As co-chairman and partner at Goodby Silverstein & Partners and a member of the Advertising Hall of Fame, Jeff Goodby would be the first to acknowledge that the agency business has changed — and not all for the better. When asked to assess the current state of creative work, the man best known for writing the words “got milk?” expresses both unease and optimism.
“Films and images are made millions of times a day by people all over the world, all of which have changed our feelings about the craft. Are we better at these things than they are? On some days,” Goodby says. “Famousness is different now, too. Every once in a while the things we call advertising become famous, but our creations don’t often pass the taxi test — has your driver ever heard of it?”
Of course, there are aspects of the business that continue to cause some level of friction between client and agency, including billing for creative, relying solely on data, and working with procurement. Goodby, who will speak at the Association of National Advertisers’ Advertising Financial Management Conference, May 23 - 26 in San Diego, addresses these issues.
Q. How should agencies ideally bill for creative? Are you seeing any new models for agency compensation?
A. I think we should work harder to have the client and agency business models mirror each other. We need to put mechanisms in place to ensure that agencies deeply care about client profits, but we also need mechanisms that make clients care about having a healthy, profitable agency. That would make for the long-term relationships we don’t often see now. Long term is good — it means you don’t have to pay your partners all over again to learn about your business.
We regularly offer to tie all our fees to client success, but very few clients take us up on it. Instead, we have bonus structures that allow us to share in their success, but less directly. Much of the problem can be traced back to the ’80s and ’90s, when agency billings were very poorly tracked. Many clients learned from that era; not all the agencies have. We still resist quantifying things, even when it would be in our interest to do so. It’s why SOW [Statement of Work] has silently crept up as fees stagnated or even fell.
It is, indeed, hard to “bill for creative.” But it must be done. It cannot be eliminated without consequences. One tactic we’ve adopted is to get clients to create a modest “blue-sky fund” beyond the planned SOW that encourages us to go beyond job orders and media plans. A lot of our best work for big clients, such as Frito-Lay and Adobe, has come out of this approach.
Hal Riney once said to me, “All of the departments in an advertising agency can help our clients make money, but only the creative department can take one dollar and turn it into 20.” That’s still basically true. But you have to plan for it to have a shot at that 20. And you have to have an agency with a track record of such success. Why shouldn’t one of those cost more? It should.
Q. When developing and evaluating creative, what is the appropriate balance between relying on gut instinct and using quantitative data?
A. As I’ve often told our people, for enough money, our clients will more or less be obtaining the same data as their competitors. It’s what happens after that that makes the difference. Many clients are now budgeting only for the data. They are not sure of the subsequent role of creativity.
Is there a golden ratio of data to creative? I think it varies from business to business. But I am absolutely 100% positive that the creative cannot and should not approach zero. The CFOs who think so will be schooled by the ones who don’t.
Q. CMOs continue to struggle with developing data and analytics capabilities. What role should agencies play in helping the industry overcome this issue?
A.Our agency welcomes any and all data. We collect a lot of it for our clients ourselves. Sometimes we partner with them to engage outside research firms. Beyond that, we conduct a proprietary quantitative sweep into which we can insert any immediate question or problem.
I think the key to data collection is to have a vision up front about what you really want to monitor, then curate the research in real time, and adjust it to your needs. Be open to all kinds of interpretations and analyses. You have to have good people for this.
Q. Has procurement been a friend or a foe to the advertising industry?
A. There is nothing wrong with the basic impulse behind procurement. I think, however, that procurement, like the CEO and marketing, should be responsible for growth, not just restriction and limitation. In many ways today, the goals of procurement people are currently at odds with the goals of the CMO, who is held responsible for big, magical leaps forward. Procurement has no such interest or responsibility.
The ever-shortening tenures of CMOs are rather directly affected, I think, by the squeeze between the CEO’s naked need for shareholder value and procurement’s insistence on blind cost cutting. How to grow falls stressfully upon the CMO (and his or her agency partners). But it should be everyone’s responsibility.