A recent Ad Age article on “Serial Reviewers” warned clients who frequently oust agencies, like 1-800-Flowers, Quiznos, Chipotle and BMW, are “hurting their brands and risking a bad reputation” in the advertising industry. What the article didn’t say was that CMO tenure plays a bigger part in brand erosion than any agency’s missteps. If clients fix that–they fix a much bigger threat to their brand than a poor agency choice. They might even save a good agency relationship.

The best agency in the world will struggle with a client who replaces its CMO every two years.Take Chipotle: even though they’ve cycled four different agencies in six years, they’ve only recently named a CMO.Quiznos changed Chief Marketing Officers three times in six years. When the C-suite shifts, companies experience a lack of leadership and clear direction–the kiss of death for an agency relationship. And potentially more damaging to the brand than hiring the worst agency on the planet.

Agencies aren’t without fault. Clients don’t make changes when everything works. But if things seize up because of musical chairs in the executive suite tell your agency, because even if you don’t, they know it. It’s human nature to blame the other party and show them the door. Ultimately, client/agency relationships are stronger when both sides are willing to point out their failures. That honesty and transparency may open up a dialogue to fix the problems before the need to change agencies–and that could be good for everyone.

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Hitch is a consultancy that helps marketers hire the right marketing agency.

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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Thanks to Tom and Tallie Fishburne for sending me this cartoon to publish.  Brand Camp has cartoons for any marketing topic you could want.  If you don’t see what you want, contact Tom, he’ll produce it for you.  You can see more of Tom’s work on his Flikr page.  Contact Tallie Fishburne for inquiries on how to license Brand Camp’s content.

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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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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