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I am a know-it-all. I can give you an opinion on anything marketing, just ask me. Except, that is, the dreaded decision about budget. At some point, the conversation between me and a client turns to how much to invest: “OK Mike, great ideas. Now, how much should I spend?” There are many resources to help the ad agency media department answer the question. However, I am always just a little tempted to say, “How the heck should I know?” The advertising budget is an investment in the future of a company. I am always uncomfortable telling anyone how much they should put into their growth strategy.
I know something about media buying and planning, and I have good buyers. Plus, it also helps to have years of client history for references, so I am able to come up with a sound estimate. But, I always wish I had more data to help make that “investment” decision.
I imagine that if I ever did say “how should I know?” the client would do what he should do anyway and turn to his other experts in such matters—his accountant or financial advisor. He would promptly learn that the “industry standard” is 4 to 6%. This “industry standard” has been quoted as a standard, to a lot of industries, for well over 50 years. No matter the business, the competitive environment, the product opportunity, the product life-cycle, the answer is always the same, 4 to 6%. After all, it’s the “industry standard.” Now, these aren’t bad numbers, as numbers go. But, it’s a bit like knowing the average temperature in Philadelphia is 47 degrees. What you know, for sure, is that it is rarely 47 in Philadelphia.
Actually the accountant, the financial advisor and the advertising agency all have a stake in their client’s success … Skin in the game, as they say. Each knows a lot about a specific discipline. The accountant is not going to recommend that anyone spend more than prudent just because the ad agency came up with that “great idea.” He knows his client’s limits. He is a key advisor on this issue.
The many questions outside the expertise and experience of the accountant should go to the ad agency for development. We know we become better as an advertising agency when we become trusted as advisors and collaborate with the client. This involves us helping in formulating the questions necessary in the development of marketing and budget decisions: Is now the time to take an aggressive growth position, or to hold? What is my market share today, and where could /should it be? What is the competitive environment? Are existing players changing tactics? Is new competition on the horizon? Where are product or conquest opportunities? What urgency exists? And often a real gut check query, can I handle increases in business at this time? The ad agency should play a key part in helping with specifics and in setting bench marks for future business activity. The agency is responsible for the three equally essential core disciplines: Marketing, Creative and Media.
Marketing: Marketing, in this context, is understanding all of the above and making plans and strategies accordingly.
Creative: Creative is where marketing, message and art meet. While the 800 number, order now message may not change the world, many product introductions or re-branding ad messages have become memorable characteristics of periods in our culture. Advertising is art. Of course, it is not just coming up with the next GEICO Insurance idea. Creative means coming up with the right message, at the right time, for the product or service. It must fit the client’s short and long range plans. The great creative is sustainable.
Media: Ahhh, Media. There is this wonderful tension that exists between an ad agency’s media buying experts and the media sales executives. They both speak the same business language.
There is generally a great deal of respect between buyer and seller - often due to long standing business relationships. Both buyers and sellers in the media business immediately know when the market is tight, and when it is soft. They both understand market volatility and how economic pressure relates to fluctuations in media cost—the bid/ask aspect. Interestingly, they both have similar goals, except they are coming from opposite perspectives. The media sales executive must productively maximize inventory while balancing an obligation to the client (agency or advertiser) to make sure that what he or she is selling works as promised.
An ad agency is first obligated to the client. However, this carries with it an obligation to the media seller to be clear about objectives and expectations. All of this creates a culture within the ad community of honest dialogue between agencies and media organizations. This sets up what I see as a wonderful tension between the two professional groups.
Economic uncertainty has caused media sellers to fight harder for available dollars. Today, they have become more aggressive in looking for direct business. Often, commissions and bonuses are structured to encourage sales reps to develop new advertisers. Some TV stations have either entered or have stepped up production and creative services departments for direct clients. Radio stations have become much more creative in helping advertisers. They are also more assertive in pursuit of larger shares of the media budget. Web sellers have built-in many encouragements in their quest for new business and for a larger share from existing advertisers. Outdoor lights up every 8 seconds. Newspapers, which many be consider “old school,” are developing new capabilities through their on-line pages, and within traditional newsprint. Who would have thought of 3D ads in the daily newspaper? . . . Come’ on, 3D in the daily paper? … that’s impressive.
Not since Gutenberg invented the press has the communications industry been so transformed as over the past decade. This is the best time ever to be in the advertising and communications business. In the 1960’s it was good ideas, along with a healthy helping of Dewar’s Scotch, Chesterfield’s and lobster lunches. It was the golden age of Mad Men. Today, the industry is alive with even better ideas, and with new and better ways of reaching consumers … not so much with the scotch, cigarettes, and lobster though. One thing that has not changed much is that wonderful tension between the agency representative and media seller.
Mike Gillespie Sr. has been president of Gillespie Group, a full service advertising agency in the Philadelphia area since 1991. He can be reached at 610 924 0900.
gillespiegroup.com