In past episodes, the media split and narrow business definition have been identified as key factors for the value depletion of the advertising business. Truthfully, this story begins much earlier, connected intrinsically to the way we were paid and the way we worked, as a logical outcome. Modern managements inherited this overwhelming legacy and were thus unable to overturn the tidings of the house.
Let’s start this unavoidable argument with the inverse correlation between value and choice. Whenever any creation or recommendation is unique and solitary, its perceived price is high — be it a piece of art or a legal advice by Harish Salve. Equally whenever there is a choice that is abundant and exercisable by both creator and customer, the perceived price gets lower — be it a machine-produced product or a co-created assignment with a local carpenter. Management Consulting, a comparable peer in many aspects to advertising, was culturally always in the second category while advertising entrenched its worth in the first.
It is necessary to remember that Advertising was always the 15% business; we were commission agents making our due lucre from the multiplicity and not the potency of our craft, which also made our business strangely accountable. Unlike the consultant we could not vamoose from the board room with just a recommendation, we needed to be answerable for the outcomes directly. Our revenues were linked directly to the timely placement of the advertisement. I remember the panic buttons during my early career when a campaign was delayed. Exactly the reason why we were comfortable with generating a million options for our clients — as facilitation of the release order and thus billings.
When the transition to the retainership model occurred in the early 2000s, driven validly by cash flow and stability considerations, this culture could not be expected to change overnight. I was part of the JWT team servicing ITC and can absolutely confirm that it was business as usual when this shift occurred. Our entourage to client meetings consisted of a bagful of layouts and the parleys were truly co-created — the craft was clearly ours, but the decision was increasingly theirs. What seemingly was a strategic convenience for the agency teams, more choice leading to quicker approvals, soon became a bane for the business. When the customer decides the direction of your product, that is not customising — it is a form of abdication that rapidly diminishes value.
Quite truthfully, we were all sucked in to this culture of many-and-more, especially with our high-paying relationships — in continuance of past practices. This was arguably different in certain ‘creative’ agencies where suits were suitably admonished, but that too for marquee campaigns and not the daily deliverables — a fact confirmed by many on that side. I am personally to blame as are many peers, using every tactic in the book of persuasion to bully or cajole creative partners to deliver what the client exactly demanded. Thus, along with the profligacy of choice emerged the uber-powerful client — talented folks who sincerely believed that their contribution to the creative process was a mite more than what it actually was.
This is exactly where the conflict between the retainership and the commission cultures seemed to pop up, in myriad dimensions. During commission, the client had a tangible remuneration handle, however seemingly illogical it may be — a globally acceptable business practice. During retainership, the client initially struggled to identify this value, time-cost an alien concept for a partner who was expected to be on a 24/7 watch. Unlike others on retainer, the management consultants or advisers, premium clock-watchers who were trained and taught to make a production of the time spent on analysis and advice. So that clients recognised and respected this factor while defining remuneration.
So, while the creative agency moved to the retainership model, it was still playing by the rules of the commission game, a fundamental barrier to premiumisation. The powerful recommendation that earns the consultant her keep, along with all the intrinsic rituals, never quite re-entered our craft. The ruthless adherence to time was truthfully never in our DNA, coming from a primarily service orientation. Thus, the adherence to the recommendation, continued to be superseded by the multiplicity of solutions, the infamous ‘Nalli’s’ approach versus the physician’s diagnosis. Our way of working not in tune with the ways of the premium retainership advisor.
Thus, perception of value remains the single-most barrier to premiumisation of a unique industry — which blends the best of right and left brains to develop human solutions. Clients must share a part of the accountability as well — increasingly trusting their own judgement prowess over the schooled recommendation of the agency. Seemingly a soft subject, where everybody has an opinion just like dining, the authority of the provider was soon reduced. In dining though, the recipes are closely guarded by the creators, the IP of the craft protected in the process confidentiality.
Modern managements face a fierce challenge in paving the path to premiumisation — an industry still mired in the ‘commission’ world while operating on retainer terms. We are conditioned to give away too much for free, pleasing the customer like a Eureka Forbes salesman and not partnering the client like a management consultant. To change this pattern, we must have a fresh view of our product, treating it like an IP and not an assembly-line output. That can honestly happen, especially in the nimble networked agency which can channelise its integrated skills to the re-establishment of value.
An industry that blends the best of right and left brains and is trained to be accountable for outcomes — truly a heady mix in these demanding business situations. We are, however, still paying for the myopia of top management during the earliest part of the 21st century — chiefly the inability to view the retainership shift as a cultural change and not just a billing reboot. If approached as fundamental culture, then others and not us would be paying a price for our glorious outcomes.
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