Ad agencies need better advertising: 101's Laurence Green on why positioning should be more important than pitching

 
Will Railton
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The problem is that advertising is a village. We don’t step outside it and ask: why are agency margins at an all-time low?

Our industry conversation has swung too far from long-term to short, from strategy to tactics, and away from the alchemical power of great creative,” says Laurence Green, founder of creative agency 101. He has been critical in the past of the fact that pitching has become the default method for procuring agencies’ services. And he believes something needs to change.

Earlier this year, 101 made headlines when it parted ways with Kettle Chips. But what surprised Green was that his decision was considered newsworthy. “It would be perverse for me to say that our vision for the brand was somehow better or more commercially astute than the client’s, but we were simply heading in different directions. Agencies aren’t often on the front foot with clients. It shows how the industry has become cautious.”

Pitch imperfect

Companies don’t enlist the services of a law firm or an accountant in the same way they do an advertising agency, he says. And the normalisation of the pitching process is putting strain on agencies, wasting their resources and those of their prospective clients.

“If a client decides to run a pitch, they’ve probably realised how hellish the next three months are going to be, so they’ll hire an intermediary to run the process for them. Then they have to establish a long list of 10 to 12 agencies, set an exam question, and whittle it down to a short list. Those short-listed agencies have to be given access to a firm’s data and staff.”

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On the other side, agencies are forced to develop their ideas fully for a pitch they may end up losing. “If you’re not selected, you’ve given up all your strategic and creative work in the dance. And it distracts you from your obligations to your existing clients.”

“The problem is that advertising is a village. We don’t step outside it and ask: why are agency margins at an all-time low? When I started in the industry 25 years ago, a graduate starting salary was similar to those of other professionals in the City. Martin Sorrell has warned that agencies are being cut to the bone, and that one day, agencies won’t be able to provide the talent and flexibility clients need. But advertisers such as Mars’s former chief marketing officer Bruce McColl have said the same thing.”

Advertise the agencies

If agencies spent less time and money on pitches, says Green, they could put more into marketing themselves. “Currently, agencies want market share, rather than to position themselves as premium-priced but niche players.”

He thinks segmentation of the industry is long overdue. “Specialisation could occur around different categories, such as food, or around a particular output. That could be emotionally-led TV, or fast turn-around. For 101, it’s organising ideas which allow clients to behave in a coherent and consistent way.”

When Sainsbury’s relaunched discount supermarket chain Netto in the UK, 101 underscored the Scandinavian ethic which would help distinguish its shopping experience from that of Lidl and Aldi. “It was more than the advertising end line. It was something the chief executive could use when talking to the media. It ran through everything from recruitment in local stores to merchandising.”

Brand equity

The prize is a strong brand which will pay dividends to a client over 10 or 20 years. “Advertising will rarely generate enough short-term sales to pay back what you have put into marketing in the short term. It’s why Warren Buffett buys Coca-Cola and Kraft Heinz.”

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This has been forgotten, thinks Green, partly because of the recession. But also due to the sense of immediacy which digital has thrust upon advertising, producing a false competition between advertising and digital agencies and decoupling creative from media.

Media and creative will have to unite behind a single higher agenda. It’s not about having a single agency, he says, but a full-service ethos which ensures all a client’s agencies play as one team, in the service of a brand over the long term.

Green doesn’t think that publicly-listed companies which have to report quarterly earnings reports are necessarily less likely to view their brand as a long-term asset. But it’s no coincidence, he adds, that John Lewis has both a unique partnership model in which all staff hold a stake, and has produced the best brand advertising of the last five years. “It sounds obvious but it’s easy to build a brand for a company which understands that a brand can have value in perpetuity.”

It’s often a matter of leadership, thinks Green. He points to marketers like Martin Glenn, the former chief executive of United Biscuits. In the first half of 2014, McVitie’s “Sweet” campaign increased return on investment by nearly 90 per cent. “Naturally, if a firm is run by a marketeer, the work of its agency and marketing department gets more of a stage. But if a business is run by a chief financial officer, advertising is often viewed as a cost.”

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