Advertising and the commodity slurry.

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Advertising agencies have allowed themselves to become commoditized.  In product marketing there are luxury goods, mid-priced challengers and bargain goods, but in the agency business everyone is more or less priced the same. 

Sure, if you hire BBDO or Ogilvy your top line creative people will be more expensive than someone from the no-name middle tier but you get what you pay for and after a year or so the profitability equation seeps in and both type of shops meet in the middle. The commoditized middle.

This is because ad agencies sell labor and stuff (pictures, video, writing, music and coding).  The valuable part – strategy – more often than not is given away.  Strategy and creative win new business but brand strategy often disappears after the contract is signed leaving creative to carry the day.  At that point middle-managers-on-the-rise start to take control.  And tactics take over. That’s when air starts seeping out of the balloon.  Tactics are commodities in the ad business. Apple wouldn’t put up with this. 

What’s the way out?

Ad agencies need to strengthen their commitment to strategy over tactics. They need to build incentives into their contracts tied to the strategic product.  If a client approves work that is off strategy, the client should have to fund a kicker to the fee. A – because it will cause more work.  And B – because the work will be off-piste.  Campaigns come and go…and that’s okay.  But brand strategy should not. Agencies known for their strategic work will emerge from the commodity slurry. Peace!