nice bit of change but won't make you rich.
But now I can create music. Promote it free online. Sell it myself. And tour and make as much money or more than when I had all the bloat.
What about TV-Cable? Similar situation. They create something but added onto the cost is the technology to send it (cable, internet), the technology to view/consume it (TV's, Sound Systems, Computers). The media that is used to promote it all.
And while Ads can help reduce the costs for the entities that make money off the Ads, the rest of the entities really don't care. TiVo and DVR OEM's do not care about Cable Channels needing Ad revenue, or Cable companies needing subscription revenue. Apple doesn't care that I-Tunes destroyed the CD packaging industry. Or the internet/social media destroying the Record Companies/Radio niche of promoting music. But the fact remains if the people who make the content can not make a profit, the whole ecosystem collapses.
So what really happens is the creators cut costs. That is why TV is filled with cheap reality shows vs stellar content. If we are only willing to pay enough to support crap we get crap. See You Tube! And sadly as sheep most people watch the crap, because they refuse to either not watch and find something else to do, or they have decided they will watch anything. But this does a big disservice to the content creators and artists who are forced to dumb down what they do just because we are all lazy and cheap.
Monday, February 1, 2010
Visa does incredible campaign in Grand Central for Olympics...why?
Link to Source
We all have enjoyed the battles between Visa and Master Card over the years. But the whole premise and whether it is money well spent is subject to debate. The reality is that the cards are not theirs, they are Bank Cards. And each card has different rates, terms, and benefits depending on the Bank. Visa/Master Card make their money via transactions. Banks via keeping a balance. Most people decide which card to use based on the credit limits/how much credit they have, benefits (like Airline Miles) and the card terms. Visa/Master Card have nothing to do with these things. Since there is no competition on transaction fees at point of sale most people really don't care about Visa or Master Card when at the point of sale. So is the money spent in sponsorships and advertising really well spent? Wouldn't kickbacks or lower transaction fees to consumers be much more well spent?
We all have enjoyed the battles between Visa and Master Card over the years. But the whole premise and whether it is money well spent is subject to debate. The reality is that the cards are not theirs, they are Bank Cards. And each card has different rates, terms, and benefits depending on the Bank. Visa/Master Card make their money via transactions. Banks via keeping a balance. Most people decide which card to use based on the credit limits/how much credit they have, benefits (like Airline Miles) and the card terms. Visa/Master Card have nothing to do with these things. Since there is no competition on transaction fees at point of sale most people really don't care about Visa or Master Card when at the point of sale. So is the money spent in sponsorships and advertising really well spent? Wouldn't kickbacks or lower transaction fees to consumers be much more well spent?
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