10 red balloons have been hidden around the U.S. and you have to find them.  How long would it take you? Could you do it in 4 weeks , 6 months, a year?  MIT Media Lab’s Dr. Riley Crane took that challenge, which last month was presented by the Pentagon’s DARPA, and with his team, used social media to accomplish the task in just 8 hours and 52 minutes!

DARPA’s intent for the balloon study was to determine if “in the 40 years since the creation of the internet it could actually be used to solve real world problems.“ So what does this have to do with advertising?  Arguably, selling more Coke is not a pressing world problem for anyone but Coca Cola, Inc. But there’s an interesting parallel between the search for those 10 balloons and the advertising industry.

Ad agencies are facing real challenges to their value proposition and the outcome of the DARPA experiment is indicative of how social networks have changed the advertising industry forever.  DARPA’s experiment (and MIT’s approach) can offer clues about how agencies can make this industry shift work for them—rather than feeling threatened as the ground moves below their feet.  And it’s a cautionary tale for clients as well.

The new big idea

Social networks (and by extension, crowdsourcing) have helped bring about the democratization of the big idea, which is probably one of the biggest shifts to our industry in the last 50 years.  Marketers now know their agencies aren’t the sole generators of solutions.  This shift is changing how clients compensate their agencies—or at least the value placed on previously highly-valued goods—like the big idea. Traditionally, advertising agencies focused on finding balloons—the big idea—and clients paid handsomely for it.  In today’s hyper social-networked world, often the strategy is the big idea.

In the case of the DARPA experiment, strategy won the day.  Someone (MIT) had to devise the system or architecture that allowed the solution to be found. In other words, DARPA wasn’t paying for the balloons to be found (the apparent solution) they were paying for the creation of the process. Today many marketers are less interested in paying agencies for ideas—they would rather pay for strategy, for process, and the broad thinking to get to the solution.  How does this change the value of creativity?

Elton John famously wrote “Your Song” (one of his biggest hits ever) in about ten minutes after his lyricist partner Bernie Taupin penned the words over breakfast. By today’s valuation of creativity, Elton and Bernie would probably have been paid 25 bucks for that masterpiece. This strikes fear into the hearts of many creative people because if agencies can’t charge well for their ideas, what do they have to sell?

Clients should look to their agencies as strategic consultants, not just idea factories. Yes, clients still need ideas and good ideas still sell stuff, but the fact that ideas are likely to come from anywhere goes against having an agency if ideas are all you want your agency for. It’s like hiring a piano teacher to sit in your living room and play you tunes. Real agency value comes in having a partner with broad perspective and insight on your business, a team with peripheral vision, foresight and hindsight who is strategically responsible for making sure the whole plan and execution of that plan is greater than the sum of its parts.  To use another music analogy, if the CMO is the conductor of the orchestra, the agency is the Concertmaster. So in the search to hire your next ad agency, find an agency with demonstrated strategic ability–one that uses social networks to their advantage to tap creativity and good ideas, wherever they live, not the ones trying to be balloon finders.

There’s a story about a family who runs out of gas in the desert a few hundred yards from the only gas station around.  The station owner comes up with a gas can, and charges them $25 for gas, $25 for the gas can and $150 for labor.  The stranded travelers question “what labor?” The attendant responds, “All the thinking to add it up”.  The gist is this:  clients should be paying agencies to think, not necessarily execute. Agencies need to be willing to use all the tools currently at their disposal including sourcing ideas across social networks. Clients will more likely value an agency who is not threatened by, or needing to be, the only one with the big idea—because they aren’t anymore.

It’s tough out there for marketers on both sides. Agencies, in particular, are having a rough go of things amid a complicated mash-up of contracts, compensation, and collaboration.  So what does this shift mean for the future of the advertising agency and the clients who hire them? DARPA’s experiment and MIT’s solution may offer some clues:

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Citrus is a northwest ad marketing agency with 26 people with offices in Portland – Bend – Whitefish, MT (yup, handles the Lottery plus) and soon Memphis. Peter Levitan is its founder. I first met Peter in a recent ad agency search I conducted.

In their capabilities presentation, they were the only firm who actually sent in questions for the prospective client to consider. That was impressive. Let’s see if their answers to our 7 questions are equally impressive. I have to admit, I like the answer to question # 4 and no coaching was required! I also loved their “Dear Agency“ self promo piece.

What was the aha moment when you realized “our company needs to be doing things differently than we have been?”

We didn’t have an “a ha” moment so much as an “a ha” evolution.

In recent weeks, we have gone thorough an internal agency positioning review. We’re finally taking the time to do for ourselves what we do for our clients. This is not easy in the advertising/marketing/digital space because agencies tend to say the same things. Seems like it’s always the same blah blah. I suspect no one knows this better than Hitch.

During this process, we examined a range of positions that came from our brains as well as from the craniums (crania?) of other agencies. We also did quantitative online research with clients and learned that most think that all agencies are full of it. Just kidding. Well, sort of. Truth is, many clients and prospects think all agencies sound the same—no matter what we say.

So we decided to do something bold. Something different. Something a little crazy. We decided to tell the truth. We decided to tell the world what we really do for our clients: We move people. We move people through rational and emotional messaging. We move people from apathy to emotion, inertia to action (a purchase is among our clients’ favorite actions).

I guess you could say that our “a ha” moment revolves around the concept of MOVE.

What books are on your night stand or great blogs on your Google reader.

I believe I’m part of a dying breed: the magazine reader. I am committed—to the point of being slavish—to reading at least 30% of all New Yorker issues (near-impossible if you work), The Atlantic, The Economist, the last issue of Gourmet and stolen copies of Communication Arts.

The last great book I read was, in fact, a picture book. It was a look at how Avedon shot his famous series and book “In the American West.”

Works from the Blogosphere include Jeff Jarvis’s BuzzMachine (we invented the Internet together), random Blogs from the AdAge Power 150 blog list and “Things marketing people love.”

Give me an example of marketing you think is brilliant and why?

I always admire the speed of New York umbrella salespeople to hit just the right intersections when it starts to rain. Super targeted. Well-timed. Compellingly stated. Isn’t this what we all strive for?

We’ve all read that the pitch / RFP process is broken. Many agencies aren’t even interested in competing in pitches. Do you see an alternative to this process?

I’d like to make three points on pitching, all of which are derived from years of pitching as director of Saatchi’s business development group and now as the owner of a small agency.

First, most clients don’t have a clue about what they’re really looking for. It’s not their fault. They’re just trying to select an ad agency based on what are ultimately subjective criteria. Do I think that the agency is smart? Do I believe that the work is strong? Do I like them? Unless we’re talking about digital or direct response agencies that can deliver quantitative stories that directly relate sales increases to marketing activities, these traits don’t help selection a whole helluva lot. Ditto most case histories.

Point two: clients should use an agency search consultant. Selecting an ad agency is an important decision. Chances are, Bob in sales or Margo in procurement just aren’t going to cut it. (No offense, Bob and Margo.) Neither will a CMO who does a search every ten years. Hire an expert, please. I beg of you.

Finally, a note to agencies: Get. Over. It. Most industries use RFP’s. Just get past your egos and decide if pitching the potential client is a sound business decision. Determine if you have a chance based on your work and category experience. Look at the odds and decide if it makes financial sense. Did it make any financial or rationale sense for 1,284 agencies to pitch Zappos?

What does the agency of the future look like?

The agency of the future employs robots and goes to meetings in flying cars. Kidding.

Here’s something I’ve been thinking through for a while. I live in Portland. Portland has one of the highest populations of strategists, creative thinkers, copywriters, art directors and digital magicians in the country—maybe the world. What if we found a way to harness this creative and strategic power under the umbrella of brilliant management to deliver the new agency: Portland, Inc. I’d love to pitch Portland against Goodby, Weiden, Crispin and Ogilvy. Why not— they all use Portland freelancers anyway!

What do marketers need that agencies are not giving them?

Marketers need more smart ideas that will drive sales.

This dearth of sales-driven thinking isn’t due to agencies’ oversight. Marketers have made their own bed by deflating agency profit margins and reducing timeframes. (I just had a major hotel chain ask for a proposal to develop a new website for launch “late this year.” Um, its mid-October [when I'm writing this].) Simply put, clients have reduced our ability to spend the time required to develop the big ideas that are required to really win in today’s complex media space. Period.

Who do you admire and why?

Paris Hilton. I mean it. I have never seen someone build such a strong brand on so little. It was magical.

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Trevor Graves is a founding principle and the GM of Nemo Design.  I got to know Trevor a bit better recently when they were on the shortlist for a recent ad agency search I conducted.

NEMO lives Youth Culture.  From its roots as a three man shop in Portland, Nemo has grown into an internationally recognized marketing/design firm, with multi-million dollar clients like Nike, HP, ESPN, Fuel Television network, Smith optics, Bell helmets, Timbers MLS soccer, Salomon and Timberline–to name a few.

When asked that makes NEMO different, Trevor says “We never make ads: advertising is fake, it’s clutter, and it’s ignored by most. We touch people through art, we communicate emotions, we engage in genuine conversation, we create real experiences that real people will find interesting, inspiring, useful and memorable. We make the cash register ring, without trying to sell anyone.”

With respect to all the recent “label” discussions about agencies, NEMO eschews labels.  They become whatever kind of agency they need to solve problem.  I like that.

To everyone who wonders about the future of agencies and whether they’ll stay around NEMO says “We are paid for having vision (we see the invisible) and a Point of View (we can explain what it looks like, what it means, and why it matters). ”  In your face, cynics.

What was the aha moment when you realized “our company needs to be doing things differently than we have been”?

Is there ever one defining AHA moment? To be relevant in culture and in business, you need to have AHA moments all the time. We live in the age of change. So, the big lofty AHA may arrive and it’s very subtle. Growing up in action sports, you’re intuitively aware of nuances and you’re constantly moving. You see everything in a shifted paradigm: what can I do with this? What can I make here? What line can I take? This awareness is hardwired into a lot of the people at Nemo and it helps us tremendously; you learn to recognize change in the world and how to creatively embrace it, how to be curious and provoke the new. Our clients constantly look to us to help them see the invisible opportunity and create an impact with it.

What books are on your nightstand or great blogs on your Google reader?

The book that is literally on my nightstand today is “Built to Last” by James Collins and Jerry Porras. One of the dangers in this industry is defining your success and what your stand for through your clients, rather than having a great sense of your own core ideology. As for blogs and such, I am ADD. The snack-sized bites coming through my Tweedeck are in the same vein as things you’d find on the Hitch blogroll.

Give me an example of marketing you think is brilliant and why.

The world I came from, “marketing” was a dirty word and something not to be trusted. Marketing meant fake. The real impact came from the people and brands that were all about adding to the culture: Participating, connecting, and celebrating a lifestyle. I use that filter to judge what we call “marketing” today. Is it real, is it making real change and are people feeling it? Favorite examples are the iPhone, really centering around product as message, and the Obama campaign. The simple slogans of Change and Hope, the use of a logo mark,  and the social media was game-changing.

We’ve all read that the pitch / RFP process is broken.  Many agencies aren’t even interested in competing in pitches.  Do you see an alternative to this process?

I am going to make a Mad Men reference, please forgive me. Season 3, Episode 7.  Don Draper is called into talk with Conrad Hilton in his Presidential suite. Conrad asks Don to take a look at some mock up of ads he has on the coffee table.

Conrad- “What do ya think”

Don- “I don’t think you would be working in the Presidential suite if you worked for free.”

Conrad, surprised- “This is friendly”

Don- “Connie, this is my profession, what do you want me to do?”

Conrad smirks, taken aback that Don didn’t just roll over and give him the free advise he desired.

Conrad- “ I want you to give me one for free.”

With a poetic pause, the camera pans low and looks up at Don as he pulls a smoke and lights it with a cool guy style. The camera pans back down to an illustrated mouse dressed in a top hat, and a marker rendering of the exterior of the Hilton Hotel. Don exhales. In a confident straightforward response, he replies.

Don- “I don’t think anybody wants to think about a mouse at a hotel.”

Conrad Hilton is startled and dazed. Don has earned Conrad’s respect and is asked to symbolically sit at the table with him to discuss the advertisements, peer to peer. This is an opportunity we as agency people are asked to do in the RFP process yet we give away our spot at the table by giving our service for free. I think many of us have read Blair Enns “Win Without Pitching” and there are some insights in the work that help the community of agencies to commiserate as victims about how unfair the RFP process can be. We can’t control the world but like Don Draper, we can control our reaction to it.

Let’s look at the RFP process from the client side and see where we as the agency can have our own Don Draper moments. The average relationship between agency and client is about 4 years. What that means for the client is that they are not practiced or even up to speed on what agencies are out there, who is a good fit for their band and even practice on how to “court” a great agency. Like Mr. Hilton, the client can be a bit unsure and wants to avoid what Enns calls Buyer’s Remorse. They don’t want to hire the wrong firm. They ask the agency to pitch free ideas because the execution is very literal and makes it easier for them to compare agency to agency. I get it. What Nemo has done is set up a routine or process around qualifying the lead.

1. Is this client a good match for Nemo? Nemo is an Action agency and it makes sense for a client to come to us to us for our expertise. A Hotel like the Hilton might not be a good fit for Nemo however a resort like the Black Pearl resort in the Caymen Island would be a good fit for Nemo, http://www.blackpearl.ky/
2. Budget. If they are not willing to go over a scope of work and budget then they are showing signs of a bad client and we would put up a red flag at this point. If they have a small budget, we ask to work around an actual contest of pitching. Our margin gets sucked up in handing out free work when there isn’t more money to offset the pitch once and if we win the account. $500k is a budget that pitching starts to make sense for Nemo. Smaller than that is a project and handled differently.
3. We ask whom else are they asking to pitch. I am not sure why all the secrecy around this topic but it is fair to know the landscape. If a client is asking for something for free, I want transparency of who else is on the short list. This is because if we perceive any of the competition is a better fit for the client’s needs, we are the first to endorse their service and save ourselves all the expense and inefficiency of pitching.
4. If the client has a smaller budget and the work lines up and the client is still in the “Buyer’s Remorse” mode, we suggest doing a small, real project to see how the relationship works first hand. We have also done in depth case study reviews to help clients understand how we have worked with other clients and how we might work together.
5. We try to have the actual stakeholders present rather than just the marketing department. The territory is not the map.

What does the agency of the future look like?

The agency model I see reflects our vision of what Nemo was born to do. Fast, smart, passionate and well connected. We keep our core team full time to insure our branded look and service, then ramp up around them with experts and freelancers when needed. There are so many talented creatives in the market; it makes managing a business much smarter. We can hand pick a SWAT team of experts to tap for consulting in short bursts. Hollywood works this way.

I also see the best creative agencies contributing more to culture; making their own brands and content, taking more risks and sharing the rewards, collaborating and experimenting. Who wants to play?

What do marketers need that agencies are not giving them?

Marketers need their agencies to offer emerging rates for services that they want to grow into. The old cliché states that you can’t get the job without the experience and you cant get the experience without the job. Your agency understands your brand and with the ability to expand that service you both win. For an example, if you were an interactive shop, extending into a social media service wouldn’t be a huge leap of faith. It is fair to pay that firm less for them to gain the experience on your brand and in return you as the marketers get a deeper service at a discounted rate. A win-win for both parties.

Who do you admire and why?

Amelia Graves. She is our 5-year daughter. I guess I am getting to maturity to be able to observe her world and how she might see it. She is imaginative, curious about the world, she lives in the present with no concern for the future, she has no concept of money, she breaks out in song and dance with no fear of being ridiculed. When she plays with her toys, she is lost in an endless imaginary world. My selfish side wants to bottle that energy up and use it to further my agenda in the real world of constantly needing to invent more creative for clients. The other side of me admires this innocence for what it is and knows that she can own that space and time.

“All children are artists. The problem is how to remain an artist once he grows up.” - Pablo Picasso

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I help companies find their ad agency –An Agency Search Consultant.  It’s a great gig.  I love it.  I’m good at it.

Usually I hear from CMOs, Marketing VPs, start-up companies, established brands.  Today I got a call from a Top Chef!  After the surprise wore off, we had a great chat.

Since we try to keep searches confidential, I’ll decline to say who it is.  For now, I’ll just call them “Chef”.

I enjoyed watching Chef this season as they moved through the competition and was sad to see them eventually go.  But, that’s the way the cookie crumbles.  (I’ll try to avoid any more bad food puns.)

Suffice to say, Chef is talented, engaging, has a great story and is smart.  Smart because Chef wants to capitalize on their recent fame and continue to build their personal brand–and now is the time!  Besides that, I’m always up for a new challenge–and heck, it sounds like a lot of fun!

At this point I’m reaching out beyond my agency network to connect with specialists to help find “Chef” the right person, persons, or firms to pump up their brand.

This is completely preliminary. I’ve not had a detailed discussion yet to know “Chef’s” goals.  At this point, I’m just trying to find out who’s out there in preparation for our next call.

I envision getting “Chef” connected with a speaking bureau, an agent, a social media consultant, a public relations specialist, a publisher (think we may have a writer already), perhaps even a few brands who’d be interested in sponsorships.  At this point, all ideas are on the table.  I’ve already reached out to some folks I know, but perhaps I should know about you?

Email me if you’d like to discuss this further: david [at] marketinghitch dot com.

I started getting to know HL2 in a recent ad agency search I conducted for a client in the Pacific Northwest.  Their clients include HTC, SBC, Microsoft, HR Block, ATT Wireless, Hotels.com

There were a few different long chats with Don Low, one of the founding partners which gave me a lot of insight into this group of 70 creative professionals, but I really started to get HL2 watching the pieces in the 4th chamber–more so than seeing their work.

I’d like to hang out at a Fat Burger or shoot hoops with them (I think I could stuff the TaxCut box) –but apparently they’re also pretty good at that marketing thing.  Founded in 1994, they’re more fun than most 15 year olds you know–and they won’t talk back or steal your car.  OK, they won’t steal your car.

What was the aha moment when you realized “Our company needs to be doing things differently than we have been”?

My business partner, Tom Horton says, “Only through suffering do we become wise”. While we love new business wins, it usually takes a major loss for us to get pissed off and make dramatic changes. Two years ago we lost a major pitch and in the ‘loser’ call we heard, “We loved HL2 but the other agency just had a stronger analytics methodology”. We now have an analytics group of 8 and every campaign in the office has accompanying KPI’s with a corresponding dashboard for reporting. It’s transformed our business and the new business effort has never been stronger.

What books are on your nightstand or great blogs on your Google reader?

Soldier of the Great War by Helprin, A Distant Mirror by Tuchman and biographies of Mark Twain and Einstein. My personal reading takes precedent when I get home.  But I’m also working through a book called Crowdsourcing by Jeff Howe. At work I spend time with a few key blogs – Seth Godin, the Dachis Group, Ad age and the Web Analytics blog.

Give me an example of marketing you think is brilliant and why?

Sprint is giving it a good go. Coke media is extremely focused and disciplined. I like the traction that Bing is getting as a start up brand.  The Nike+ Join the Race campaign is experiential and inspirational.  Each of these brands has deployed a multi-disciplined approach that spans TV to event promotion and social media.

We’ve all read that the agency RFP process is broken. Many agencies aren’t even interested in competing in pitches. Do you see an alternative to the process?

I actually believe that, for many companies, the RFP levels the playing field and brings new agencies to the table. I believe you win the work you deserve. Either you’re digging deep, investing and setting up your agency to win or your coasting. The RFP process has allowed HL2 access to clients we never would have met on our own.

However, all clients don’t need to go through this formal process (especially the clients we’re currently pitching). Meet with 4-6 select agencies, get to know their culture, see their work, learn how they think and narrow to two. Then ask for proposals and presentations. While this is more legwork for the client initially, the long-term relationship is more likely to stick. It makes no sense to sit in a room and review 20 written proposals in today’s marketing world.

What does the ad agency of the future look like?

Lean, mean, smart, resourceful, marketing saavy, focused on the numbers, uber-creative.

Yes. That about sums it up. With a really cool space and an interest in the client that goes beyond billable work.

The agency of the future will need to spend more time looking for ways to tell stories and exploit technology to deliver great experiences, participate in the conversation and bring real value to consumer.

What do marketers need that ad agencies are not giving them?

Love. They’re not giving them love. Unconditional, immutable love. I’m-waking-up-in-the-morning-thinking-about-your-business kind of love. As agencies are working to wean their business model away from large media commissions and making their nut on fees, they are squeezed for talent–creative, account, planning, production, analytics talent. Larger agencies are no longer able to over-service accounts like they used to because there just isn’t enough money there. Clients stop feeling the love. Today’s agency is learning to be more nimble and is working to create a culture where the every employee is working to deliver superior strategy, creative and service.

Whom do you admire and why?

Winston Churchill. Primarily because he is proof that you can lead when you get old…. (Many historians now think he was suffering from pre-senile dementia while he was the PM. I think Winston; either drunk or affected was better than the rest of us with all our wits). Churchill is history’s portrait of resilience. A drive that never quit, unwillingness to compromise and foresight that saved the world.

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