Michael Farmer

Articles by Michael All articles by Michael

• Are Holding Companies Facing An 'Innovator's Dilemma' Threat From AI? in MediaDailyNews on 05/26/2023
  

  If the holding company model is predicated on selling the time of agency people to clients, and AI threatens to replace them with software outputs, what is to be done?

Comments by Michael All comments by Michael

• Agency Review Activity Spikes After Quiet 2020 by Steve McClellan (MAD on 07/09/2021)
  

  Steve,Every "won client" replaces a "lost client," so isn't the "new agency business revenue of $544 million" a misleading figure? Isn't it netted out by a similar loss of at least $544 million in agency revenue?And aren't the biggest client winners also the biggest client losers, since the industry is not  growing? I don't think that the client wins result in market share gains by any particular agencies.The trade press focuses on the "winners" of agency reviews but ignores the equally noteworthy loss of clients that creates the conditions for the reviews in the first place.Furthermore, since new business wins are usually won on the basis of lower prices / fees, the recent burst of agency reviews is probably a sign that there has also been a burst of fee reductions in the industry.This, of course, raises questions about whether the winners are really winners, or whether winning in a burst of agency reviews is just another sign of Madison Avenue's deterioration.Michael FarmerAuthor: Madison Avenue Manslaughter (3rd edition 2019) 

• In-Housing Isn't Agencies' Biggest Challenge -- It's Growth by Sean Hargrave (London Blog on 06/19/2019)
  

  Sean,You absolutely nailed it. Growth, rather than cost reduction, needs to be the new imperative. Decades of agency cost reduction and ‘juniorization’ have crippled agency capabilities, making it more difficult for agencies to give meaningful transformation support to their clients. So, to achieve higher levels of growth, agencies need to negotiate remuneration based on Scopes of Work (something that they do not do) and begin to upgrade their skills. This means investment and more modest margins. Agencies need the support of their holding company owners for this type of program. WPP under Mark Read is already heading in this direction. Michael FarmerAuthor, Madison Avenue Manslaughter

• When Advertising During The Super Bowl Makes Good Business Sense by Paul Legutko (MAD on 01/25/2019)
  

  What a timely and relevant article!Thank you, Paul. One thinks of Burger King, for example. Its sales per store are about $1.5 million, according to published data. McDonald’s is about $2.5 million per store. Chick-A-Filet is over $4 million per store, and it isn’t even open on Sundays. Clearly, Burger King has some fundamental operational and restaurant-related problems. Cleanliness? Menu? Ambiance? Service?The King is probably not a relevant solution. So why all the excitement about BK’s return to Super Bowl advertising after a 13 year absence?Beats me. A waste of money that might be spent in better ways. Michael FarmerAuthor: Madison Avenue Manslaughter

• When Advertising During The Super Bowl Makes Good Business Sense by Paul Legutko (MAD on 01/25/2019)
  

  What a timely and relevant article!Thank you, Paul. One thinks of Burger King, for example. Its sales per store are about $1.5 million, according to published data. McDonald’s is about $2.5 million per store. Chick-A-Filet is over $4 million per store, and it isn’t even open on Sundays. Clearly, Burger King has some fundamental operational and restaurant-related problems. Cleanliness? Menu? Ambiance? Service?The King is probably not a relevant solution. So why all the excitement about BK’s return to Super Bowl advertising after a 13 year absence?Beats me. A waste of money that might be spent in better ways. Michael FarmerAuthor: Madison Avenue Manslaughter

• MediaCom Tops In New Business by Richard Whitman (Mediapsssst on 12/26/2018)
  

  Richard,The focus on new business "wins" may distort the picture, since it is a one-sided measurement approach.What about current business "losses?"MediaCom is part of WPP, and WPP's growth rate has been disappointing.Yet, MediaCom appears to be good at winning new business.Does this mean:    1. MediaCom also loses more clients than others, and the "net" business situation is either flat or declining?   2. MediaCom is heavily discounting its services in order to win new business -- because it is desperate to win?It's hard to say, and the assumption of the "new business wins" article is that new business wins are a good thing, and agencies who win big are strong and good.I suspect that this is not the entirely the case. Fees for new business wins have been in freefall for some time, and new biusiness winners have been eroding their fee bases and their future growth rates.Pricing is a major industry problem.Best wishes,Michael FarmerAuthor: Madison Avenue Manslaughter, an inside view of fee-cutting clients, profit-hungry owners and declining ad agencies

• Burger King, Unilever Tops For Effectiveness by Tanya Gazdik (Marketing Daily on 02/26/2018)
  

  Burger King is #9 in its industry in sales per store, behind Wendy's, Jack in the Box and McDonald's (in the hamburger category). Its sales per store are only slightly more than half of McDonald's. BK's sales per store is completely undistinguished.Furthermore, it was displaced as #4 in the US in fast food sales by Taco Bell this past year.It's hard to see how its marketing makes it the #1 brand, unless "effectiveness in the marketplace as judged by consumers" is completely ignored.They do "cute ads," but these ads are not driving consumers to consume their products on a consistent basis.Your evaluations overstate the effectiveness of BK's overall marketing. They've been in the tank for a decade, and they've run through more than 15 ad agencies.If this is true for your BK evaluation, what about the others? Michael FarmerAuthor: Madison Avenue Manslaughter

• Taco Bell Bumps BK As No. 4 U.S. Restaurant Chain by Tanya Gazdik (Around the Net In Brand Marketing on 02/23/2018)
  

  Ironically, BK was named "Creative Marketer of the Year in 2017 at Cannes, even though their sales per outlet are #9 in the industry and despite being well on its way to being displaced in the #4 position by Taco Bell.It only shows how disconnected the Cannes juries are from commercial realities, as if creativity and marketing can be evaluated and rewarded without regard for actual sales and performance.cutSmall wonder that brands are not growing and marketing spend is being cut.Michael FarmerAuthor: Madison Avenue Manslaughter

• Ad Agency Version 2018: Three Primary Models Are Emerging by Bob Bailey (MAD on 01/09/2018)
  

  Bob,This is a very smart and insightful article. Clients are not paying differentiated pricing for the three types of services, except when they hire management consulting firms for Insightful Expansion. Consultants get premium fees for premium services.Clients pay agencies, though, at commodity rates based on headcounts, using benchmarked salaries, overhead rates and profit margins.This lowest-common-denominator pricing ensures that agencies underdeliver when it comes to Insights. If all pricing for agency services is commodity-like pricing, then it's a joke to think that agencies can offer strategic insights. All agencies get driven to being paid as if they're doing nothing but transactions.My analyses show that they're even underpaid for this!Agency ignorance of pricing is ruining their operations, eroding their capabilities and spoiling their clients, who get used to underpaying.Michael FarmerAuthor: Madison Avenue Manslaughter

• Why Brands Are Asking Agencies -- 'Do We Really Need All These People?' by Sean Hargrave (London Blog on 03/01/2017)
  

  Sean,You really nailed it with this article!  Congratulations. You're 100% right.Michael FarmerAuthorMadison Avenue Manslaughter: an inside view of fee-cutting clients, profit-hungry owners and declining ad agencies.

• British Journalist Defends Kevin Roberts' Position on Diversity in the Advertising Workplace by Richard Whitman (Mediapsssst on 08/02/2016)
  

  Left unsaid in the Kevin Roberts debate is the relatively undesirable nature of the senior agency executive position. The facts are clear: ad agency workloads are growing, but clients are relentlessly cutting fees. Agency people are overworked and underpaid. Agency remuneration is a fraction of what can be earned in ad tech and management consulting. The holding companies squeeze their agencies for profits, which in many cases can only be generated through agency downsizings. Who in their right mind would seek a senior executive position? Only a very brave individual -- woman or man -- would want to take this on, and part of the responsibility would entail completely overturning the way agencies are (un)managed today. It's an outsider's challenge, and it might be particularly well-suited for talented, experienced women who have traditionally been outsiders in this white man's club -- but let's not understate the nature of the challenge! Madison Avenue's Manslaughter is the current condition of the industry, brought about by the long-term management passivity of ad agency senior executives.

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